As filed with the U.S. Securities and Exchange Commission on September 5, 2025.

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. Norton Rose Fulbright US LLP 1045 W. Fulton Market, Suite 1200 Chicago, IL 60607 (312) 964-7763		Kristopher Miks, Esq. Norton Rose Fulbright Canada LLP 510 West Georgia Street, Suite 1800 Vancouver, B.C. V6B 0M3, Canada (604) 687-6575		Alyse Sagalchik, Esq. Katten Muchin Rosenman LLP 525 W. Monroe Street Chicago, IL 60661 (312) 902-5200

 

 

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.

 

 

TABLE OF CONTENTS

 

		Page
PROSPECTUS SUMMARY			1
THE OFFERING			10
SUMMARY CONSOLIDATED FINANCIAL INFORMATION			13
RISK FACTORS			15
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			54
USE OF PROCEEDS			55
DIVIDEND POLICY			56
CAPITALIZATION			57
DILUTION			58
CORPORATE HISTORY AND STRUCTURE			60
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			65
BUSINESS			78
MANAGEMENT			99
PRINCIPAL SHAREHOLDERS			107
RELATED PARTY TRANSACTIONS			109
DESCRIPTION OF SHARE CAPITAL			111
SHARES ELIGIBLE FOR FUTURE SALE			122
TAXATION			124
UNDERWRITING			132
EXPENSES RELATED TO THIS OFFERING			142
LEGAL MATTERS			143
EXPERTS			144
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT			145
ENFORCEMENT OF CIVIL LIABILITIES			146
WHERE YOU CAN FIND MORE INFORMATION			147
INDEX TO FINANCIAL STATEMENTS			F-1

We have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriter have not authorized any other person to provide you with different or additional information. Neither we nor the underwriter are making an offer to sell the common shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus.

For investors outside the United States: Neither we nor the underwriter has done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus outside the United States.

Until     , 2025 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

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RISK FACTORS

Investing in our securities involves a high degree of risk. The following risk factors describe circumstances or events that could have a negative effect on our business, financial condition or operating results. You should carefully consider the risks described below, together with all of the other information included in this prospectus, before making an investment decision. If any of the following risks actually occur, our business, financial condition or results of operations could suffer. The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently believe are not material could also impair our business, financial condition or results of operations. In that case, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Related to Government Regulations

We face various controlled substance regulatory compliance risks.

Psychedelic products and treatments, production and distribution is a new and emerging industry with substantial existing regulations and uncertainty as to future regulations. There is no assurance we will be able to derive meaningful revenue from our investment in psychedelic compounds, or that regulatory frameworks will support our business expansion, as the impact of various legislative regimes on our business plans and operations is uncertain. Our current and future product candidates are or may be subject to controlled substance laws and regulations in the territories where the product will be produced, manufactured, marketed, and sold, such as Canada and the United States. Failure to comply with these laws and regulations, or the cost of compliance, may adversely affect the results of our business operations, both during clinical development and post approval, and our financial condition. In addition, there is no guarantee that the applicable legislation regulating the research and development and manufacture of controlled substances in the jurisdictions where we operate now or in the future will create or allow for the growth opportunities we currently anticipate.

There is no guarantee that the legislative frameworks governing the research and development of controlled substances will enable the growth opportunities we currently anticipate. Our involvement in psychedelic product development positions us within a nascent, highly regulated and increasingly competitive industry that is evolving rapidly. Given the rapid pace of regulatory, market and scientific developments, new risks may emerge that management cannot foresee or adequately assess, potentially resulting in outcomes that differ materially from those expressed in any forward-looking statements. Regulatory uncertainty remains a key challenge; for example, approval pathways for substances such as MDMA and psilocybin differ significantly by jurisdiction, and there is no assurance of future regulatory acceptance in the United States or other target markets.

Additionally, the processing, manufacturing, packaging, labeling, advertising and distribution of our products are subject to oversight by regulatory authorities in each jurisdiction where our products are sold. These regulatory agencies may assert jurisdiction over any of our products and may not accept the evidence we provide to demonstrate product safety or efficacy. Regulatory bodies may also determine that a specific product or ingredient poses an unacceptable health risk, which could prohibit its sale or restrict the claims we are permitted to make. Additionally, we may be prevented from disseminating third-party literature in support of our products if it fails to meet applicable regulatory standards. Regulatory authorities may further require the withdrawal or recall of a product from the market. Any such action could result in significant costs, lost revenue, liability exposure and adverse impacts on our growth trajectory.

Achievement of our business objectives is subject to compliance with regulatory requirements enacted and enforced by governmental authorities and obtaining and maintaining all required regulatory approvals. We will incur costs and have ongoing obligations related to regulatory compliance, and, depending upon the jurisdictions in which we are conducting our business, those costs and obligations may be significant. Failure to comply with applicable laws, regulations and permits, license or approval requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be 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

 

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may significantly affect the financial condition of market participants and which cannot be reliably predicted. We may be required to compensate those suffering loss or damage by reason of our operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

We cannot predict the timeline required to secure all appropriate regulatory approvals or licenses for our business or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failing to obtain, required regulatory approvals or licenses may significantly delay or impact the research and development activities and could have a material adverse effect on our business, results of operations and financial condition. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition.

The marketability of any product may also be affected by numerous factors that are beyond our control and which cannot be predicted, including, in particular, changes to government regulations, such as those relating to taxes and other government levies which may be imposed on us. The current Canadian federal and provincial restrictions on the marketing and promotion of drugs, and medical services and the regulation of the import, export, production, distribution, possession and sale of controlled substances and precursor chemicals in Canada may limit the ability to effectively advertise and promote our products and business.

We may not be able to receive and maintain our licenses.

Our operations require us to obtain licenses, and in some cases, renewals of existing licenses and the issuance of permits by certain governmental authorities in Canada. We believe that we currently hold or have applied for all necessary licenses and permits to carry out the activities that we are currently conducting under applicable laws and regulations, and also believe that we are complying in all material respects with the terms of such licenses and permits. In addition, we will endeavor to apply for, as the need arises, all necessary licenses and permits to carry on the activities we expect to conduct in the future. However, our ability to obtain, sustain or renew any such licenses and permits on acceptable terms is subject to changes in regulations and policies and to the discretion of the applicable authorities or other governmental agencies in the jurisdictions where we conduct our business. Any loss of interest in any such required license or permit, or the failure of any governmental authority to issue or renew such licenses or permits upon acceptable terms, could have a material adverse impact on us.

Our ability to cultivate, extract, formulate and conduct research in psychedelic substances in Canada is dependent on our ability to obtain federal licenses from Health Canada, including the Dealer’s Licence and Precursor’s Licence. Licenses, once issued, are subject to ongoing compliance and reporting requirements. Our ability to fabricate, package, label and export to certain jurisdictions is depended on our ability to maintain the Health Canada issued Drug Establishment Licence which is also subject to ongoing compliance requirements. Failure to comply with the requirements would have a material adverse impact on our business, financial condition and operating results. There is also no assurance we will be able to obtain any required new licenses or approvals from Health Canada or that the licence remains recognized based on changes outside of our control. There can be no guarantee that Health Canada will continue to issue the Dealer’s Licence, Precursor Licence, Drug Establishment Licence or any other licenses to us. Government licenses are currently, and in the future will be, required in connection with our operations, in addition to other unknown permits and approvals which may be required. To the extent such permits and approvals are required and not obtained, we may be prevented from operating and/or expanding our business, which could have a material adverse effect on our business, financial condition and results of operations.

We cannot predict the time required to secure all appropriate regulatory approvals for our products or the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or 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.

 

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If we violate any laws and regulations related to controlled substances or precursors, we may face material adverse repercussions.

In Canada, under the CDSA, psilocybin and MDMA are currently Schedule III and Schedule I substances, respectively. One of the precursors for our research grade MDMA is subject to restrictions under the precursor regulations and, for that reason, we hold a Precursor Licence for import in the event that we require a source from outside Canada. Our operations are conducted in strict compliance with the laws and regulations regarding our activities with such controlled substances. As such, all facilities engaged with such substances by or on behalf of us in Canada do so under current licenses, permits and approvals, as applicable, issued by appropriate Canadian federal, provincial, territorial, and local governmental agencies. In the United States, under the U.S. Controlled Substances Act, psilocybin and MDMD are currently Schedule I substances, meaning they cannot be commercialized or prescribed for medical use and are subject to strict regulatory requirements.

While we are focused on psychedelics, specifically psilocybin and MDMA inspired compounds, we do not have any direct or indirect involvement with the illegal selling, production or distribution of any substances in the jurisdictions in which we operate and do not intend to have any such involvement. A violation of any applicable laws and regulations, such as the CDSA, Narcotic Control Regulations, or of similar legislation in the jurisdictions in which we operate could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings initiated by either government entities in the jurisdictions in which we operate, or private citizens or criminal charges, as well as result in reputational damage. Any such violations could have an adverse effect on our business, results of operations and financial condition. In addition, allegations of violations of applicable laws and regulations, even if ultimately determined to be unfounded, could result in reputational harm, increased scrutiny from regulatory authorities, and other adverse effects on our business, financial condition and results of operations.

We may be materially adversely impacted by changes in legislative and regulatory policies in jurisdictions where we sell our products and operate.

The recent 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.

 

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Furthermore, changes in government, legislative or regulatory policies in Australia could have a material adverse effect on our business. Changes in product scheduling, including those products permitted for therapeutic use and changes to the indications for which those products are permitted, could affect our ability to sell our product in the Australian market. Additions or changes to a Therapeutics Good Standard for any of our products could also impact our ability to product, test and release those products to comply to such Therapeutics Good Standard. As data is currently being amalgamated based on the performance of the products, and competitor’s products for use by Authorized Prescribers in Australia, it is possible that data analysis will lead the Australian government to open up access or alternatively halt or suspend access to these medicines with the Authorised Prescribers Scheme.

Changes in government, legislative or regulatory policies in Canada could have a material adverse effect on our business. If the government of Canada decides to revoke or restrict eligibility for certain substances for the Special Access Programme program or if there is a change in how medical conditions are defined for Special Access Programme access, or if a mandate is put in place to increase regulatory scrutiny for Special Access Programme requests or clinical trials, this could mean slower turn around times for approvals for our client’s usage for our products.

In addition, although we do not conduct clinical trials ourselves, we are indirectly affected by the actions or failures of third parties conducting clinical trials using our products. Regulatory authorities such as the FDA, Health Canada and other comparable agencies require that clinical trials comply with applicable protocols, legal and regulatory standards and GCP guidelines, which govern the design, conduct, monitoring and reporting of human clinical trials. These authorities conduct periodic inspections of sponsors, investigators, clinical sites and institutional review boards (“IRBs”) to ensure compliance.

If our clients or their contractors fail to meet these standards, the resulting data may be deemed unreliable, potentially requiring additional clinical trials and delaying regulatory approval. We cannot guarantee that any trial involving our products will be found compliant upon inspection. Delays in the initiation, conduct or completion of any clinical trial of our product candidates will increase our costs, slow down the product candidate development and approval process and delay or potentially jeopardize our ability to commence product sales and generate revenue. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. In the event we identify any additional product candidates to pursue, there is no assurance of the necessary regulatory approvals to allow clinical trials to begin in a timely manner, if at all. Any of these events could have a material adverse effect on our business, prospects, financial condition and results of operations.

We face various risks related to product liability and/or regulatory action.

As we continue to grow, we may distribute or import products from other countries that are designed to be ingested by humans. As such, we face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused damages, loss or injury. In addition, the future sale of our products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance in the future on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all.

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

 

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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.

 

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Canada does not have a formal quota system analogous to that which exists in the United States, but our ability to market and sell our Canadian-manufactured products in the United States may be inherently limited by DEA quotas on production, manufacturing, procurement, and importation, which apply to Schedule I substances.

Risks Related to Our Business and Industry

Our industry and market are relatively new.

We operate our business in a relatively new industry and market. While we have active sales in Australia, there is no guarantee that our revenue streams will be sustainable or sufficient to support long-term growth within Australia and beyond. There is also no assurance we will be able to derive meaningful revenue from our investment in psychedelic drugs, or to pursue that business to the extent currently proposed or at all. Adoption of psychedelic-assisted therapy is subject to stigma, legal uncertainty, and physician hesitancy, which could slow commercial penetration. Broader acceptance of these treatments depends on continued scientific validation, regulatory approval, and shifts in public perception.

In addition to being subject to general business risks, we must continue to build brand awareness in this industry and market through significant investments in our strategy, production capacity, quality assurance and compliance with regulations. There is no assurance that the industry and market will continue to exist and grow as currently estimated or anticipated or function and evolve in the manner consistent with management’s expectations and assumptions. Any event or circumstance that adversely affects our industry and market could have a material adverse effect on our business, financial conditions and results of operations.

We have a limited operating history, and we may not be able to manage our growth.

We have a relatively limited operating history in our industry upon which our business and future prospects may be evaluated. We are subject to all of the business risks and uncertainties associated with any new business enterprise, including the risk that we will not achieve our operating goals. In order for us to meet future operating and debt service requirements, we will need to be successful in our growing, marketing and sales efforts. Additionally, where we experience increased production and future sales, our current operational infrastructure may require changes to scale our business efficiently and effectively to keep pace with demand and achieve long-term profitability. If our products and services are not accepted by new customers, our operating results may be materially and adversely affected.

In order to manage growth and change in strategy effectively, we must: (a) maintain adequate systems to meet future customer demands; (b) expand sales and marketing, distribution capabilities and administrative functions; (c) expand the skills and capabilities of our current management team; and (d) attract and retain qualified employees. While we intend to focus on managing our costs and expenses over the long term, we expect to invest to support our growth and may have additional unexpected costs. We may not be able to expand quickly enough to exploit potential market opportunities.

We have a history of operating losses, and there is no assurance that we will be able to achieve profitability, raise additional financing or continue as a going concern.

We have suffered recurring losses from operations and have a net capital deficiency that raise substantial doubt about our ability to continue as a going concern. During the nine months ended June 30, 2025 and the fiscal year ended September 30, 2024, we incurred a net loss of C$2,362,664 (US$1,734,704) and C$6,035,859 (US$4,431,615), 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, 2025 of C$25,939,066 (US$19,044,836) 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.

 

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To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the acceptance of the product by physicians and patients, the ability to obtain reimbursement at any price and whether we own the commercial rights for that territory. Our growth strategy depends on our ability to generate revenue. In addition, if the number of addressable patients is not as anticipated, the indication or intended use approved by regulatory authorities is narrower than expected, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products, even if approved. Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations.

We cannot provide any assurance that we will be able to secure additional funding from public or private offerings or debt financings on terms acceptable to us, if at all, and any debt financing we undertake could subject us to restrictive covenants that limit our operational flexibility and could adversely affect our business and financial condition. Any new securities that we may issue in the future may be sold on terms more favorable for our new investors than the terms of this offering. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects.

Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. For example, market volatility resulting from, among other factors, the imposition of tariffs and retaliatory tariffs, military conflicts, such as ongoing conflicts in the Middle East, as well as, Russia’s war in Ukraine, and other factors that are currently unknown or not yet material could also adversely impact our ability to raise or access funds as and when needed. If adequate funds are not available to us on a timely basis, we may be required to delay, limit or discontinue one or more research or development programs or the potential commercialization of any approved products or be unable to expand operations or otherwise capitalize on business opportunities, as desired, which could materially affect our business, prospects, financial condition and results of operations.

If we are unable to obtain additional financing and on acceptable terms, we could be forced to delay, limit or discontinue product candidate development and sales efforts.

Developing and manufacturing biopharmaceutical products is expensive and time-consuming, and we expect to require substantial additional capital to conduct research for our current and future programs, seek regulatory approvals for our product candidates and launch and commercialize any products for which we receive regulatory approval, including growing our commercial sales, marketing and distribution organization. We regularly assess the ongoing development of our programs and may, from time to time, delay, limit or otherwise discontinue a program in order to allocate resources towards our existing programs, more developed programs or new investments.

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

 

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funds to continue preparing for market entry to the United States after the next 12 months as we do not expect to gain market entry to the United States within the next 12 months. Due to the uncertainty around the extent and timing of regulatory approval in the United States, we cannot currently estimate the amount of additional funds that will be needed to prepare for market entry to the United States. Any such additional fundraising efforts for us may divert our management’s attention from their day-to-day responsibilities, which may adversely affect our ability to develop and commercialize our product candidates or any future product candidates we may identify and pursue. Moreover, such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations or other restrictions that may adversely affect our business. Any new securities that we may issue in the future may be sold on terms more favorable for our new investors than the terms of this offering. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. We cannot assure that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.

Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

Our future funding requirements, both short-term and long-term, will depend on many factors, including, but not limited to:

 

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the outcomes of ongoing and planned third-party clinical trials;

 

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the outcome, timing and cost of meeting regulatory requirements established by Health Canada, the FDA, and other comparable foreign regulatory authorities;

 

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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;

 

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our ability to successfully identify and negotiate acceptable terms for third-party supply and contract manufacturing agreements;

 

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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;

 

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the amount and timing of sales and other revenues from our product candidates, if approved, including the sales price and the availability of coverage and adequate third-party reimbursement;

 

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the cash requirements of developing our programs and our ability and willingness to finance their continued development;

 

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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;

 

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the costs of acquiring, licensing or investing in intellectual property rights, products, product candidates and businesses;

 

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the costs of maintaining, expanding and protecting our intellectual property portfolio;

 

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our ability to attract, hire and retain qualified personnel as we expand research and development and our operational and commercial infrastructure; and

 

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the costs of operating as a public company in the United States, maintaining a listing in the United States and associated compliance with applicable rules and regulations.

We may be subject to product recalls.

Manufacturers, producers and distributors of products are sometimes subject to the recall of their products for a variety of reasons, including risk to health or safety, product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling. If any of our products are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. We may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention.

Although we have detailed procedures and GMP controls in place for testing our products, there can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if we are subject to recall, our image and reputation could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for our products and could have a material adverse effect on our results of operations and financial condition. Additionally, product recalls may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention, potential loss of applicable licenses and potential legal fees and other expenses.

We face increasing competition in our industry.

We face increasing competition in the markets in which we operate. Some of our competitors are more established than us and may have more resources than us and be better positioned to develop superior product features and technological innovations and able to better adapt to market trends than us. These competitors may receive regulatory approvals before us, introduce alternative treatments, or secure larger market shares. Our ability to compete depends on, among other things, high product quality, short lead time, timely delivery, competitive pricing, range of product offerings and superior customer service and support. Increased competition may require us to reduce prices or increase costs and may have a material adverse effect on our financial condition and results of operations. Any decrease in the quality of our products or level of service to customers or any occurrence of a price war among our competitors and us may adversely affect our business and results of operations.

Competition in the psychedelics industry is growing as various public and private companies enter the market. As a result of this competition, some of which is with large, well established companies with substantial capabilities and significant financial and technical resources, we may be unable to compete successfully in the future. There can be no assurance that we will be able to grow or sustain our business in the presence of these competitive conditions.

At the same time, because the psychedelics industry is in a nascent stage with uncertain boundaries, there is a lack of information about comparable companies available for potential investors to review in deciding about whether to invest in us and, few, if any, established companies whose business model we can follow or upon 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.

 

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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

 

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product candidates distributed by other companies prove to be, or are asserted to be, harmful to patients. Because of our dependence upon consumer perception, any adverse publicity associated with illness or other adverse effects resulting from patients’ use or misuse of any of our product candidates, if approved or any similar products distributed by other companies could have a material adverse impact on our business, prospects, financial condition and results of operations.

Future adverse events in research into depression and other mental health disorders, such as substance use disorder and anxiety, on which we focus our research efforts, or the pharmaceutical industry more generally, could also result in greater governmental regulation, stricter labeling requirements and potential regulatory delays in the testing or approvals of our product candidates. Any increased scrutiny could delay or increase the costs of obtaining regulatory approval for our product candidates or any future product candidates.

We have a limited number of products, and we may not be able to successfully develop new products.

Historically, our revenue is derived almost exclusively from sales of mushroom-based natural health products. We now derive revenue from the sale of limited pharmaceutical products. However, our success will depend, in part, on our ability to develop, introduce and market new and innovative products. If there is a shift in consumer demand, we must meet such demand through new and innovative products, or else our business will fail. Our ability to develop, market and produce new products is subject to us having substantial capital. There is no assurance that we will be able to develop new and innovative products or have the capital necessary to develop such products.

Further, because we have limited financial resources and access to funding, we have to make decisions regarding the allocation of capital and resources across our business. For example, we may forego or delay pursuit of certain product candidates or business opportunities that later may prove to have greater commercial potential than our current or future development programs and product candidates. In addition, our decisions concerning the allocation of research, collaboration, management and financial resources toward particular programs or product candidates may not lead to the development of viable commercial product candidates, and may divert resources, including personnel, away from more advantageous opportunities or from our other current programs. Similarly, our decisions to delay, terminate or collaborate with third parties in respect of certain product candidates and development programs could also prove not to be optimal and could cause us to miss valuable opportunities with no resulting benefit. If our assessment of the market potential of our product candidates or trends in the pharmaceutical or biotechnology industries proves to be inaccurate, our business, financial condition and results of operations could be materially adversely affected.

We face product pricing risks.

As the market for our products matures, or as new or existing competitors introduce new products or services that compete with us, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our pricing model and operating budget. If this were to occur, it is possible that we would have to change our pricing model or reduce prices, which could harm revenue, gross margin and operating results. In addition, reimbursement and pricing negotiations with healthcare providers and insurers regarding our products may impact our profitability. The adoption of psychedelic treatments within the healthcare industry depends on pricing structures, insurance coverage and regulatory acceptance, which remain uncertain. Further, there is a risk of long-term price compression as generic drug manufacturers enter the market for MDMA, psilocybin and other similar psychoactive drugs, which could have a materially adverse impact on our business, financial condition and results of operations.

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

 

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Canadian dollar versus other currencies will impact the translation of our net revenues generated in these foreign currencies into Canadian dollars. We import certain ingredients in our products from foreign countries, and may be forced to pay higher rates for our ingredients as a result of the weakening of the Canadian dollar.

We could experience distribution or supply chain interruptions.

We are susceptible to risks relating to distributor and supply chain interruptions. Distribution in Canada is largely accomplished through independent contractors, and, therefore, an interruption (e.g., a labor strike) for any length of time affecting such independent contractors may have a significant impact on our ability to sell our products. Limited GMP-qualified suppliers could create production bottlenecks and lead to disruptions in our supply chain. Supply chain interruptions, including a production or inventory disruption, could impact product quality and availability. Inherent to producing products is a potential for shortages or surpluses in future years if demand and supply are materially different from long-term forecasts. We monitor category trends and regularly reviews maturing inventory levels, but there can be no assurance that our estimates will be correct.

We rely on third party manufacturers and suppliers.

We rely on outside sources to manufacture our products including suppliers of critical raw materials and GMP-compliant testing services, shipping services and other suppliers to support the GMP facility. Dependence on third-party suppliers for raw material inputs and compliance with GMP standards creates potential risks related to production delays or quality control issues. Dependence on third-party laboratories for testing our finished products to GMP standards also creates risks related to release delays or quality control issues. Additionally, our failure to deliver either components or finished goods on a timely basis could have a material adverse effect on our business. Our ability to maintain consistent supply and meet regulatory requirements depends on factors outside of our control, including supplier reliability and raw material availability. As these are third parties over which we will have little or no control, the failure of such third parties to provide components or testing services on a timely basis could have a material adverse effect on our business, financial condition and operating results.

Our suppliers, service providers and distributors may elect, at any time, to breach or otherwise cease to participate in supply, service or distribution agreements, or other relationships, on which our operations rely. Loss of our suppliers, service providers or distributors would have a material adverse effect on our business and operational results. We currently rely on certain third party laboratories. Disruption of operations at any one of these facilities could adversely affect inventory supplies and our ability to meet product delivery deadlines.

We are currently party to and may seek to enter into additional collaborations, licenses and other similar arrangements and may not be successful in maintaining existing arrangements or entering into new ones, and even if we are, we may not realize the benefits of such relationships.

We are currently party to license and collaboration agreements with a number of universities and pharmaceutical companies, and we expect to enter into additional agreements as part of our business strategy. We anticipate relying upon strategic collaborations for marketing and commercializing our existing product candidates, if approved, and we may sell product offerings through strategic partnerships with pharmaceutical and biotechnology companies. The success of our current and any future collaboration arrangements may depend heavily on the efforts and activities of our collaborators. Collaborations are subject to numerous risks, such as:

 

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collaborators may have significant discretion in determining the efforts and resources that they will apply to collaborations;

 

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collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in their strategic focus due to their acquisition of competitive products or their internal development of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities;

 

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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;

 

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates;

 

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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;

 

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we could grant exclusive rights to collaborators that would prevent us from collaborating with others;

 

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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;

 

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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;

 

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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;

 

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disputes may arise with respect to the ownership of any intellectual property developed pursuant to our collaborations; and

 

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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:

 

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significant time and effort from our management team;

 

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coordination of our marketing and research and development programs with the marketing and research and development priorities of our collaborators; and

 

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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

 

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of a product candidate is delayed, the safety of a product candidate is questioned or sales of an approved product candidate are unsatisfactory.

In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of collaborations we enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our business, financial condition and results of operations.

We may face shortages in our raw materials.

One of our main products is derived from psychedelic mushrooms which are cultivated, harvested and dried at our facilities. Accordingly, we must grow enough mushrooms so that the products can be produced to meet the demand of our customers. A shortage of inputs, quality control issue with inputs to mushroom growing operations, issues in storage or culture of inputs, contamination or the loss of a key genetic, or a poor harvest could result in loss of sales and damage to us. If we become unable to harvest in a timely basis and at commercially reasonable prices, and are unable to produce mushrooms at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we will be unable to meet customer demand. In particular, we will be unable to source mushrooms from an alternative grower with the necessary regulatory approvals in a timely manner, which would have a material adverse effect on our business, financial condition and operating results.

In addition to the mushroom input, which we supply internally, both of our drug products are derived from commercially available GMP-qualified ingredients including the active MDMA, excipients, capsules and packaging components. We are currently reliant on a key supplier for our API inputs, and any disruption in API inflow will have a material adverse effect on our business. Consequently, a subsequent change in API supplier may require additional regulatory approvals and increase the cost and timing of our product development. If we and/or our suppliers become unable to acquire materials, especially API, at commercially reasonable prices, and are unable to find one or more replacement suppliers at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we will likely be unable to meet customer demand, which could have a material adverse effect on our business, financial condition and operating results.

Our success depends on the performance of our management and our employees.

Our success is largely dependent on the performance of our directors and officers. The loss of the services of any of these persons could have a materially adverse effect on our business and prospects. There is no assurance that we can maintain the services of our directors, officers or other qualified personnel required to operate our business.

We do not maintain key person insurance on any of our directors or officers, and, as result, we would bear the full loss and expense of hiring and replacing any director or officer in the event of the loss of any such persons by their resignation, retirement, incapacity, or death, as well as any loss of business opportunity or other costs suffered by us from such loss of any director or officer.

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

 

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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.

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

 

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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

 

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patients may turn out to be lower than expected. The effort to identify patients with these mental health disorders we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for our product candidates that we may identify may be limited or may not be amenable to treatment with our product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business. Further, even if we obtain significant market share for our product candidates, because the potential target populations may be small, we may never achieve profitability.

If we are unable to effectively execute our growth strategies and manage risks associated with expanding the scale of our operations, our ability to grow our business and establish our international markets may be negatively affected.

To accomplish our growth strategies and manage the future growth of our operations, we will need to improve our operational and financial systems and internal controls, and expand, train and manage our growing employee base.

As we transition from early-stage operations to a more mature pharmaceutical model, we must invest in the development and refinement of operational infrastructure, including enterprise resource planning, inventory control, and financial reporting systems that can withstand audit scrutiny across multiple regulatory agencies.

The expansion of our workforce will require disciplined hiring, training, and retention strategies to ensure technical competency in highly regulated and scientific functions. Our ability to recruit and retain personnel with the requisite expertise may impair our capacity to meet compliance and supply obligations.

We will need to maintain and expand our relationships with our customers, suppliers and other third parties. Furthermore, as we enter new markets, we may face new market, technological, operational and regulatory risks and challenges with which we are unfamiliar.

We must also maintain and strengthen our commercial relationships with healthcare providers, clinical research organizations, contract manufacturing partners, and government stakeholders. Disruption in any of these partnerships - particularly those supporting our controlled substance supply chain -could compromise product availability, impact revenue forecasts, or damage our regulatory standing.

If we are unsuccessful in managing these complexities, the effect could result in delayed product launches, failed market entries, regulatory non-compliance, and reduced investor confidence, all of which would materially impair our long-term growth trajectory and financial performance.

Cyberattacks or other failures in our telecommunications or information technology systems, or those of our collaborators, contracted research organizations, third-party logistics providers, distributors or other contractors or consultants, could result in information theft, data corruption and significant disruption of our business operations which could materially affect our results.

We, our programs, our collaborators, our contracted research organizations, third-party logistics providers, distributors and other contractors and consultants rely on information technology, or IT, systems and networks to 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

 

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unauthorized access to computer systems and networks, have increased in frequency, intensity, and sophistication. These threats pose a risk to the security of our, our programs’, our collaborators’, our contracted research organizations’, third-party logistics providers’, distributors’ and other contractors’ and consultants’ systems and networks, and the confidentiality, availability and integrity of our confidential information. There can be no assurance that we will be successful in preventing cyberattacks or successfully mitigating their effects. There can also be no assurance that our, our programs’, our collaborators’, our contracted research organizations’, third-party logistics providers’, distributors’ and other contractors’ and consultants’ cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and confidential information.

The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased. In addition, varying parts of our workforce are currently working remotely on a part or full time basis. This could increase our cyber security risk, create data accessibility concerns, and make us more susceptible to communication disruptions. We may not be able to anticipate all types of security threats, and we may not be able to implement preventive measures effective against all such security threats. The techniques used by cyber criminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies. We may also experience security incidents that may remain undetected for an extended period. Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. Similarly, there can be no assurance that our collaborators, contracted research organizations, third-party logistics providers, distributors and other contractors and consultants will be successful in protecting our clinical and other data that is stored on their systems. Any loss of clinical trial data from our clients’ completed or ongoing clinical trials for any of our product candidates could result in delays in our development and regulatory approval efforts and significantly increase our costs to recover or reproduce the data. We and certain of our service providers are from time to time subject to cyberattacks and security incidents. We have experienced and expect to continue to experience actual and attempted cyberattacks of our IT networks, such as through phishing scams and ransomware. Although we do not believe that we have experienced any significant system failure, accident or cybersecurity incidents to date, we cannot guarantee that we will not experience such incidents in the future. Any adverse impact to the availability, integrity or confidentiality of our or third-party systems or confidential information can result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Any or all of the foregoing could materially adversely affect our business, results of operations, and financial condition.

Any cyberattack that leads to unauthorized access, use, or disclosure of confidential information, data breach or destruction or loss of confidential information could result in a violation of applicable Canadian, U.S. and international privacy, data protection and other laws and regulations, require us to notify affected individuals or supervisory authorities, subject us to litigation and governmental investigations, proceedings and regulatory 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

 

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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:

 

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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;

 

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our failure to obtain and maintain regulatory approvals for the use of our products in various countries;

 

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additional potentially relevant third-party patent rights;

 

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complexities and difficulties in obtaining protection and enforcing our intellectual property;

 

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difficulties in staffing and managing foreign operations;

 

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complexities associated with managing multiple payer reimbursement regimes, government payers, or patient self-pay systems;

 

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limits in our ability to penetrate international markets;

 

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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;

 

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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;

 

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economic weakness, including inflation or stagflation, or political instability;

 

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difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations, including taxes;

 

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certain expenses including, among others, expenses for travel, translation, and insurance; and

 

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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.

 

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Risks Related to Drug Development

We face various risks associated with drug development.

We are engaged in the research of growing psilocybin mushrooms and undertaking extractions from these mushrooms with a view to ultimately developing patents and other intellectual property rights related to mushroom cultivation, extraction and formulation. We are also engaged in the research and development of MDMA capsules and the intellectual property related to MDMA formulation. However, it is uncertain whether any of our current or future product development efforts will prove to be successful and meet applicable regulatory requirements, and whether any of our future product candidates will receive the requisite regulatory approvals, be capable of being manufactured at a reasonable cost or be successfully marketed. To achieve profitable operations, we alone or with others, must successfully develop, gain regulatory approval for, and market our current and future products. To obtain regulatory approvals for our product candidates being developed and to achieve commercial success, clinical trials must demonstrate that the product candidates are safe for human use and that they demonstrate efficacy. The impact of legislative regimes on our business remains uncertain, particularly as regulatory bodies continue to develop and refine their approaches to psychedelic research and commercialization.

Many product candidates never reach the stage of clinical testing and even those that do have only a small chance of successfully completing clinical development and gaining regulatory approval. Product candidates may fail for a number of reasons, including being unsafe for human use or due to the failure to provide therapeutic benefits equal to or better than the standard of treatment at the time of testing. Unsatisfactory results obtained from a particular study relating to a research and development program may cause us or our collaborators to abandon commitments to that program. Positive results of early pre-clinical research may not be indicative of the results that will be obtained in later stages of pre-clinical or clinical research. Similarly, positive results from early-stage clinical trials may not be indicative of favorable outcomes in later-stage clinical trials, and we can make no assurance that any future studies, if undertaken, will yield favorable results.

If we are successful in developing our current and future product candidates into approved products, we will still experience many potential obstacles, which would affect our ability to successfully market and commercialize such approved products, such as the need to develop or obtain manufacturing, marketing and distribution capabilities, price pressures from third-party payers or proposed changes in health care systems. If we are unable to successfully market and commercialize our products, our financial condition and results of operations may be materially and adversely affected.

As of the date hereof, the clinical effectiveness and safety of any of our developmental products is not yet fully supported by clinical data and the medical community has not yet developed a large body of peer reviewed literature that supports the safety and efficacy of similar products. If future studies call into question the safety or efficacy of our products, our business, financial condition, and results of operations could be adversely affected. Our success depends on achieving necessary regulatory approvals, which involve stringent regulatory hurdles and potential delays.

We can make no assurance that any future studies, if undertaken, will yield favorable results. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials after 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

 

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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

 

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application, clients may be required to expend significant resources, which may not be available to them, to conduct additional trials in support of potential approval of our product candidates.

We cannot be certain that our product candidates will be successful in clinical trials. Our clients’ inability to successfully complete preclinical and clinical development could result in additional costs to us and negatively impact our ability to obtain approval and to generate revenue. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize product candidates. In addition, even if such clinical trials are successfully completed, we cannot guarantee that Health Canada, the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our product candidates for approval. In addition, Health Canada, the FDA and other regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted.

If we, as supplier, or our clients are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted.

We may not achieve publicly announced milestone expectations and forecasts according to schedule, or at all.

From time to time, we may announce the timing of certain events that we expect to occur, such as the anticipated timing of results from our clients’ clinical trials. These statements are forward-looking and are based on the best estimates of management at the time relating to the occurrence of such events. However, the actual timing of such events may differ from what has been publicly disclosed. The timing of events such as a client’s initiation or completion of a clinical trial, filing of an application to obtain regulatory approval or announcement of additional clinical trials for a product candidate may ultimately vary from what is publicly disclosed. These variations in timing may occur as a result of different events, including the nature of the results obtained during a clinical trial or during a research phase, timing of the completion of clinical trials or any other event having the effect of delaying the publicly announced timeline. Further, any U.S. rescheduling delays or changes in Australian and Canadian policies may impact our market timelines. We undertake no obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. Any variation in the timing of previously announced milestone expectations and forecasts could have a material adverse effect on our business plan, financial condition or operating results.

We rely on third parties to conduct clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.

We currently rely, and expect to continue to rely, on third parties, including our clients and their contracted research organizations, clinical data management firms, medical institutions and clinical investigators, to conduct research, preclinical studies, and clinical trials involving our product candidates. These third parties are responsible for designing, executing and overseeing the clinical development and regulatory submission processes. Any of these third parties may terminate their engagements or fail to fulfill their contractual 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.

 

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Additionally, under applicable regulations, our clients are responsible for registering clinical trials and reporting results in accordance with jurisdictional requirements. In Canada, for example, all Health Canada-authorized trials must be registered in a clinical trial registry meeting World Health Organization standards before the enrollment of participants, and summary results must be submitted to the same registry. In the United States, certain trials must be registered on ClinicalTrials.gov, and results of completed trials must be posted within specified timeframes. Noncompliance can lead to fines, adverse publicity and civil or criminal penalties.

Even if our clients complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time consuming and uncertain and may prevent us from obtaining approvals for the potential commercialization of our product candidates.

Any product candidates we may develop and the activities associated with their development and potential commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by Health Canada, the FDA and other comparable foreign regulatory authorities. Failure to obtain marketing authorization for a product candidate will prevent us from commercializing the product candidate in a given jurisdiction.

We currently expect to rely on our clients to file and support the applications necessary to gain marketing authorizations for our products in jurisdictions where we cannot supply our products directly. Securing regulatory approval requires the submission of preclinical and clinical data from our clients and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy, or with respect to biological products in the U.S., the product candidate’s safety, purity and potency. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Any product candidates we develop may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use, if approved.

The process of obtaining marketing authorizations, in Canada, the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing authorization policies during the development period, changes in or the enactment of additional statutes or regulations or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. Health Canada, the FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that clients’ data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be 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

 

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challenges related to conducting adequate and well-controlled clinical trials, including designing an appropriate comparator arm in trials given the potential difficulties related to maintaining the blinding during the trial or placebo or nocebo effects.

Due to the inherent complexity of the human brain and the central nervous system, it is often challenging to predict or fully understand why a drug, including psilocybin, MDMA or any other product candidates, may demonstrate therapeutic benefits in some patients but not others, or why individuals may respond differently to the same treatment. The impact and complexities that arise from comingling therapeutic treatments with psychotherapy is an added variable not present in traditional medical treatments. Moreover, most of the patients treated in our clients’ clinical trials have previously been treated with the same drugs, other drugs or therapies, introducing additional variabilities. These factors collectively complicate the evaluation of prior treatment effects and make it more difficult to assess the true efficacy of our product candidates.

If our clients encounter difficulties enrolling patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

Third parties’ identification and qualification of trial participants to participate in clinical studies is critical to our success. The timing of our clients’ clinical trials depends on, among other things, the speed at which they can recruit trial participants to participate in testing our product candidates and their ability to enroll a sufficient number of patients who remain in the trial until its conclusion. Delays in enrollment and withdrawals from the trial may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates. If trial participants are unwilling to participate in our studies because of negative publicity from adverse events in our trials or other trials of similar products, or those related to specific therapeutic area, or for other reasons, including competitive clinical studies for similar patient populations, the timeline for recruiting trial participants, conducting studies, and obtaining regulatory approval of potential products may be delayed. These delays could result in increased costs, delays in advancing our product candidate development, delays in testing the effectiveness of these product candidates, or termination of the clinical studies altogether.

Our clinical client partners may not be able to identify, recruit and enroll a sufficient number of trial participants, or those with required or desired characteristics to achieve diversity in a study, to complete their clinical studies in a timely manner. Patient and subject enrollment is affected by factors including:

 

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the size and nature of the patient population;

 

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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;

 

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the size of the study population required for analysis of the trial’s primary endpoints;

 

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the severity of the disorder under investigation;

 

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the proximity of patients to a trial site;

 

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the inclusion and exclusion criteria for the trial in question;

 

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the design of the trial protocol;

 

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the ability to recruit clinical trial investigators with the appropriate competencies and experience;

 

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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;

 

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the availability and efficacy of approved medications or product candidates for the disorder or condition under investigation;

 

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•

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;

 

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the ability to obtain and maintain patient consents; and

 

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the risk that patients enrolled in clinical trials will not complete such trials, for any reason.

If our clients have difficulty enrolling sufficient numbers of patients to conduct clinical trials as planned, they may need to delay or terminate clinical trials, either of which would have an adverse effect on our business.

Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or halt their clinical development, prevent their regulatory approval, cause our clients to suspend or discontinue clinical trials, cause us to abandon a product candidate, limit their commercial potential, if approved, or result in other significant negative consequences that could severely harm our business, prospects, financial condition and results of operations.

As is the case with pharmaceuticals generally, it is likely that there may be unexpected or undesirable side effects, adverse effects and other risks associated with the use of our product candidates. Results of clinical trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by these product candidates could cause our clients or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by Health Canada, the FDA or other comparable foreign regulatory authorities. The side effects related to the product candidate could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition, results of operations and prospects significantly.

Moreover, if our product candidates are associated with undesirable side effects in preclinical studies or clinical trials or have characteristics that are unexpected, we may elect to abandon their development or limit their development to more narrow indications or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective, which may limit the commercial expectations for the product candidate if approved. Our clients may also be required to modify or terminate their study plans based on findings in preclinical studies or clinical trials. Many product candidates that initially show promise in early-stage testing may later be found to cause side effects that prevent further development. As we work to advance existing product candidates and to identify new product candidates, we cannot be certain that later testing or trials of product candidates that initially showed promise in early testing will not be found to cause similar or different unacceptable side effects that prevent their further development.

It is possible that as our product candidates are tested in larger, longer and more extensive clinical trials, or as the use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, 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

 

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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:

 

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regulatory authorities may suspend or withdraw approvals of such product candidate, or seek an injunction against its manufacture or distribution;

 

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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;

 

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we may be required by Health Canada, the FDA or other regulatory authorities to implement a REMS or similar risk management measures;

 

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we may be required to change the way a product candidate is administered;

 

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our clients may have to conduct additional clinical trials;

 

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we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

 

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we could be sued and held liable for harm caused to patients; and

 

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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.

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.

 

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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:

 

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the efficacy and safety of the product as demonstrated in pivotal clinical trials;

 

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the potential and perceived advantages of the product compared to competitive and alternative products;

 

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the prevalence and severity of any side effects;

 

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whether the product is designated under physician treatment guidelines as a first-, second- or third-line therapy;

 

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our ability, or the ability of any future collaborators, to offer the product for sale at competitive prices;

 

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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;

 

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the willingness of the target patient population to try, and of physicians to prescribe, the product;

 

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limitations or warnings, including distribution or use restrictions contained in the product’s approved labeling;

 

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the strength of sales, marketing and distribution support;

 

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restrictions on how the product is distributed;

 

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the timing of market introduction of competitive products;

 

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publicity concerning these products or competing products and treatments;

 

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changes in the standard of care for the targeted indications for the product; and

 

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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.

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

 

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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:

 

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the inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that the applicable product candidate is safe and effective as a treatment for our targeted indications or otherwise meets the applicable regulatory standards for approval;

 

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the FDA or comparable foreign regulatory authorities may disagree with the design, endpoints or implementation of our clients’ clinical trials;

 

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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;

 

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the FDA or comparable foreign regulatory authorities may require additional preclinical studies or clinical trials beyond those that we currently anticipate;

 

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the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

 

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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;

 

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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;

 

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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

 

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the approval policies or regulations of the FDA or comparable foreign regulatory authorities may change in a manner that renders the clinical trial design or data insufficient for approval.

The lengthy approval process, as well as the unpredictability of the results of clinical trials and evolving regulatory requirements, may result in our failure to obtain regulatory approval to market product candidates that we may pursue in the United States or elsewhere, which would significantly harm our business, prospects, financial condition and results of operations.

Furthermore, approval by the FDA in the United States, if obtained, does not ensure approval by regulatory authorities in other countries or jurisdictions. In order to market any products outside of Canada, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and effectiveness. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval processes vary among countries and can involve additional product testing and validation and additional or different administrative review periods from those in Canada, including additional preclinical studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In some cases, the price that we intend to charge for our products is also subject to approval.

Seeking foreign regulatory approval could result in difficulties and costs for us and require additional preclinical studies or clinical trials by our clients, which could be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. The foreign regulatory approval process involves all of the risks associated with FDA approval. We currently have three products approved for sale in Australia. If we fail to comply with regulatory requirements in any markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of our products will be harmed.

We may be affected by negative results from clinical trials or studies conducted by third-parties.

From time to time, studies or clinical trials on various aspects of psychedelics are conducted by academic researchers, competitors or others. The results of these studies or trials, when published, may have a significant effect on the marketability of the substance that is the subject of the study. For example, the FDA rejected 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.

 

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We may seek to protect our proprietary position by filing patent applications in Canada, the United States and abroad and by in-licensing intellectual property related to our existing product candidates, our various proprietary technologies and any other product candidates or technologies that we may identify.

Obtaining and enforcing pharmaceutical and biopharmaceutical patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or to maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We may not have the right to control the preparation, filing and prosecution of patent applications or to maintain the rights to patents licensed to third parties. Therefore, these potential patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal, technological and factual questions and has in recent years been the subject of much litigation. The standards that the Canadian Intellectual Property Office (“CIPO”), the USPTO and foreign counterparts use to grant patents are not always applied predictably or uniformly. Any future patent applications may not result in patents being issued that protect our product candidates or technology, in whole or in part, or which effectively prevent others from commercializing competitive product candidates. The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if future patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our future owned or licensed patents by developing similar or alternative product candidates in a non-infringing manner.

In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our future patents may be challenged in the courts or patent offices in Canada, the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical product candidates to ours, or limit the duration of the patent protection of our product candidates. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property portfolio may not provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.

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

 

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considerable number of patents, and it may not always be clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we were sued for patent infringement, we would need to demonstrate that our product candidates, products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Proving invalidity may be difficult. For example, in Canada, proving invalidity in court requires a showing of clear and convincing evidence to overcome the presumption of validity that applies to issued patents. In addition, many companies in the biotechnology and pharmaceutical industries have employed intellectual property litigation as a means to gain an advantage over their competitors. As the biotechnology and pharmaceutical industries expand and more patents are issued, and as we gain greater visibility and market exposure as a public company, the risk increases that our existing product candidates and any other product candidates that we may identify may be subject to claims of infringement of the patent rights of third parties.

There may be other third-party patents or patent applications with claims to composition of matter, materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our existing or future product candidates. Further, we may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our product candidates, might assert are infringed by our current or future product candidates, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our product candidates. It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates and other proprietary technologies we may develop, could be found to be infringed by our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidates unless we obtained a license under the applicable patents, or until such patents expire.

Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidates unless we obtained a license or until such patents expires. In either case, such a license may not be available on commercially reasonable terms or at all, or it may be non-exclusive, which could result in our competitors gaining access to the same intellectual property rights.

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

 

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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

There has been no prior market for our common shares on a U.S. national securities exchange, and an active and liquid market for our common shares may fail to develop or be sustained, which could harm the market price of our common shares.

Prior to this offering, there has been no public market on a U.S. national securities exchange for our common shares. We plan to apply to list our common shares on the Nasdaq Capital Market under the symbol “OPTH.” There is no guarantee that Nasdaq, or any other exchange or quotation system, will permit our common shares to be listed and traded. The closing of this offering is contingent upon the successful listing of our common shares on the Nasdaq Capital Market.

Even if our common shares are approved for listing on the Nasdaq Capital Market, a liquid public market for our common shares may not develop, or if it is developed, may not be sustained. The lack of an active market may impair your ability to sell your common shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses using our shares as consideration.

 

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The initial public offering price for our common shares has been determined by negotiation between us and the underwriter based upon several factors, including prevailing market conditions, our historical performance, estimates of our business potential and earnings prospects and the market valuations of similar companies. The price at which the common shares are traded after this offering may decline below the initial public offering price, meaning that you may experience a decrease in the value of your common shares regardless of our operating performance or prospects.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and, as such, we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

 

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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;

 

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the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

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the selective disclosure rules by issuers of material non-public information under Regulation FD.

Following this offering, we will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our financial results on a quarterly basis, distributed pursuant to the rules and regulations of Nasdaq. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to the information required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As a foreign private issuer, we are permitted, and intend, to rely on exemptions from certain Nasdaq corporate governance standards applicable to U.S. domestic issuers. This may afford less protection to holders of our common shares than they would enjoy if we complied fully with the Nasdaq corporate governance listing standards.

We are exempted from certain corporate governance requirements of Nasdaq by virtue of being a foreign private issuer. As a foreign private issuer, we are permitted to follow the governance practices of our home country in lieu of certain corporate governance requirements of Nasdaq. As result, the standards applicable to us are considerably different from the standards applied to U.S. domestic issuers and could provide less protection to you than you would have under the Nasdaq rules applicable to domestic issuers.

Specifically, we intend to rely on exemptions from the following Nasdaq corporate governance requirements:

 

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We do not intend to have a majority of our directors qualify as independent. This is not required under our home country practices.

 

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We do not intend to hold regular scheduled meetings that independent directors exclusively attend. This is not required under our home country practices.

 

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We do not intend to have a nomination committee. This is not required under our home country practices.

 

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We do not intend to have a compensation committee comprised solely of independent directors who are independent under applicable Nasdaq and SEC standards for members of compensation committees. This is not required under our home country practices.

 

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We do not intend to have director nominees selected or recommended for the Board’s selection by independent directors. We also do not intend to adopt a formal written charter or board resolution addressing the nominations process. Under our home country practices, when the Board identifies the need to fill a position, either due to a vacancy or as required to carry out the Board’s duties effectively and maintain a breadth of experience, the Board requests that current directors put forward potential candidates for consideration.

 

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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 Share Capital – Shareholder Meetings”.

 

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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.

 

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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

 

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value of their shares. Following compliance with the procedural steps contemplated in any such interim order. (including as to obtaining security holder approval), the court would conduct a final hearing, which would, among other things, assess the fairness of the arrangement and approve or reject the proposed arrangement. Lastly, under applicable Canadian Securities Exchange policies, our Equity Plan (as defined below) is subject to ordinary shareholder approval every three years. If shareholders fail to approve the resolution for the renewal of our Equity Plan, we are prohibited from granting equity-based compensation under the Equity Plan to our of officers, directors, employees or consultants, even if such renewal approval was sought prior to the end of the three-year period.

As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses and may impede our ability to maintain our listing on Nasdaq.

After our listing on Nasdaq, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. If we lose our foreign private issuer status on a determination date, then, beginning on the first day of the fiscal year following the determination date, we would have to comply with U.S. federal proxy rules and other requirements, and our officers, directors and principal shareholders would become subject to the reporting and short-swing profit disclosure and 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, as issued by the IASB, 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.

We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, and our shareholders could receive less information than they might expect to receive from more mature public companies.

Upon the completion of this offering, we will qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

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

 

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fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our securities that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Because we will be subject to ongoing public reporting requirements for such time as we remain an emerging growth company that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our securities less attractive if we elect to rely on these exemptions or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our securities.

It may be difficult to enforce judgments or bring actions outside the United States against us and our directors.

We are a Canadian corporation, and our officers and directors are neither citizens nor residents of the United States. All or a substantial part of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for an investor to enforce in courts outside the United States judgments obtained in United States courts based upon the civil liability provisions of United States federal securities laws against these persons and us or to bring in courts outside the United States an original action to enforce liabilities based upon United States federal securities laws against these persons and us.

We may be subject to securities litigation, which is expensive and could divert our management’s attention.

In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action or other shareholder litigation. We may be the target of this type of litigation in the future. Even if such claims are without merit, litigation could result in substantial legal costs, divert management’s attention from the operation of our business and damage our reputation. In addition, while we maintain directors’ and officers’ liability insurance, our insurance coverage may not be sufficient to cover all costs, judgments, or settlements associated with such claims. If our insurance coverage is inadequate or unavailable, we may be exposed to significant liabilities, which could materially and adversely affect our financial condition and results of operations.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

The public offering price of our common shares is substantially higher than the pro forma net tangible book value per common share before giving effect to this offering. Accordingly, if you purchase our common shares in this offering, you will incur immediate substantial dilution. Furthermore, if the underwriter exercises its option to purchase additional shares, you could experience further dilution. For a further description of the dilution that you will experience immediately after this offering, see the section entitled “Dilution.”

If we sell shares of our common shares in future financings, shareholders may experience immediate dilution, and, as a result, our stock price may decline.

We expect our expenses to increase significantly in the foreseeable future and we may from time to time issue additional common shares. These issuances may be at a discount from the current trading price of our common shares. As a result, our shareholders would experience immediate dilution upon the purchase of any of our common shares sold at such discount. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred shares or common shares. If we issue common shares or securities convertible into common shares, our common shareholders will experience additional dilution and, as a result, our share price may decline.

 

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We have broad discretion to determine how to use the funds raised in this offering and may use them in ways that may not enhance our operating results or the price of our common shares.

Our management will have broad discretion over the use of proceeds from this offering, and we could spend the proceeds from this offering in ways our shareholders may not agree with or that do not yield a favorable return, if at all. We currently expect to use the net proceeds from this offering for scaling production and distribution of our products, market expansion and sales growth and general working capital and other operating expenses. However, our use of these proceeds may differ substantially from our current plans. If we do not invest or apply the proceeds from this offering in ways that improve our operating results, we may fail to achieve the expected financial results, which could cause our share price to decline.

We do not currently intend to pay dividends on our common shares, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common shares.

We do not currently intend to pay any cash dividends on our common shares for the foreseeable future. Therefore, you are not likely to receive any dividends on your common share for the foreseeable future. Since we do not intend to pay dividends, your ability to receive a return on your investment will depend on any future appreciation in the market value of our common shares. There is no guarantee that our common share will appreciate or even maintain the price at which our holders have purchased such common shares.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our common shares, our share price and trading volume could decline.

The trading market for our common shares will be influenced by the research and reports that industry or securities analysts publish about us or our business. If no or few securities or industry analysts commence or continue coverage of us, the trading price for our common shares would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, or our share performance, or if our operating results fail to meet the expectations of analysts, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

We may not be able to satisfy listing requirements of the Nasdaq Capital Market or obtain or maintain a listing of our common shares.

We must meet certain financial and liquidity criteria to obtain and maintain a listing on the Nasdaq Capital Market; however, there is no guarantee that we will be able to satisfy these requirements. If we violate Nasdaq listing requirements, our common shares may be delisted. If we fail to meet any of Nasdaq’s listing standards, our common shares may be delisted. In addition, 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

 

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“Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by controlled foreign corporations, regardless of whether we make any distributions. We are not committing to assist investors in determining whether we or any of our non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation, or to furnish to any United States shareholders with the information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our common shares.

In the future, we may be classified as a passive foreign investment company for United States federal income tax purposes.

Generally, if for any taxable year 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. Whether we are a PFIC for the current or any future taxable year is uncertain, as it will depend on our income and assets for each such year. We do not believe we were a PFIC for our most recently ended taxable year and based on current business plans and financial expectations, we do not expect to be a PFIC for our current taxable year. However, no assurance can be giving concerning our PFIC status for our current taxable year and for any subsequent tax years. Accordingly, we may be classified as a PFIC in the future. If we are characterized as a PFIC, U.S. holders of our common shares may suffer adverse tax consequences. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of common shares.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements concerning our business, operations and financial performance, as well as our plans, objectives and expectations for our business operations and financial performance and condition. All statements other than statements of historical facts included in this prospectus are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “plans”, “expects”, “projected”, “estimated”, “forecasts”, “anticipates”, “intend”, “guidance”, “outlook”, “potential”, “prospects”, “seek”, “aim”, “strategy”, “targets” or “believes”, or variations of such words and phrases or statements that certain future conditions, actions, events or results “will”, “may”, “could”, “would”, “should”, “might” or “can”, or negative versions thereof, “occur”, “continue” or “be achieved” and other similar expressions. In addition, statements that “we believe” or similar statements reflect our beliefs and opinions on the relevant subject.

Forward-looking statements include, but are not limited to, statements with respect to:

 

•

our ability to achieve our growth strategy;

 

•

the demand for our products;

 

•

expectations regarding revenue, expenses and operations;

 

•

government regulations of our products;

 

•

sufficiency of current working capital to support future operating and working capital requirements;

 

•

the stability of general economic and market conditions;

 

•

currency exchange rates and interest rates;

 

•

equity and debt markets continuing to provide us with access to capital;

 

•

our ability to comply with applicable laws and regulations; and

 

•

our continued compliance with third party intellectual property rights.

We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we cannot guarantee that the future results, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section entitled “Risk Factors” and elsewhere in this prospectus for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, including applicable Canadian and U.S. securities laws, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

This prospectus also contains certain data and information, which we obtained from various government and private publications. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.

 

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USE OF PROCEEDS

After deducting the estimated underwriting discounts and commissions and offering expenses payable by us, we expect to receive net proceeds of approximately US$  million from this offering (or approximately US$  million if the underwriter exercises the over-allotment option in full), based on an assumed public offering price of US$  per common share, which is the midpoint of the estimated initial public offering price range set forth on the front cover of this prospectus. A US$1.00 increase (decrease) in the assumed initial public offering price of US$  per common share would increase (decrease) the net proceeds to us from this offering by US$  million, assuming the underwriter does not exercise its option to purchase additional common shares and the number of common shares offered by us, as set forth on the front cover of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

We intend to use the net proceeds from this offering for the following purposes:

 

•

% of the net proceeds (approximately US$  million) for scaling production and distribution of our products in our current markets;

 

•

% of the net proceeds (approximately US$  million) for preparing additional market entry to Israel and the United States and sales growth; and

 

•

% of the net proceeds (approximately US$  million) for general working capital and other operating expenses.

The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. We believe that the net proceeds of this offering will be sufficient to meet our needs for scaling production and distribution of our products in our current markets. We also believe that the net proceeds of this offering will be sufficient to meet our needs for preparing additional market entry to Israel and the United States and sales growth for the next 12 months. However, we anticipate that we will need additional funds to continue preparing for market entry to the United States after the next 12 months as we do not expect to gain market entry to the United States within the next 12 months. Due to the uncertainty around the extent and timing of regulatory approval in the United States, we cannot currently estimate the amount of additional funds that will be needed to prepare for market entry to the United States. Any such additional fundraising efforts may divert our management’s attention from their day-to-day responsibilities and result in dilution to shareholders. For more information, see “Risk Factors – Risks Related to Our Business and Industry – If we are unable to obtain additional financing and on acceptable terms, we could be forced to delay, limit or discontinue product candidate development and sales efforts.”

Our management will have broad discretion in the way that we use the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we intend to invest our net proceeds in short-term, interest bearing, investment-grade securities.

 

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DIVIDEND POLICY

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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CAPITALIZATION

The following table sets forth our total capitalization as of June 30, 2025:

 

•

on an actual basis; and

 

•

on an as adjusted basis to give effect to the issuance and sale of    common shares in this offering, and the receipt of approximately US$  million in estimated net proceeds, at an assumed initial public offering price of US$  per common share, the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us (assuming the over-allotment option is not exercised).

You should read this table together with our consolidated financial statements, the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

		June 30, 2025								June 30, 2025
		Actual								As Adjusted
		C$				US$				C$				US$
Cash and cash equivalents			88,533				65,002
Current liabilities
Accounts payable and accrued liabilities			1,538,883				922,386
Amounts due to related parties			788,738				579,103
Deferred revenue			292,001				214,391
Current portion of lease liabilities			2,753				2,021
Current portion of loans payable (unguaranteed, secured)			1,000,000				734,214
Long-term liabilities
Long-term loans payable (unguaranteed, secured)			1,853,000				1,360,499
Total liabilities			6,383,375				4,686,766
Shareholders’ equity:
Common shares, no par value; unlimited common shares authorized and [ ] common shares (96,638,169 shares pre-Reverse Share Split) issued and outstanding, actual; unlimited common shares authorized and     common shares (    shares pre-Reverse Share Split) issued and outstanding, as adjusted.			31,691,943				23,268,681
Reserves			1,999,613				1,468,145
Accumulated deficit			(25,939,066	)			(19,044,836	)
Total shareholders’ equity			7,752,490				5,691,990
Total capitalization			14,135,865				10,378,755

The above table is based on the number of shares outstanding at June 30, 2025, as adjusted for the Reverse Share Split and giving effect to the pro forma adjustments indicated therein.

 

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DILUTION

If you invest in our common shares in this offering, your ownership interest will be immediately diluted to the extent of the difference between the offering price per share and the pro forma as adjusted net tangible book value per share after this offering. Historical net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the number of common shares outstanding. Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of our common shares in this offering and the pro forma as adjusted net tangible book value per common share immediately after the consummation of this offering.

As of June 30, 2025, our net tangible book value was C$7,752,490 million (US$5,691,990 million), or C$[ ] (US$[ ]) per common share, after giving effect to the Reverse Share Split based on 96,638,169 common shares issued and outstanding. Our net tangible book value represents the amount of our total consolidated tangible assets (which is calculated by subtracting intangible assets from our total consolidated assets), less the amount of our total consolidated liabilities. Dilution is determined by subtracting net tangible book value after giving effect to this offering.

After giving effect to our sale of    common shares in this offering at an assumed initial public offering price of US$   per common share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value as of June 30, 2025 would have been US$   million, or US$   per common share. This amount represents an immediate increase in pro forma net tangible book value of US$   per common share to existing shareholders and an immediate dilution in pro forma net tangible book value of US$   per common share to purchasers of our common shares in this offering, as illustrated in the following table.

 

		Per Common Share
Assumed initial public offering price per common share		US$
Pro forma, as adjusted net tangible book value per share as of June 30, 2025		US$
Increase in pro forma net tangible book value per share attributable to new investors in this offering		US$
Pro forma, as adjusted net tangible book value per share immediately after this offering		US$
Dilution per share to new investors in this offering		US$

Each US$1.00 increase (decrease) in the assumed public offering price of US$   per common share, would increase (decrease) our as adjusted net tangible book value, after this offering by approximately US$    million, or US$    per common share and the dilution to new investors by US$   per common share, in each case assuming the number of common shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

A 100,000 share increase (decrease) in the number of common shares offered by us would increase (decrease) our as adjusted net tangible book value by approximately US$   million, or US$   per common share, and decrease (increase) in the dilution to new investors by approximately (US$   ) per share, in each case assuming the public offering price of US$   per common share remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

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If the underwriter was to fully exercise its over-allotment option in full to purchase additional common shares, our pro forma net tangible book value would be approximately US$   million or US$   per common share. This represents an increase in pro forma as adjusted net tangible book value of US$   per share to our existing investors and an immediate dilution of US$   per share to new investors.

The following table summarizes the differences between our existing shareholders and the new investors with respect to the number of common shares purchased from us in this offering, the total consideration paid and the average price per common share paid at an assumed initial public offering price of US$    per common share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus and before deducting estimated underwriting discounts and commissions and estimated offering expenses (assuming no exercise of the over-allotment option). As the table shows, new investors purchasing common shares in this offering may in certain circumstances pay an average price per common share substantially higher than the average price per common share paid by our existing shareholders.

 

Shares Purchased

Total Consideration

Average Price

Number

%

Amount

%

Per Share

Existing shareholders

US$

US$

New investors

US$

US$

Total

US$

US$

The above discussion and tables are based on the number of shares outstanding at June 30, 2025, as adjusted for the Reverse Share Split and giving effect to the pro forma adjustments indicated therein.

 

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CORPORATE HISTORY AND STRUCTURE

We were incorporated under the Business Corporations Act (British Columbia) on May 27, 2020 under the name “1251418 B.C. Ltd.”. We changed our name to “Optimi Health Corp.” on August 17, 2020. Optimi Health Corp. owns all of the issued and outstanding equity securities of Optimi Labs Inc., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Labs”), and Optimi Nutraceuticals Corp., a company incorporated under the Business Corporations Act (British Columbia) (“Optimi Nutraceuticals”). Optimi Labs is our operating subsidiary that is in the business of operating our manufacturing facilities and our related research and development initiatives and sales and marketing efforts. Optimi Nutraceuticals acts as our retail subsidiary, providing consumers with high quality, natural, plant-based products. However, we are in the process of permanently winding down that business to focus our efforts on our pharmaceutical grade manufacturing business. The following discussions do not reflect the Reverse Share Split.

Financing Activities

Following incorporation, we were capitalized by completing the First Private Placement, which raised C$1,000,000 and was completed on July 6, 2020.

On September 11, 2020, we closed the Special Warrant Private Placement, issuing 17,963,005 Special Warrants for gross proceeds of C$4,490,751. Each Special Warrant entitled the holder to acquire, without further payment, one SW Unit and was automatically deemed exercised on January 12, 2021. There are no Special Warrants outstanding as of the date of this prospectus. In connection with the Special Warrant Private Placement, we issued 25,150 broker units. Each broker unit was exercisable until September 11, 2021 at a price of C$0.25 for one Common Share and one Common Share purchase warrant, with each such warrant exercisable at C$0.40 per Common Share until September 11, 2021. The broker units and resulting warrants have been fully exercised.

On February 25, 2021, we announced the closing of our initial public offering in Canada of 27,600,000 units at a price of C$0.75 per unit for aggregate gross proceeds of C$20,700,000, with each unit composed of one Common Share and one-half of one Common Share purchase warrant (each, an “IPO Warrant”). The Common Shares and IPO Warrants commenced trading on the CSE on February 25, 2021 under the symbols “OPTI” and “OPTI.WT”, respectively.

On October 7, 2022, we issued 5,692,308 units at a price of C$0.325 per unit, for gross proceeds of C$1,850,000. Each unit consisted of one Common Share and one half of a Common Share purchase warrant. Each warrant was exercisable at C$0.50 for a period of two years from the date of issuance.

On August 4, 2023, we issued 100,000 common share purchase warrants as consideration for the entry into a loan agreement and general security agreement with Catcher Investments Ltd., a company controlled by John James Wilson, a director and non-executive Chair of the Board. The loan is secured against the assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to Catcher Investments Ltd. quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on August 4, 2026. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.

On August 29, 2023, we issued 100,000 common share purchase warrants as consideration for the entry into a loan agreement and general security agreement with two independent third party lenders. The loan is secured against the assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to the lenders quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on August 29, 2026. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.

On November 1, 2023, we issued 100,000 common shares 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

 

60

assets of the Company and bears interest at a rate of 7.5% per annum, payable by us to the lender quarterly on the last business day of every fiscal quarter until the loan is repaid. The loan will mature, and all outstanding principal shall be payable, on April 30, 2025. Each share purchase warrant entitles the holder to purchase one Common Share at a price of C$0.50 for a period of three years from the date of issuance.

On February 23, 2024, we issued 1,850,033 units at a price C$0.30 per unit, for gross proceeds of C$555,009. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 333,333 units and 1,000,000 units, respectively.

On May 10, 2024, we issued 1,333,334 units at a price C$0.30 per unit, for gross proceeds of C$400,000. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 666,667 units each.

On May 29, 2024, we issued 1,816,633 units at a price C$0.30 per unit, for gross proceeds of C$544,990. Each unit consisted of one Common Share and one-half of a common share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of C$0.40 and is exercisable for two years from the date of issuance, subject to an accelerated expiry provision.

On August 15, 2024, we issued 1,796,666 units at a price of C$0.30 per unit, for gross proceeds of C$538,999.80. Each unit comprised of one Common Share and one-half of a common share purchase warrant. Each warrant entitles the holder to acquire one Common Share at C$0.40 for two years from the date of issuance, subject to an accelerated expiry provision. Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 333,333 of these units.

On January 24, 2025, we issued 1,316,668 units at a price of C$0.30 per unit for gross proceeds of C$395,000. Each unit is comprised of one Common Share and one-half of one transferable common share purchase warrant. Each whole warrant entitles the holder to acquire one Common Share at C$0.40 for two years from the date of issuance, subject to an accelerated expiry provision. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 583,334 units and 733,334 units, respectively.

On July 24, 2025, we issued 3,450 unsecured convertible debentures at a price of C$1,000 per convertible debenture for gross proceeds of C$3,450,000. The convertible debentures bear interest at a rate of 15.0% per annum, calculated and payable quarterly in arrears in cash, maturing July 24, 2026, twelve months from the date of issuance, unless extended by and at the option of the holders for a further twelve months. The principal amount of each convertible debenture is convertible into our common shares at a conversion price of C$0.15, being the closing price of our common shares on the CSE on July 16, 2025, the date preceding the execution by each holder of the subscription agreement for the convertible debentures. On maturity, any outstanding principal amount of the convertible debentures, plus any accrued and unpaid interest thereon, will be repaid by the Company in cash or, at the option of the holders, through the issuance of our common shares. Catcher Investments Ltd., a company controlled by John James Wilson, and Cathay Visions Enterprises Ltd., a company controlled by Dane Stevens, subscribed for 3,000 convertible debentures and 450 convertible debentures, respectively.

On July 24, 2025, we issued 400,000 common 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$0.25 for a period of two years from the date of issuance. Under the terms of the loan amendment the maturity date was extended from April 30, 2025 to April 30, 2026.

Although not yet effective, our Board of Directors has approved a reverse share split with a share split ratio of 1-for-[ ] (“Reverse Share Split”). We anticipate effecting the Reverse Share Split immediately prior to the

 

61

uplisting of our common shares on the Nasdaq Capital Market and such Reverse Share Split being effective on, or just before, the date our common shares are uplisted to the Nasdaq Capital Market. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of the Nasdaq Capital Market.

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 Canada federally licensed cannabis production company.

Pursuant to the terms of the Lease Agreement, during the term of the Lease Agreement, as extended and renewed from time to time, the title to and ownership of the Facilities (including all alterations, additions, changes, substitutions or improvements thereto) shall be vested in us and shall automatically vest in the name of BC Green at the expiry or earlier termination of the Lease Agreement. In June 2022, we completed the construction of the Facilities, which are two GMP-capable 10,000 sq. ft. purpose-built mushroom cultivation and processing facilities in Princeton, British Columbia. We continue to invest in automated production technologies at the Facilities to enhance scalability and cost efficiency.

Dealer’s Licence

We currently hold a Dealer’s Licence issued under the CDSA authorizing our possession of limited quantities of psilocybin, psilocin, and MDMA (as well as other controlled substances), as well as our production, assembly, sale and delivery of products containing the same within the confines of the regulatory framework prescribed by Health Canada. The Dealer’s Licence enables us to conduct research and development with in-house scientific and quality teams.

Precursors Licence

We were granted a Precursors Licence by Health Canada in December 2023 authorizing our import of 3,4-METHYLENEDIOXYPHENYL-2-PROPANONE (a chemical precursor for MDMA synthesis).

Drug Establishment Licence

In May 2024, we received a DEL for the fabrication, packaging, labeling and sale of our MDMA and psilocybin capsules as well as extraction of our psilocybin mushrooms to generate active pharmaceutical ingredients. As Health Canada is a participant in several Mutual Recognition Agreements (“MRAs”) for drug and medicinal products, our GMP-compliant manufacturing processes may be accepted by other regulatory authorities in participating jurisdictions, which may facilitate international distribution of our psilocybin and MDMA drug products. Examples of countries covered by MRAs include the Netherlands, Norway and the United Kingdom. We may consider these markets in the future. The DEL confirms that our Canadian facilities conform to Health Canada’s GMP compliance standards and those jurisdictions with equivalent GMP standards. The DEL differentiates us from other psychedelic manufacturers in the space and enables us to provide competitively priced products for human therapeutic use within the GMP psychedelics market. The DEL allows us flexibility to adapt to international licensing demands and changes in legislation and also gives our clients and patients assurance of a fully GMP product. Canadian companies without a DEL may not be issued export permits to supply Australia, or other countries where a market is established. In the Authorised Prescribers Scheme, authorized psychiatrists will be able to prescribe MDMA-assisted therapy for patient suffering from PTSD and psilocybin-assisted therapy for patients suffering from TRD. All products supplied to the Authorised Prescribers Scheme should be certified GMP compliant as per the Therapeutic Goods Administration of Australia.

 

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Clinical Trials and Related Approvals

We currently are not the clinical trial applicant for any study. Rather, our third-party partners conduct preclinical and clinical studies of our product candidates and produce data upon which we rely.

In 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 permit for shipment of 160 doses of MDMA and psilocybin for patients with PTSD and TRD to Australia.

In May 2024, we entered into a phase II clinical trial supply agreement for natural psilocybin extract in major depressive disorder with ATMA CENA Healthcare Solutions. In the third quarter of 2025, we plan to start supplying for clinical trials in Canada for psilocybin extract in collaboration with ATMA CENA Healthcare Solutions.

In September 2024, first patients dosed in Australia’s Authorised Prescribers Scheme in Australia with our MDMA capsules for PTSD.

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.

Intellectual Property and Trademark Protection

On September 16, 2020, we applied for trademark protection for “Optimi” and “Optimi Health” in Canada and the United States and were granted trademark protection for “Optimi” and “Optimi Health” in Canada on January 12, 2024. We received a non-final office action letter from the United States Patent and Trademark Office, objecting to the registration of the “Optimi” and “Optimi Health” marks due to the likelihood of confusion with four prior U.S. registered trademarks. We have also received a cease and desist letter from a U.S. public company, alleging that the use and attempted registration of the “Optimi” and “Optimi Health” marks infringes the registered trademarks of the U.S. company. At this time, we do not intend to continue to pursue registration of the “Optimi” and “Optimi Health” marks in the U.S. due to the anticipated costs and time required. We may file a petition to revive the trademark applications in the future.

Other Key Events

On April 1, 2021, we obtained the symbol “OPTHF” to commencing trading on the OTCPINK market in the United States.

On April 6, 2021, we commenced trading on the Frankfurt Stock Exchange under the symbol “8BN”.

In April 2024, we completed validated GMP production of 5mg natural psilocybin extract capsules with a certificate of analysis (“COA”).

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 import certificate from Mind Med Australia for 160 doses of MDMA & psilocybin capsules for therapeutic use in Australian patients.

In August 2024, we completed our first shipment of MDMA to Mind Medicine Australia for PTSD treatment and in December 2024 we completed our second shipment and April 2025 our third shipment. We are scheduled to a complete a fourth shipment in Q2 2025, with ongoing shipments thereafter as the market evolves.

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.

 

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In April 2025, we completed our third shipment of 1,000 MDMA capsules to Australia, our largest to date.

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 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.

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 consolidated financial statements 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 unaudited consolidated financial statements for the nine months ended June 30, 2025 and 2024 and the audited consolidated financial statements for the years ended September 30, 2024 and 2023 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 10,000-square-foot production facilities 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-Methylenedioxypheny-2-Propanone if used in the synthesis of MDMA.

The legal status of psychedelic drugs varies by country and our various licenses allow us to supply markets where it is legal and position ourselves for new markets. Our products are currently available in Australia where psilocybin and MDMA have been rescheduled to allow prescription by an Authorized Prescriber only for TRD and PTSD. In Canada, our products are available via the SAP, which we are authorized to supply as a provision of our DL whereby sale or provision to the holder of a Controlled Drugs and Substances Act subsection 56(1) exemption is not prohibited for licensed dealers to provide psilocybin and MDMA in relation to an SAP authorization. The SAP patient authorization process has been successfully achieved for MDMA products. Our psilocybin product is currently in phase 2b clinical trials in Canada conducted by third parties. In all other countries, access is restricted to approved clinical trials, including in Israel, one of our planned target markets, where our MDMA product is currently in phase 2 clinical trials conducted by third parties. We are currently restricted from selling our products in the United States, another one of our planned target markets, where psilocybin and MDMA are considered Schedule I “controlled or “scheduled” substances, meaning their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use is subject to a significant degree of regulation by the DEA. While our MDMA and botanical psilocybin products are currently being accessed in Canada and Australia, in any new market, a regulatory approval would be required for our products – be that a clinical trial application approval, a marketing authorization approval or access via a change to regulatory access for these products.

Our DEL enables us to supply validated psilocybin API, psilocybin drug products and MDMA drug products to patients in Australia under the Authorised Prescribers Scheme. Through strategic collaborations and ongoing compliance with global regulatory authorities, we aim to expand our product availability to additional jurisdictions where psychedelic-assisted therapies are gaining regulatory approval.

 

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The key differentiator of a DEL is that it enables our MDMA and psilocybin capsules to be prescribed by authorized physicians in Australia for the treatment of PTSD and TRD. Unlike most companies in the psychedelic sector that remain in clinical or pre-commercial phases, we are currently supplying regulated medicines under prescription in certain markets – supported by a DEL that also permits the legal manufacture and international export of both products.

As part of our commitment to innovation and broadening accessibility to psychedelic-based therapies, we continuously refine our production methodologies, invest in advanced extraction technologies and enhance our regulatory compliance frameworks to remain ahead of industry standards. By prioritizing sustainable and responsible production practices, we are dedicated to becoming a global leader in the psychedelic pharmaceutical sector. Our research initiatives focus on optimizing extraction efficiency, improving formulation stability, and ensuring scalable manufacturing techniques that align with future market expansion plans. Although we do not currently own any patents, nor do we have any pending patent applications related to our MDMA and botanical psilocybin products, the design, formulation, and large-scale manufacture of these products are founded on—and would be materially impaired without—a comprehensive body of proprietary know-how, specialized production methodologies, and rigorously safeguarded trade secrets that we protect through internal controls and confidentiality agreements.

Principal Factors Affecting Our Results of Operations

Our operational and financial performance is primarily driven by our ability to execute on the manufacture and distribution of regulated psychedelic substances within the constraints of evolving global regulatory frameworks. We have established a defensible and scalable GMP platform, secured relevant licensing under Health Canada and demonstrated commercial supply capabilities to authorized markets, currently only to Australia. Our near-term results will be influenced by regulatory developments in key jurisdictions, order volume from existing partners, cost optimization through automation and disciplined capital deployment. As international access expands, we believe we are well positioned to scale responsibly and grow our share of the emerging global market for psychedelic-assisted therapies.

The operational and financial factors below materially affect our results of operations. Unlike traditional biotechnology issuers focused solely on clinical development, our performance is influenced by our role as a GMP-certified manufacturer with regulatory clearance to product and export controlled substances, including MDMA and psilocybin, for legal therapeutic use in international markets.

Commercial Manufacturing and Export Activity

Our revenue-generating operations depend primarily on the manufacture and export of MDMA and psilocybin drug products produced under our DEL. We are currently supplying commercial and investigational quantities of drug product to authorized markets, including Australia, where prescribers may access these compounds under the Authorised Prescriber Scheme.

As we expand into new jurisdictions and scale production capacity, the volume and consistency of export orders will directly impact revenue recognition, working capital utilization and gross margin performance. Our operational results are also sensitive to delivery timelines, batch release schedules, and the regulatory conditions under which orders are fulfilled.

Production Capacity and Operational Efficiency

Our ability to fulfill export orders and achieve meaningful gross margins depends on the efficiency of our manufacturing operations. Key performance drivers include capsule throughput, process yield, batch consistency and the integration of new automation technologies.

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.

 

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Cost of Goods and Input Supply Chain

The cost and availability of raw materials—including precursor chemicals for MDMA synthesis and cultivation inputs for psilocybin production—affect both our production cost structure and delivery lead times. These inputs are subject to compliance with controlled substance regulations and international sourcing constraints.

Although current input pricing is stable under existing contracts, fluctuations in chemical precursor availability, changes in controlled substance import/export policy or disruptions in agricultural input supply chains may affect our production cost and timing. Our financial performance is dependent on effective supply chain management, inventory planning and procurement discipline.

Regulatory Licensing and Compliance

Our operational continuity is dependent on maintaining full regulatory compliance with Health Canada, including our Drug Establishment Licence, Controlled Substances Licence, and adherence to GMP obligations. Compliance with these licenses and Health Canada inspections directly impacts our ability to manufacture, release, and export finished drug product.

In addition, our FDA Facility Establishment Identifier (“FEI”) registration and U.S. Agent appointment (mdi Consultants, Inc.) are critical to our future commercial participation in the U.S. market, particularly in the event of U.S. Drug Enforcement Administration (“DEA”) rescheduling of MDMA or psilocybin. Our results of operations will be materially impacted by the speed and extent of U.S. regulatory change, as well as our ability to rapidly activate supply chains and commercial relationships in the U.S. market.

Strategic Partnerships and Market Access

Our ability to grow revenue is also dependent on our partnerships with distributors, prescribers and clinical research sponsors. We are currently engaged in commercial supply agreements with entities in Australia and are supporting multiple research-stage collaborations. The scale, structure and renewability of these partnerships are central to our forward sales visibility and revenue growth.

As additional jurisdictions begin permitting regulated access to psychedelic-assisted therapies, we anticipate expanding our partnership model, which may include distribution, licensing or data-sharing arrangements. Our operational results will be influenced by the pace of these expansions and the cost structures attached to third-party engagements.

Research Support, Formulation Development, and Technical Upgrades

Although we are not currently a drug development company, we incur research-related costs in the areas of stability studies, shelf-life validation, analytical testing and formulation refinement. These costs are capitalized or expensed based on regulatory requirements and are expected to increase modestly as we support expanded shelf-life targets, international regulatory submissions, or technical method updates.

We also maintain internal technical teams dedicated to continuous process improvement, which may incur project-based costs related to method revalidation, equipment calibration or IT system integration. These initiatives are essential to long-term compliance and efficiency.

Capital Expenditure and Financing Strategy

Our ability to execute on scaling plans—particularly increased manufacturing automation, warehousing upgrades and regulatory submissions in new jurisdictions—is dependent on access to capital. As of the date hereof, we have operated with a lean capital structure, prioritizing core infrastructure and essential quality systems.

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.

 

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Key Components of Our Results of Operations

The following section presents the key components of our results of operations by the nature of corresponding operating activities for the periods indicated.

Revenue

The following table sets forth a breakdown of our revenue by nature, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated.

 

		Nine Months Ended June 30,
		2025												2024
Revenue		C$				US$				%				C$				%
Drug products and licensing revenue			359,753				264,136				73				—				—
Nutraceutical products			130,577				95,872				27				161,162				100
Total			490,330				360,008				100				161,162				100

 

		Year Ended September 30,
		2024												2023
Revenue		C$				US$				%				C$				%
Drug products and licensing revenue			11,026				8,095				2.8				—				—
Nutraceutical products			378,824				278,138				97.2				181,087				100
Total			389,850				286,233				100				181,087				100

We have historically generated revenue from the sale of drug products and nutraceutical products. We are in the process of permanently winding down the sale of nutraceutical products. We consider this business to be immaterial to our overall consolidated operations. The assets and liabilities of this business are immaterial with respect to the consolidated financial statements. While this business did contribute a significant portion of our historical revenue, it generated a net loss overall. As a whole, the winding down of this business will bolster our financial performance given its history of recurring losses. Our drug products include GMP psychedelic substances, including MDMA and psilocybin, for research and therapeutic applications.

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,
		2025												2024
Revenue		C$				US$				%				C$				%
Australia and New Zealand			280,253				205,766				57				—				—
Canada			208,807				153,309				43				323,171				97.3
Israel			—				—				—				4,526				1.4
United States			1,270				932				—				4,294				1.3
Total			490,330				360,007				100				331,991				100

 

		Year Ended September 30,
		2024												2023
Revenue		C$				US$				%				C$				%
Australia and New Zealand			2,750				2,019				0.7				—				—
Canada			377,602				277,241				96.9				175,427				96.9
Israel			4,526				3,323				1.2				—				—
United States			4,972				3,651				1.2				5,660				3.1
Total			389,850				286,234				100				181,087				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,
		2025												2024
Cost of Sales		C$				US$				%				C$				%
Finished goods drug products			65,741				48,268				70				—				—
Finished goods nutraceutical products			24,318				17,855				26				164,647				93
Other			4,168				3,060				4				12,013				7
Total			94,227				69,183				100				176,660				100

 

		Year Ended September 30,
		2024												2023
Cost of Sales		C$				US$				%				C$				%
Finished goods drug products			4,986				3,661				2.1				—				—
Finished goods nutraceutical products			226,426				166,245				95.0				138,760				93.2
Other			6,976				5,122				2.9				10,167				6.8
Total			238,388				175,028				100				148,927				100

Our cost of sales consists of finished goods drug products, finished goods nutraceutical products and others.

Fair Value Adjustment of Biological Assets and Inventory

Our biological assets consist of psilocybin mushrooms. During the fiscal year ended September 30, 2023, we commenced production and harvest of psilocybin mushrooms. Although we can sell our raw mushroom biomass, we 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.

The determination of fair value of the biological assets requires us to make various estimates and assumptions. For more information, see Note 6 to our consolidated audited financial statements included elsewhere in the prospectus.

Our inventory consists of finished goods functional mushroom nutraceutical products, finished goods drug products, harvested mushrooms and raw materials. As at June 30, 2025 and September 30, 2024, we held 157 kg and 210kg, respectively, in harvested mushroom biomass inventory.

 

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Expenses

The following table sets forth a breakdown of our expenses by nature, each expressed in the absolute amount and as a percentage of our total expenses, for the periods indicated.

 

		Nine Months Ended June 30,
		2025												2024
Expenses		C$				US$				%				C$				%
Advertising, promotion and public relations			41,148				30,211				1				179,383				4
Amortization and depreciation			679,622				498,988				19				609,173				13
Bank charges and interest			329,192				241,698				9				295,392				6
Consulting			614,887				451,459				17				814,459				18
Insurance			149,736				109,938				4				246,593				5
Investor relations			—				—				—				12,000				0
Marketing			—				—				—				—				—
Office, rent and administration			136,430				100,169				4				234,063				5
Production costs			309,977				227,590				8				62,205				1
Professional fees			97,305				71,443				3				452,431				10
Research and development			203,498				149,411				6				14,663				0
Share-based compensation			45,940				33,730				1				55,878				1
Shipping			62,189				45,660				2				120,105				3
Transfer agent and filing fees			115,184				84,570				3				117,750				3
Travel and accommodation			26,305				19,314				1				56,740				1
Wages and benefits			858,934				630,642				24				1,322,633				29
Total			3,670,347				2,694,823				100				4,593,468				100

 

		Year Ended September 30,
		2024												2023
Expenses		C$				US$				%				C$				%
Advertising, promotion and public relations			216,135				158,689				3.4				237,699				4.3
Amortization and depreciation			867,947				637,259				13.8				729,560				13.2
Bank charges and interest			429,339				315,227				6.8				43,707				0.8
Consulting			1,122,812				824,385				17.8				1,003,023				18.2
Insurance			325,369				238,891				5.2				350,023				6.3
Investor relations			104,086				76,421				1.6				—				—
Marketing			—				—				—				21,213				0.4
Office, rent and administration			295,654				217,073				4.7				240,023				4.4
Production costs			551,089				404,618				8.7				357,268				6.5
Professional fees			160,551				117,879				2.5				298,638				5.4
Research and development			144,473				106,074				2.3				152,146				2.8
Share-based compensation			60,079				44,111				1.0				163,463				3.0
Shipping			144,368				105,997				2.3				115,258				2.1
Transfer agent and filing fees			156,955				115,239				2.5				162,116				2.9
Travel and accommodation			63,425				46,568				1.0				137,945				2.5
Wages and benefits			1,667,152				1,224,047				26.4				1,504,151				27.2
Total			6,309,434				4,632,478				100				5,516,233				100

Our expenses include expenses related to advertising, promotion and public relations, amortization and depreciation, bank charges and interest, consulting, insurance, investor relations, marketing, office rent and administration, production costs, professional fees, research and development, share-based compensation, shipping, transfer agent and filing fees, travel and accommodation and wages and benefits.

 

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Our amortization and depreciation expenses relates to the natural deterioration of plant and equipment due to the passage of time.

Our consulting expenses include amounts paid or payable to management and third-party consultants.

Our production costs include costs related to facility operating costs not capitalized to biological assets or inventory.

Our wages and benefits expenses include amounts paid to management and employees.

Reverse Share Split

Although not yet effective, our Board of Directors has approved a reverse share split with a share split ratio of 1-for-[ ] (“Reverse Share Split”). We anticipate affecting the Reverse Share Split immediately prior to the uplisting of our common shares on the Nasdaq Capital Market and such Reverse Share Split being effective on, or just before, the date our common shares are uplisted to the Nasdaq Capital Market. The Reverse Share Split is intended to allow us to meet the minimum share price requirement of the Nasdaq Capital Market.

Except as otherwise indicated and except in our financial statements and the notes thereto, all references to our common shares, share data, per share data and related information depict the Reverse Share Split as if it was effective and as if it had occurred at the beginning of the earliest period presented. The Reverse Share Split, when effective, will combine each [ ] shares of our outstanding common shares into one common share, without any change in the par value per share which will remain no par value, and the Reverse Share Split correspondingly will adjust, among other things, the number of common shares issuable upon exercise of outstanding options and warrants and the exercise price of such options and warrants and shares issuable upon conversion of other convertible securities. No fractional shares will be issued in connection with the Reverse Share Split, and any fractional shares resulting from the Reverse Share Split will be rounded to the nearest whole share.

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,
		2025								2024
Statements of Comprehensive Loss		C$				US$				C$
Revenue			490,330				360,007				311,991
Cost of sales			(94,227)				(69,183)				(176,660)
Gross margin before fair value adjustments			396,103				290,824				135,331
Fair value adjustment of biological assets and inventory, net			—				—				141,162
Gross margin			396,103				290,824				276,493
Expenses			(3,670,347)				(2,694,823)				(4,593,468)
Interest and other income			7,629				5,601				4,299
Debt forgiveness			903,951				663,694				—
Loss and comprehensive loss			(2,362,664)				(1,734,704)				(4,312,676)

 

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		Year Ended September 30,
		2024								2023
Statements of Comprehensive Loss		C$				US$				C$
Revenue			389,850				286,233				181,087
Cost of sales			(238,388	)			(175,028	)			(148,927	)
Gross margin before fair value adjustments			151,462				111,205				32,160
Fair value adjustment of biological assets and inventory, net			119,448				87,700				168,071
Gross margin			270,910				198,906				200,231
Expenses			(6,309,434	)			(4,632,477	)			(5,516,233	)
Interest and other income			2,665				1,957				136,410
Loss on sale of equipment			—				—				(14,956	)
Loss and comprehensive loss			(6,035,859	)			(4,431,614	)			(5,194,548	)

Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024

Revenue

Our revenue increased to C$490,330 (US$293,941) in the nine months ended June 30, 2025 from C$331,991 in the nine months ended June 30, 2024 as we expanded commercialization of our drug products.

Cost of sales

Our cost of sales decreased to C$94,227 (US$69,183) in the nine months ended June 30, 2025 from C$176,660 in the nine months ended June 30, 2024 as our sales mix shifted from finished goods nutraceutical products to drug products and licensing revenue, which generated higher margins.

Fair value adjustment of biological assets and inventory, net

Our fair value adjustment of biological assets and inventory, net decreased to C$nil (US$nil) in the nine months ended June 30, 2025 from C$141,162 in the nine months ended June 30, 2024 as the mushrooms grown during the nine months period ended June 30, 2025 were grown for research and development purposes.

Expenses

Our expenses decreased to C$3,670,347 (US$2,694,823) in the nine months ended June 30, 2025 from C$4,312,676 in the nine months ended June 30, 2024, as we focused on cutting costs and streamlining our operations.

Debt forgiveness

In the nine months ended June 30, 2025, certain directors forgave $903,951 (US$663,694) in accounts payable recorded as debt forgiveness. There was no debt forgiveness in the nine months ended June 30, 2024.

Loss and comprehensive loss

As a result of the foregoing, our loss and comprehensive loss reached C$2,362,664 (US$1,734,704) in the nine months ended June 30, 2025 from C$4,312,676 in the nine months ended June 30, 2024.

Year Ended September 30, 2024 Compared to Year Ended September 30, 2023

Revenue

Our revenue increased to C$389,850 (US$286,234) in 2024 from C$181,087 in 2023 as the Company expanded its nutraceutical sales and began commercialization of its drug products.

 

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Cost of sales

Our cost of sales increased to C$238,388 (US$175,028) in 2024 from C$148,927 in 2023 in conjunction with the increased revenue.

Fair value adjustment of biological assets and inventory, net

Our fair value adjustment of biological assets and inventory, net decreased to C$119,448 (US$87,700) in 2024 from C$168,071 in 2023 as the Company grew less mushroom biomass and focused on R&D and extraction of its existing biomass.

Expenses

Our expenses increased to C$6,309,434 (US$4,632,477) in 2024 from C$5,516,233 in 2023, primarily due to increased salaries and wages, consulting, amortization and production costs, which was partially offset by reduced professional fees, share-based compensation and travel and accommodations.

Interest and other income

Our interest and other income decreased significantly to C$2,665 (US$1,957) in 2024 from C$136,410 in 2023, primarily due to the Company holding less interest-generating investments.

Loss and comprehensive loss

As a result of the foregoing, our loss and comprehensive loss reached C$6,035,859 (US$4,431,615) in 2024 from C$5,194,548 in 2023.

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.

The following table sets forth a summary of our cash flows for the periods presented.

 

		Nine Months Ended June 30,
		2025								2024
		C$				US$				C$
Cash used in operating activities			1,249,866				917,670				3,596,048
Cash used in investing activities			15,551				11,418				78,059
Cash provided by financing activities			1,250,290				917,981				2,575,166
Changes in cash and cash equivalents			(15,127)				(11,106)				(1,098,941)
Cash and cash equivalents, beginning of period			103,660				76,109				13,44,778
Cash and cash equivalents, end of period			88,533				65,003				245,837

 

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