STME 10-Q
Stimcell Energetics Inc. (STME)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
or
Commission File Number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of |
| (I.R.S. Employer |
incorporation or organization) |
| Identification No.) |
| ||
(Address of principal executive offices) |
| (Zip code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
| Accelerated filer ☐ |
| Smaller Reporting Company | |
|
| Emerging Growth Company |
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act.) Yes
The number of shares of the Registrant’s common stock, par value $.001 per share, outstanding as of April 9, 2021 was
2
CONTENTS
3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited condensed consolidated interim financial statements of Cell MedX Corp. as at February 28, 2021, have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America and in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' deficit in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the three- and nine-month periods ended February 28, 2021, are not necessarily indicative of the results that can be expected for the year ending May 31, 2021.
As used in this Quarterly Report, the terms “we,” “us,” “our,” “Cell MedX,” and the “Company” mean Cell MedX Corp. and its subsidiary, Cell MedX (Canada) Corp., unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars.
1
CELL MEDX CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
February 28, 2021 |
| May 31, 2020 | |||
ASSETS |
|
|
| ||
|
|
|
| ||
Current assets |
|
|
| ||
Cash | $ |
| $ | ||
Inventory |
|
|
| ||
Other current assets |
|
|
| ||
Total current assets |
|
|
| ||
|
|
|
|
|
|
Equipment |
|
|
| ||
Total assets | $ |
| $ | ||
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Accounts payable | $ |
| $ | ||
Accrued liabilities |
|
|
| ||
Due to related parties |
|
|
| ||
Notes and advances payable |
|
|
| ||
Total liabilities |
|
|
| ||
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
Common stock, $ February 28, 2021 and at May 31, 2020, respectively |
|
|
| ||
Additional paid-in capital |
|
|
| ||
Obligation to issue shares |
|
|
| ||
Reserves |
|
|
| ||
Accumulated deficit |
| ( |
|
| ( |
Accumulated other comprehensive income (loss) |
| ( |
|
| |
Total stockholders' deficit |
| ( |
|
| ( |
Total liabilities and stockholders’ deficit | $ |
| $ | ||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-1
CELL MEDX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
|
| Three Months Ended |
| Nine Months Ended | ||||||
| February 28, 2021 | February 29, 2020 |
| February 28, 2021 | February 29, 2020 | |||||
|
|
|
|
|
|
| ||||
Revenue |
|
|
|
|
|
| ||||
Sales |
| $ | $ |
| $ | $ | ||||
Distribution rights |
|
|
|
|
|
| ||||
Cost of goods sold |
|
|
|
|
|
| ||||
Gross margin |
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
| ||||
Consulting fees |
|
|
|
|
|
| ||||
Distribution expenses |
|
|
|
|
|
| ||||
General and administrative expenses |
|
|
|
|
|
| ||||
Research and development costs |
|
|
|
|
|
| ||||
Total operating expenses |
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
Other items |
|
|
|
|
|
|
|
|
|
|
Interest |
|
| ( |
| ( |
|
| ( |
| ( |
Loss on reacquisition of distribution rights |
|
|
| ( |
|
|
| ( | ||
Net loss |
|
| ( |
| ( |
|
| ( |
| ( |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation income (loss) |
|
| ( |
|
|
| ( |
| ||
Comprehensive loss |
| $ | ( | $ | ( |
| $ | ( | $ | ( |
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share Basic and diluted |
| $ | ( | $ | ( |
| $ | ( | $ | ( |
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding Basic and diluted |
|
|
|
|
|
| ||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-2
CELL MEDX CORP.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
| Common Stock |
|
|
|
|
|
| ||||||||
Shares | Amount | Obligation to Issue Shares | Additional Paid-in Capital | Reserves | Deficit Accumulated | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||
|
|
|
|
|
|
|
|
| |||||||
Balance - May 31, 2019 | $ | $ | $ | $ | $ | ( | $ | $ | ( | ||||||
Shares issued for cash |
|
|
|
|
|
|
| ||||||||
Shares to be issued on exercise of warrants |
|
|
|
|
|
|
| ||||||||
Net loss for the three months ended August 31, 2019 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
| ( |
| ( | ||||||
Balance - August 31, 2019 |
|
|
|
|
| ( |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on exercise of warrants |
|
| ( |
|
|
|
|
| |||||||
Net loss for the three months ended November 30, 2019 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
|
| ||||||||
Balance - November 30, 2019 |
|
|
|
|
| ( |
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued on reacquisition of distribution rights |
|
|
|
|
|
|
| ||||||||
Net loss for the three months ended February 29, 2020 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
|
| ||||||||
Balance - February 29, 2020 | $ | $ | $ | $ | $ | ( | $ | $ | ( | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - May 31, 2020 | $ | $ | $ | $ | $ | ( | $ | $ | ( | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash |
|
| ( |
|
|
|
|
| |||||||
Shares issued on exercise of options |
|
|
|
|
|
|
| ||||||||
Net loss for the three months ended August 31, 2020 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
| ( |
| ( | ||||||
Balance - August 31, 2020 |
|
|
|
|
| ( |
| ( |
| ( | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended November 30, 2020 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
| ( |
| ( | ||||||
Balance - November 30, 2020 |
|
|
|
|
| ( |
| ( |
| ( | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the three months ended February 28, 2021 |
|
|
|
|
| ( |
|
| ( | ||||||
Translation to reporting currency |
|
|
|
|
|
| ( |
| ( | ||||||
Balance - February 28, 2021 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ( | |||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-3
CELL MEDX CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
| Nine Months Ended | ||||
February 28, 2021 |
| February 29, 2020 | |||
|
|
|
| ||
Cash flows used in operating activities |
|
|
| ||
Net loss | $ | ( |
| $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
Accrued interest on notes payable |
|
|
| ||
Amortization |
|
|
| ||
Loss on reacquisition of distribution rights |
|
|
| ||
Non-cash investor relations fees |
|
|
| ||
Unrealized foreign exchange |
| ( |
|
| |
Changes in operating assets and liabilities |
|
|
|
|
|
Inventory |
|
|
| ||
Other current assets |
|
|
| ||
Accounts payable |
|
|
| ||
Accrued liabilities |
| ( |
|
| ( |
Unearned revenue |
|
|
| ( | |
Due to related parties |
|
|
| ( | |
Net cash flows used in operating activities |
| ( |
|
| ( |
|
|
|
|
|
|
Cash flows used in investing activities |
|
|
|
|
|
Acquisition of equipment |
| ( |
|
| ( |
Net cash used in investing activities |
| ( |
|
| ( |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Advances payable |
|
|
| ||
Proceeds from notes payable |
|
|
| ||
Proceeds from subscription to shares |
|
|
| ||
Net cash provided by financing activities |
|
|
| ||
|
|
|
|
|
|
Effects of foreign currency exchange on cash |
|
|
| ||
Increase (decrease) in cash |
| ( |
|
| |
Cash, beginning |
|
|
| ||
Cash, ending | $ |
| $ | ||
|
|
|
|
|
|
Non-cash financing transactions: |
|
|
|
|
|
Exercise of warrants for debt | $ |
| $ | ||
Exercise of options for debt | $ |
| $ | ||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
F-4
CELL MEDX CORP.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2021
(Unaudited)
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
Cell MedX Corp. (Cell MedX, or the “Company”) was incorporated under the laws of the State of Nevada. On April 26, 2016, the Company formed a subsidiary, Cell MedX (Canada) Corp. (“Cell MedX Canada”) under the laws of the province of British Columbia. Cell MedX is a biotech company focusing on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general wellness.
Unaudited Interim Financial Statements
The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. Except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended May 31, 2020, included in the Company’s Annual Report on Form 10-K, filed with the SEC on September 15, 2020. The interim unaudited condensed consolidated financial statements should be read in conjunction with those audited consolidated financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three- and nine-month periods ended February 28, 2021, are not necessarily indicative of the results that may be expected for the year ending May 31, 2021.
Going concern
The accompanying unaudited interim condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of February 28, 2021, the Company has not achieved profitable operations and has accumulated a deficit of $
Risks related to the rapid expansion of the COVID-19 pandemic
The Company is cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, the Company has experienced minor disruptions to the Company’s day-to-day operations associated with delayed services resulting from various COVID-19 restrictions and shortage of man power experienced by some of the Company’s service providers. The Company cautions that there continues to be a possibility for increase of the restrictions currently in place, or addition of new restrictions currently not known to the Company. The impact of these restrictions on the Company’s operations, if implemented, is currently unknown but could be significant.
F-5
NOTE 2 - RELATED PARTY TRANSACTIONS
Amounts due to related parties, other than advances and notes payable to related parties (Note 7) at February 28, 2021, and at May 31, 2020:
February 28, 2021 |
| May 31, 2020 | |||
Due to the Chief Executive Officer (“CEO”) | $ |
| $ | ||
Due to the Chief Financial Officer (“CFO”) |
|
|
| ||
Due to/(from) the Vice President (“VP”), Technology and Operations |
| (3,504) |
|
| |
Due to a company controlled by the Chief Operating Officer (“COO”)(1) |
|
|
| n/a | |
Due to a major shareholder |
|
|
| ||
Due to a company controlled by the COO and major shareholder |
|
|
| n/a | |
Due to a company of which the COO is a director of |
|
|
| n/a | |
Due to related parties | $ |
| $ | ||
(1)John da Costa was appointed Director and Chief Operating Officer of the Company on June 8, 2020, as of that date any company controlled by Mr. da Costa is considered to be a related entity.
The amounts due to related parties are unsecured, due on demand and bear no interest.
During the nine-month periods ended February 28, 2021 and February 29, 2020, the Company had the following transactions with related parties:
February 28, 2021 |
| February 29, 2020 | |||
Management fees incurred to the CEO | $ |
| $ | ||
Management fees incurred to the CFO |
|
|
| ||
Consulting fees incurred to the VP, Technology and Operations |
|
|
| ||
Consulting fees incurred to the company controlled by the COO |
|
|
| n/a | |
Royalty incurred to the company of which the COO is a director of |
|
|
| n/a | |
Royalty incurred to the company controlled by the COO and a major shareholder |
|
|
| n/a | |
Total transactions with related parties | $ |
| $ | ||
NOTE 3 - INVENTORY
As at February 28, 2021, the inventory consisted of eBalance® devices and accessories held for sale valued at $
NOTE 4 - OTHER CURRENT ASSETS
As at February 28, 2021, other current assets consisted of $
NOTE 5 - EQUIPMENT
Changes in the net book value of the equipment at February 28, 2021 and May 31, 2020 are as follows:
| February 28, 2021 |
| May 31, 2020 | ||
Book value, beginning of the period | $ |
| $ | ||
Changes during the period |
|
|
| ||
Amortization |
| ( |
|
| ( |
Foreign exchange |
|
|
| ( | |
Book value, end of the period | $ |
| $ | ||
F-6
NOTE 6 - REVENUE
During the nine-month period ended February 28, 2021, the Company’s revenue consisted of sales of the Company’s eBalance® devices to end-users and monthly subscriptions to eBalance® microcurrent treatments. During the comparative nine-month period ended February 29, 2020, the Company’s revenue consisted of sales of its eBalance® devices, and the fees associated with the rights to the wholesale distribution of eBalance® devices pursuant to a letter of intent the Company entered into on June 6, 2019, which granted a potential distributor rights to all Mainland China, not including Hong Kong. Following are the details of revenue and associated costs:
| Three months ended | Nine months ended | ||||||
| February 28, 2021 | February 29, 2020 | February 28, 2021 | February 29, 2020 | ||||
Sales of eBalance® devices | $ | $ | $ | $ | ||||
Monthly subscriptions |
|
|
|
| ||||
Cost of eBalance® devices and services |
| ( |
| ( |
| ( |
| ( |
Royalty payable |
| ( |
| ( |
| ( |
| ( |
Distribution rights |
| - |
|
| - |
| ||
Gross margin | $ | $ | $ | $ | ||||
NOTE 7 - NOTES AND ADVANCES PAYABLE
The tables below summarize the notes and advances outstanding as at February 28, 2021, and May 31, 2020:
As at February 28, 2021 | |||||||
Principal Outstanding | Interest Rate per Annum |
| Accrued Interest(6) | Total Book Value | |||
$ | Convertible(1) | $ | $ | ||||
| Non-convertible(2) |
|
| ||||
| Related party(3) |
|
| ||||
| Related party(4) |
|
| ||||
| Related party(3) |
|
| ||||
| Related party advances(5) |
|
| ||||
| Advances(5) |
|
| ||||
$ |
|
| $ | $ | |||
| |||||||
As at May 31, 2020 | |||||||
Principal Outstanding | Interest Rate per Annum |
| Accrued Interest(6) | Total Book Value | |||
$ | Convertible(1) | $ | $ | ||||
| Non-convertible(2) |
|
| ||||
| Related party(3) |
|
| ||||
| Related party(4) |
|
| ||||
| Advances(5) |
|
| ||||
$ |
|
| $ | $ | |||
(1) Convertible Loans Payable
During the year ended May 31, 2020, in order to support its daily operations and to secure required working capital, the Company entered into several short-term convertible loan agreements with two lenders for a total of $
During the nine-month period ended February 28, 2021, the Company recorded $
F-7
(2) Non-convertible Loans Payable
During the nine-month period ended February 28, 2021, the Company entered into several short-term loan agreements with two lenders for a total of $
During the nine-month period ended February 28, 2021, the Company recorded $
(3) Related Party Loans Payable
During the nine-month period ended February 28, 2021, the Company’s subsidiary, Cell MedX Canada, entered into several short-term loan agreements with Mr. Jeffs, the Company’s major shareholder, for a total of $
On July 9, 2020, the Company entered into a loan agreement for $
(4) Unsecured Line of Credit with Related Party
On December 27, 2018, the Company entered into an agreement with Mr. Jeffs for an unsecured line of credit of up to $
As at February 28, 2021, the Company owed Mr. Jeffs $
(5) Advances Payable
As at February 28, 2021, the Company owed a total of $
(6) Interest Expense
During the nine-month period ended February 28, 2021, the Company recorded a total of $
NOTE 8 - SHARE CAPITAL
On July 30, 2020, the Company issued
F-8
On August 13, 2020, the Company issued
On August 13, 2020, the Company issued
Options
The changes in the number of stock options outstanding during the nine-month period ended February 28, 2021, and for the year ended May 31, 2020, are as follows:
| Nine months ended February 28, 2021 |
| Year ended May 31, 2020 | ||||
| Number of options | Weighted average exercise price |
| Number of options | Weighted average exercise price | ||
Options outstanding, beginning | $ |
| $ | ||||
Options exercised | ( | $ |
| - | $ | n/a | |
Options expired | ( | $ |
| - | $ | n/a | |
Options outstanding, ending | $ |
| $ | ||||
Details of options outstanding and exercisable as at February 28, 2021, are as follows:
Number of options outstanding and exercisable | Exercise price | Grant date | Expiry date |
$ | August 5, 2015 | April 1, 2021 | |
$ | August 5, 2015 | July 1, 2021 | |
$ | August 24, 2017 | August 23, 2022 | |
$ |
|
|
At February 28, 2021, the weighted average remaining contractual life of the stock options outstanding was 1.07 years.
Warrants
The changes in the number of warrants outstanding during the nine-month period ended February 28, 2021, and for the year ended May 31, 2020, are as follows:
| Nine months ended February 28, 2021 |
| Year ended May 31, 2020 | ||||
| Number of warrants | Weighted average exercise price |
| Number of warrants | Weighted average exercise price | ||
Warrants outstanding, beginning | $ | 0.94 |
| $ | 0.78 | ||
Warrants issued | $ | 0.35/$0.50 |
| $ | 0.38 | ||
Warrants exercised | $ | n/a |
| ( | $ | 0.05 | |
Warrants expired | ( | $ | 1.50 |
| - | $ | n/a |
Warrants outstanding, ending | $ | 0.86 |
| $ | 0.94 | ||
F-9
Details of warrants outstanding as at February 28, 2021, are as follows:
Number of warrants exercisable | Grant date | Exercise price |
March 3, 2016 | $0.75 expiring on March 3, 2021 | |
October 12, 2016 | $1.50 expiring on October 12, 2021 | |
June 24, 2019 | $0.20 expiring on June 24, 2021 | |
July 22, 2019 | $0.20 expiring on July 22, 2021 | |
January 29, 2020 | $0.50 expiring on March 12, 2023 | |
January 29, 2020 | $1.00 expiring on March 12, 2023 | |
July 30, 2020 | $0.50 expiring on July 30, 2022 | |
|
|
At February 28, 2021, the weighted average life of the warrants was 0.86 years.
F-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements, the notes to those financial statements and other financial information appearing elsewhere in this document. In addition to historical information, the following discussion and other parts of this document contain forward-looking statements that reflect plans, estimates, intentions, expectations and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the "Risk Factors" in Part II, Item 1A of this Quarterly Report.
The discussion provided in this Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended May 31, 2020, filed with the United States Securities and Exchange Commission (the “SEC”) on September 15, 2020.
Overview
We were incorporated as Plandel Resources, Inc. under the laws of the State of Nevada on March 19, 2010. On March 24, 2014, we changed our name to Sports Asylum, Inc. and on September 30, 2014, we changed our name to Cell MedX Corp. to reflect our new business direction. On April 26, 2016, we formed a subsidiary, Cell MedX (Canada) Corp., (the “Subsidiary”) under the laws of the Province of British Columbia.
We are a biotech company focused on the discovery, development and commercialization of therapeutic and non-therapeutic products that promote general health, pain relief, wellness and alleviate complications associated with medical conditions including, but not limited to: diabetes, Parkinson’s disease, high blood pressure, neuropathy and kidney function. Our Subsidiary is engaged in development and manufacturing of therapeutic devices based on our proprietary eBalance® Technology, which harnesses power of microcurrents and their effects on human body.
Current uncertainty with respect to rapid expansion of the COVID-19 pandemic
We are cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, we have experienced minor disruptions to our day-to-day operations associated with delayed services resulting from various COVID-19 restrictions and shortage of man power experienced by some of our service providers. We caution that there continues to be a possibility for increase of the restrictions currently in place, or addition of new restrictions currently not known to us. The impact of these restrictions on our operations, if implemented, is currently unknown but could be significant.
Results of Operations for the Three and Nine Months ended February 28, 2021 and February 29, 2020
Our operating results for the three- and nine-month periods ended February 28, 2021 and February 29, 2020, and the changes in the operating results between those periods are summarized in the table below.
| Three Months Ended |
| Nine Months Ended |
| ||||||
| February 28, 2021 | February 29, 2020 | Percentage Increase/ (Decrease) | February 28, 2021 | February 29, 2020 | Percentage Increase/ (Decrease) | ||||
Sales | $ | 4,374 | $ | 2,380 | 83.8% | $ | 7,712 | $ | 14,480 | (46.7)% |
Distribution rights |
| - |
| 6,562 | (100.0)% |
| - |
| 25,000 | (100.0)% |
Cost of goods |
| (2,706) |
| (1,840) | 47.1% |
| (4,063) |
| (7,737) | (47.5)% |
Gross margin |
| 1,668 |
| 7,102 | (76.5)% |
| 3,649 |
| 31,743 | (88.5)% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Amortization |
| 520 |
| 546 | (4.8)% |
| 1,888 |
| 1,359 | 38.9% |
Consulting fees |
| 63,746 |
| 63,271 | 0.8% |
| 203,133 |
| 214,270 | (5.2)% |
Distribution expenses |
| - |
| 18,968 | (100.0)% |
| 261 |
| 54,588 | (99.5)% |
General and administrative expenses |
| 37,232 |
| 69,442 | (46.4)% |
| 150,735 |
| 288,084 | (47.7)% |
Research and development costs |
| 70,145 |
| 109,115 | (35.7)% |
| 193,820 |
| 265,722 | (27.1)% |
Total operating expenses |
| 171,643 |
| 261,342 | (34.3)% |
| 549,837 |
| 824,023 | (33.3)% |
Interest |
| 9,033 |
| 4,575 | 97.4% |
| 23,358 |
| 15,310 | 52.6% |
Loss on reacquisition of distribution rights |
| - |
| 102,093 | (100.0)% |
| - |
| 102,093 | (100.0)% |
Net loss | $ | 179,008 | $ | 360,908 | (50.4)% | $ | 569,546 | $ | 909,683 | (37.4)% |
2
Revenues
During the three-month period ended February 28, 2021, we recognized $4,374 in revenue, which consisted of $2,286 we received from sales of our eBalance® wellness devices, and $2,088 from monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $2,706.
During the three-month period ended February 29, 2020, we recognized $2,380 in revenue, which consisted of $2,285 we received from sales of our eBalance® wellness devices, and $95 from monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $1,840.
During the nine-month period ended February 28, 2021, we recognized $7,712 in revenue, which consisted of $2,286 we received from sales of our eBalance® wellness devices, and $5,426 from monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $4,063.
During the nine-month period ended February 29, 2020, we recognized $14,480 in revenue, which consisted of $14,385 we received from sales of our eBalance® wellness devices, and $95 from monthly recurring revenue associated with the eBalance® treatment packages. The cost attributed to this revenue was $7,737.
On June 6, 2019, we entered into a letter of intent for the wholesale distribution rights to all Mainland China, not including Hong Kong (the “LOI”). As part of the LOI the potential distributor (the “Distributor”) paid a non-refundable fee of $25,000, which we amortized over the term of the LOI, and as of February 29, 2020, the full $25,000 deposit was recognized as revenue. During the three months ended February 29, 2020, we recognized $6,562 in revenue. As of February 29, 2020, the LOI expired, and we did not enter into a definitive agreement with the Distributor.
As of the date of this Quarterly Report on Form 10-Q, we continue research and further development of our eBalance® Technology and devices based on this technology. During the summer of 2020, Health Canada granted our eBalance® Home and Pro Systems Class II medical device licenses, which allow us to market our eBalance® devices for wellness and pain management. Our certification with FDA continues to be ongoing; at the time of this Quarterly Report on Form 10-Q we are compiling required documentation for a 510(K) premarket submission, which allows us to demonstrate that the eBalance® device is at least as safe and effective as a legally marketed device available on the market. Once this submission is approved, it will allow us to start our commercial activity in the USA.
Operating Expenses
During the three-month period ended February 28, 2021, our operating expenses decreased by 34.3% from $261,342 we incurred during the three months ended February 29, 2020, to $171,643 we incurred during the three months ended February 28, 2021. The most significant expenses during this period included $70,145 in research and development fees (February 29, 2020 - $109,115), $63,746 in consulting fees (February 29, 2020 - $63,271), $19,500 we incurred in corporate communication fees (February 29, 2020- $20,445), $4,774 in accounting and audit fees (February 29, 2020 - $4,016), and $10,500 in management fees (February 29, 2020 - $6,000). During the comparative three-month period ended February 29, 2020 we incurred $18,968 in distribution expenses paid or accrued to our sales representatives, expense that we did not incur in the current period.
On a year-to-date basis, the most significant changes were as follows:
·During the nine-month period ended February 28, 2021, our consulting fees decreased by $11,137, or 5.2%, from $214,270 we incurred during the nine-month period ended February 29, 2020, to $203,133 we incurred during the nine-month period ended February 28, 2021. Larger consulting fees during the comparative period ended February 29, 2020, were associated with $25,000 we paid for consultation on setting up our distribution channels in China.
·Our research and development fees for the nine-month period ended February 28, 2021, decreased by $71,902, or 27.1%, from $265,722 we incurred during the nine-month period ended February 29, 2020, to $193,820 we incurred during the nine-month period ended February 28, 2021. The lower research and development fees during the nine-month period ended February 28, 2021, were associated with the conclusion of the work associated with Health Canada certifications, and reduced work load associated
3
with our 510(K) submission to the FDA. In addition, we continued minor developments of the eBalance® systems.
·Our general and administrative fees for the nine-month period ended February 28, 2021, decreased by $137,349, or 47.7%, from $288,084 we incurred during the nine-month period ended February 29, 2020, to $150,735 we incurred during the nine-month period ended February 28, 2021. The largest two factors that contributed to this change were associated with fluctuation in foreign exchange rates, which, during the nine-month period ended February 28, 2021, resulted in $65,944 gain, as compared to $7,367 loss during the comparative period, and our expenditures on corporate communications, which decreased by $46,882 to $113,082 we recorded during the nine-month period ended February 28, 2021, as compared to $159,964 we incurred during the nine-month period ended February 29, 2020. Other factors that affected our general and administrative fees were associated with a $12,144 decrease to our accounting and audit fees, which decreased from $26,941 we incurred during the nine-month period ended February 29, 2020, to $14,797 for the nine-month period ended February 28, 2021. Our management fees decreased by $3,600 from $33,600 we incurred during the nine-month period ended February 29, 2020 to $30,000 we incurred during the nine-month period ended February 28, 2021, the decrease resulted from renegotiation of monthly management fees with the Company’s CEO and the CFO. In addition, during the current period, we incurred $4,134 in marketing and advertising fees as opposed to $13,983 we incurred during the nine-month period ended February 29, 2020. These decreases were in part offset by a $12,596 increase in professional fees, from $9,794 we incurred during the nine-month period ended February 29, 2020, to $22,390 we incurred during the nine-month period ended February 28, 2021.
·During the nine-month period ended February 28, 2021, we incurred $261 in distribution expenses we paid or accrued to our sales representatives (February 29, 2020- $54,588). Based on our agreements with the sales representatives, we agreed to pay CAD$350 as commission for each eBalance® device they sell. In order to allow our sales representatives to establish their customer base, during the nine-month period ended February 29, 2020, we were paying a monthly fee of CAD$5,000 to each sales representative. Due to a delay in securing Health Canada Class II device licenses, we suspended our agreements with the sales representatives in January 2020. As of the date of this Quarterly Report on Form 10-Q the agreements with the sales representatives continue to be suspended.
Other Items
During the three-month period ended February 28, 2021, we accrued $9,033 (February 29, 2020 - $4,575) in interest associated with the outstanding notes payable. On a year-to-date basis, we accrued $23,358 (February 29, 2020 - $15,310) in interest associated with the outstanding notes payable. Of this interest, $2,352 (February 29, 2020 - $7,766) represented interest we accrued on the notes payable we issued to Mr. Jeffs, our major shareholder.
During the three- and nine-month periods ended February 29, 2020, we recorded $102,093 loss on reacquisition of distribution rights from Live Current Media Inc. We did not have similar expenses during the comparative periods ended February 28, 2021.
Liquidity and Capital Resources
Working Capital
| As at February 28, 2021 |
| As at May 31, 2020 |
| Percentage Change | ||
Current assets | $ | 98,376 |
| $ | 157,343 |
| (37.5)% |
Current liabilities |
| 1,989,585 |
|
| 1,679,523 |
| 18.5% |
Working capital deficit | $ | (1,891,209) |
| $ | (1,522,180) |
| 24.2% |
As of February 28, 2021, we had a cash balance of $25,967, a working capital deficit of $1,891,209 and cash flows used in operations of $412,512 for the period then ended. During the nine-month period ended February 28, 2021, we funded our operations with $167,000 received from our private placement financing, and $226,186 we borrowed under loan agreements accumulating interest at 6% per annum, compounded monthly, and due on demand.
4
We did not generate sufficient cash flows from our operating activities to satisfy our cash requirements for the period ended February 28, 2021. The amount of cash we have generated from our operations to date is significantly less than our current debt obligations. There is no assurance that we will be able to generate sufficient cash from our operations to repay the amounts owing under the outstanding notes and advances payable, or to service our other debt obligations. If we are unable to generate sufficient cash flow from our operations to repay the amounts owing when due, we may be required to raise additional financing from other sources. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern.
Cash Flows
| Nine months ended | ||||
| February 28, 2021 |
| February 29, 2020 | ||
Cash flows used in operating activities | $ | (412,512) |
| $ | (695,398) |
Cash flows used in investing activities |
| (1,574) |
|
| (2,463) |
Cash flows provided by financing activities |
| 393,186 |
|
| 753,650 |
Effects of foreign currency exchange on cash |
| 1,777 |
|
| 103 |
Net increase (decrease) in cash during the period | $ | (19,123) |
| $ | 55,892 |
Net Cash Used in Operating Activities
Net cash used in operating activities during the nine months ended February 28, 2021, was $412,512. This cash was primarily used to cover our cash operating expenses of $597,302 and to decrease our accrued liabilities by $30,144. These uses of cash were offset by $105,497 increase in amounts due to related parties, $21,833 decrease in other current assets, $79,932 increase in our accounts payable, and by a $7,672 decrease in inventory.
Net cash used in operating activities during the nine months ended February 29, 2020, was $695,398. This cash was primarily used to cover our cash operating expenses of $785,600, to decrease our accrued liabilities by $20,255, unearned revenue by $6,814, and amounts due to related parties by $11,962. These uses of cash were offset by $19,810 decrease in other current assets, $3,757 decrease in inventory, and by $105,666 increases in our accounts payable.
Non-cash transactions
During the nine-month period ended February 28, 2021, our net loss was affected by the following expenses that did not have any impact on cash used in operations:
·$23,358 (2020 - $15,310) in interest we accrued on the outstanding notes payable. Of this interest, $2,352 (2020 - $7,766) was accrued on the notes payable we issued to Mr. Jeffs;
·$69,502 in unrealized foreign exchange gain (2020 - $5,321 loss), which resulted from fluctuations of Canadian dollar, the functional currency of Cell MedX Canada, in relation to US dollar, the functional currency of our parent company, being also our reporting currency;
·$1,888 (2020 - $1,359) in amortization of equipment we acquired for our manufacturing operations and for our office; and
·$16,500 (2020 - $Nil) in non-cash investor relations expenses which were associated with fair market value of the shares we issued to our consultant for investor relation services in April 2020.
During the nine-month period ended February 29, 2020, we recognized $102,093 as loss on reacquisition of distribution rights from LIVC pursuant to the Buyback Agreement dated January 29, 2020. We did not have similar transactions during the nine-month period ended February 28, 2021.
Net Cash Used in Investing Activities
During the nine-month period ended February 28, 2021, we purchased office equipment for $1,574 (2020 - $2,463).
5
Net Cash Provided by Financing Activities
During the nine-month period ended February 28, 2021, we received $226,186 under loan agreements, which are payable on demand and accumulate interest at 6% per annum. In addition, we received $167,000 on closing of our non-brokered private placement for 988,000 units of our common stock at $0.25 per unit for total proceeds of $247,000, of which $80,000 was received during the year ended May 31, 2020. We did not incur any share-issuance costs associated with the units issued as part of the private placement financing.
During the nine-month period ended February 29, 2020, we received $252,650 under convertible loan agreements, which are payable on demand and accumulate interest at 6% per annum. At discretion of the lenders, the full amount due under the loans can be converted into the units of our common stock at the then-current price of private placement financing. In addition, we received a total of $15,000 in non-interest-bearing advances which are payable on demand. In addition to the funds received as part of debt financing, we issued 4,050,000 units of our common stock for total proceeds of $486,000. We did not incur any share-issuance costs associated with the units issued as part of the private placement financing.
Going Concern
The notes to our unaudited condensed consolidated financial statements as at February 28, 2021, disclose our uncertain ability to continue as a going concern. Our current business operations are in an early development stage and as such, we were able to generate only minimal revenue from the operations. Our research and development as well as marketing plans for the near future will require large capital expenditures, which we are planning to mitigate through equity or debt financing, or by requiring upfront deposits from our potential distributors, once we begin commercial production of our eBalance® devices.
As at February 28, 2021, we had accumulated a deficit of $8,619,066 since inception and increased sales will be required to fund and support our operations. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary debt or equity financing to continue operations, and the attainment of profitable operations. Our unaudited condensed consolidated interim financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in our financial statements.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. We have applied our critical accounting policies and estimation methods consistently.
Changes in and Disagreements with Accountants on Accounting Procedures and Financial Disclosure
None.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
None
6
Item 4. Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of February 28, 2021. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed within the time periods specified in Securities and Exchange Commission’s rules and forms due to lack of segregation of duties.
During the quarter ended February 28, 2021, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There is a high degree of risk associated with investing in our securities. Prospective investors should carefully read this Quarterly Report on Form 10-Q and consider the following risk factors when deciding whether to purchase our securities.
The risk factors outlined below are some of the known, substantial, material and potential risks that could adversely affect our business, financial condition, operating results and common share value. We cannot assure that we will successfully address these or any unknown risks and a failure to do so can have a negative impact on your investment. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.
Risks associated with the current uncertainty with respect to rapid expansion of the COVID-19 pandemic
We are cognizant of the rapid expansion of the COVID-19 pandemic and the resulting global implications. To date, we have experienced minor disruptions to our day-to-day operations associated with delayed services resulting from various COVID-19 restrictions and shortage of man power experienced by some of our service providers. We caution that there continues to be a possibility for increase of the restrictions currently in place, or addition of new restrictions currently not known to us. The impact of these restrictions on our operations, if implemented, is currently unknown but could be significant.
Risks Associated with our Company and our Industry
We operate in a highly competitive market. We face competition from large, well established medical device manufacturers and pharmaceutical companies in the market for treating and managing diabetes and related ailments. Many of these companies are very well accepted by health practitioners and have significant resources, and we may not be able to compete effectively.
The market for devices and therapies for treating and managing diabetes and related ailments is intensely competitive, subject to rapid change and significantly affected by new product introductions. We compete indirectly with large pharmaceutical and medical device companies, such as Bayer Corp., Becton Dickinson Corp., LifeScan Inc., a division of Johnson & Johnson, MediSense Inc. and TheraSense Inc. These competitors’ products are based on traditional healthcare model and are well accepted by health practitioners and patients. If these companies decide to penetrate our target market they could threaten our position in the market.
We are subject to numerous governmental regulations which can increase our costs of developing our eBalance® Technology and products based on this technology.
Our products may be subject to rigorous regulation by the FDA, Health Canada and numerous international, supranational, federal, and state authorities. The process of obtaining regulatory approvals to market a medical device can be costly and time-consuming, and approvals might not be granted for future products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in the receipt of, or failure to obtain approvals for, our products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues, and in substantial additional costs. In addition, no assurance can be given that we will remain in compliance with applicable FDA, Health Canada and other regulatory requirements once approval or marketing authorization has been obtained for a product. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and post-marketing reporting, including adverse event reports and field alerts due to manufacturing quality concerns.
8
Competitors' intellectual property may prevent us from selling our products or have a material adverse effect on our future profitability and financial condition.
Competitors may claim that our Technology infringes upon their intellectual property. Resolving an intellectual property infringement claim can be costly and time consuming and may require us to enter into license agreements. We cannot guarantee that we would be able to obtain license agreements on commercially reasonable terms. A successful claim of patent or other intellectual property infringement could subject us to significant damages or an injunction preventing the manufacture, sale or use of our product. Any of these events could have a material adverse effect on our profitability and financial condition.
Our research and development efforts may not result in the development of commercially successful products based on our eBalance® Technology, which may hinder our profitability and future growth.
Our eBalance® Technology is currently in the research and development stage as are our planned products incorporating this technology. In order to develop commercially marketable products, we will be required to commit substantial efforts, funds, and other resources to research and development. A high rate of failure is inherent in the research and development of new products and technologies. We must make ongoing substantial expenditures without any assurance that our efforts will be commercially successful. Failure can occur at any point in the process, including after significant funds have been invested. Planned products may fail to reach the market or may only have limited commercial success because of efficacy or safety concerns, failure to achieve positive clinical outcomes, inability to obtain necessary regulatory approvals, limited scope of approved uses, excessive costs to manufacture, the failure to establish or maintain intellectual property rights, or infringement of the intellectual property rights of others.
Even if we successfully develop marketable products or commercially develop our current technology, we may be quickly rendered obsolete by changing customer preferences, changing industry standards, or competitors' innovations.
Innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursement. We cannot state with certainty when or whether our products under development will be launched, whether we will be able to develop, license, or otherwise acquire new products, or whether any products will be commercially successful. Failure to launch successful new products or new indications for existing products may cause our products to become obsolete, causing our revenues and operating results to suffer.
New products and technological advances by our competitors may negatively affect our results of operations.
Our products face intense competition from our competitors. Competitors' products may be safer, more effective, more effectively marketed or sold, or have lower prices or superior performance features than our products. We cannot predict with certainty the timing or impact of the introduction of competitors' products.
Significant safety concerns could arise for our products, which could have a material adverse effect on our revenues and financial condition.
Healthcare products typically receive regulatory approval based on data obtained in controlled clinical trials of limited duration. Following regulatory approval, these products will be used over longer periods of time in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new safety issues are reported, we may be required to amend the conditions of use for a product. For example, we may be required to provide additional warnings on a product's label or narrow its approved intended use, either of which could reduce the product's market acceptance. If serious safety issues arise with our product, sales of the product could be halted by us or by regulatory authorities. Safety issues affecting suppliers' or competitors' products also may reduce the market acceptance of our products.
Inability to attract and maintain key personnel may cause our business to fail.
Success depends on the acquisition of key personnel. We will have to compete with other companies both within and outside the healthcare industry to recruit and retain competent employees and consultants. If we cannot maintain qualified personnel to meet the needs of our anticipated growth, we could face material adverse effects on our business and financial condition.
9
To date we have generated only minimal revenues. If we cannot increase our revenues to start generating profits, our investors may lose their entire investment.
To date we have generated only minimal revenues. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing. We have a very limited operating history and thus our progress as well as potential future success cannot be reasonably estimated. Success has yet to be proven and financial losses should be expected to continue in the near future and at least until such time that we enter commercial production of devices based on the eBalance® Technology, of which there is no assurance. We continue to face all the risks of a ‘start-up’ venture including unforeseen costs, expenses, problems, and management limitations and difficulties. Since inception, we have accumulated deficit of $8,619,066 and there is no guarantee, that we may ever be able to turn a profit or locate additional opportunities, hire additional management and other personnel.
We need to acquire additional financing or our business will fail.
We must obtain additional capital or our business will fail. In order to continue development of our eBalance® Technology and to successfully carry out our planned clinical and observational trials, we must secure more funds. Currently, we have very limited resources and have already accumulated a net loss. Financing may be subject to numerous factors including investor sentiment, acceptance of our technology and so on. We currently have no arrangements for additional financing. We may also have to borrow large sums of money that require substantial capital and interest payments.
Risks related to our stock
We expect to raise additional capital through the offering of more shares, which will result in dilution to our current shareholders.
Raising additional capital through future offerings of common stock is expected to be necessary for our Company to continue. However, there is no guarantee that we will be successful in raising additional capital. Issuance of additional stock will increase the total number of shares issued and outstanding resulting in decrease of the percentage interest held by each of our shareholders.
The market for our common stock is limited and investors may have difficulty selling their stock.
Our shares are currently traded on the over the counter market, with quotations entered for our common stock on the OTCQB under the symbol “CMXC.” However, the volume of trading in our common stock is currently limited. As a result, holders of our common stock may have difficulty selling their shares.
Because our common stock is a penny stock, stockholders may be further limited in their ability to sell their shares.
Our shares constitute a penny stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are expected to remain classified as a penny stock for the foreseeable future. Classification as a penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to Rules 15g-2 through 15g-9 of the Exchange Act. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.
Or
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common
10
stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:
·contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
·contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;
·contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;
·contains a toll-free telephone number for inquiries on disciplinary actions;
·defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
·contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock
We have not paid nor anticipate paying cash dividends on our common stock.
We have not declared any dividends on our common stock during the past two fiscal years or at any time in our history. The Nevada Revised Statutes (the “NRS”), provide certain limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:
(a)we would not be able to pay our debts as they become due in the usual course of business; or
(b)except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.
We do not expect to declare any dividends in the foreseeable future as we expect to spend any funds legally available for the payment of dividends on the development of our business
No assurance that forward-looking assessments will be realized.
Our ability to accomplish our objectives and whether or not we are financially successful is dependent upon numerous factors, each of which could have a material effect on the results obtained. Some of these factors are in the discretion and control of management and others are beyond management’s control. The assumptions and hypotheses used in preparing any forward-looking assessments contained herein are considered reasonable by management. There can be no assurance, however, that any projections or assessments contained herein or otherwise made by management will be realized or achieved at any level.
FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF THESE AND OTHER FACTORS SET-FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX, AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.
11
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit |
|
|
Number |
| Description of Document |
| Articles of Incorporation (2) | |
| Articles of Merger - Sports Asylum, Inc. and Plandel Resources, Inc.(3) | |
| Articles of Merger - Cell MedX Corp. and Sports Asylum, Inc.(3) | |
| Bylaws (1) | |
| Specimen Stock Certificate (1) | |
| Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(4) | |
| First Amendment Agreement dated October 28, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(5) | |
| Second Amendment Agreement dated November 13, 2014 to that Technology Purchase Agreement dated October 16, 2014 among Cell MedX Corp., Jean Arnett, and Brad Hargreaves.(6) | |
| Stock Option Agreement dated August 5, 2015 among Cell MedX Corp. and Frank E. McEnulty.(7) | |
| Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and Yanika Silina(8) | |
| Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and Da Costa Management Corp.(8) | |
| Stock Option Agreement dated August 24, 2017 among Cell MedX Corp. and John Giovanni Di Cicco.(8) | |
| Intellectual Property Royalty Agreement between Cell MedX Corp. and Brek Technologies Inc., dated for reference September 6, 2018.(9) | |
| Royalty Agreement between Cell MedX Corp. and Mr. Richard Norman Jeffs, dated for reference September 6, 2018.(9) | |
| Credit Line Agreement dated December 27, 2018, between Richard Norman Jeffs and Cell MedX Corp.(10) | |
| Distribution Agreement between Cell MedX Corp. and Live Current Media, Inc., dated for reference March 21, 2019. (11) | |
| Loan Agreement and Note Payable dated September 4, 2019, among Cell MedX Corp. and Longview Investment Limited (12) | |
| Loan Agreement and Note Payable dated September 6, 2019, among Cell MedX Corp. and Rain Communications Corp. (12) | |
| Loan Agreement and Note Payable dated September 16, 2019, among Cell MedX Corp. and Longview Investment Limited(12) |
12
Exhibit |
|
|
Number |
| Description of Document |
| Loan Agreement and Note Payable dated September 19, 2019, among Cell MedX Corp. and Rain Communications Corp. (12) | |
| Loan Agreement and Note Payable dated September 20, 2019, among Cell MedX Corp. and Longview Investment Limited(12) | |
| Loan Agreement and Note Payable dated October 30, 2019, among Cell MedX Corp. and Longview Investment Limited (12) | |
| Loan Agreement and Note Payable dated October 30, 2019, among Cell MedX Corp. and Rain Communications Corp. (12) | |
| Loan Agreement and Note Payable dated December 3, 2019, among Cell MedX Corp. and Longview Investment Limited (13) | |
| Loan Agreement and Note Payable dated January 6, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Loan Agreement and Note Payable dated January 9, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Loan Agreement and Note Payable dated January 31, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Buyback agreement between Live Current Media Inc. and Cell MedX Corp., dated January 29, 2020.(14) | |
| Loan Agreement and Note Payable dated February 17, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Loan Agreement and Note Payable dated March 4, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Loan Agreement and Note Payable dated March 25, 2020, among Cell MedX Corp. and Longview Investment Limited(13) | |
| Loan Agreement and Note Payable dated April 13, 2020, among Cell MedX Corp. and Longview Investment Limited(15) | |
| Loan Agreement dated July 3, 2020, among Cell MedX Corp. and David Jeffs. (15) | |
| Loan Agreement and Note Payable dated August 31, 2020, among Cell MedX Corp. and Tradex Capital Corp.(15) | |
| Loan Agreement and Note Payable dated September 2, 2020, among Cell MedX Corp. and Rain Communications Corp.(16) | |
| Loan Agreement and Note Payable dated October 26, 2020, among Cell MedX Corp. and Rain Communications Corp.(16) | |
| Loan Agreement and Note Payable dated December 14, 2020, among Cell MedX (Canada) Corp. and Richard Jeffs. | |
| Loan Agreement and Note Payable dated December 23, 2020, among Cell MedX (Canada) Corp. and Richard Jeffs. | |
| Loan Agreement and Note Payable dated January 21, 2021, among Cell MedX Corp. and Rain Communications Corp. | |
| Loan Agreement and Note Payable dated February 16, 2021, among Cell MedX Corp. and Rain Communications Corp. | |
| Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
13
Exhibit |
|
|
Number |
| Description of Document |
101 |
| The following materials from this Quarterly Report on Form 10-Q for the three- and nine-month periods ended February 28, 2021 and February 29, 2020 formatted in XBRL (extensible Business Reporting Language): |
|
| (1) Unaudited Condensed Consolidated Balance Sheets at February 28, 2021 and as at May 31, 2020. |
|
| (2) Unaudited Condensed Consolidated Statements of Operations for the three- and nine-month periods ended February 28, 2021 and February 29, 2020. |
|
| (3) Unaudited Condensed Consolidated Statement of Stockholders’ Deficit as at February 28, 2021 and February 29, 2020. |
|
| (4) Unaudited Condensed Consolidated Statements of Cash Flows for the nine-month periods ended February 28, 2021 and February 29, 2020. |
(1)Filed as an exhibit to the Company’s Registration Statement on Form S-1 filed with SEC on July 13, 2010
(2)Filed as an exhibit to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed with SEC on October 13, 2010
(3)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 9, 2014
(4)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on October 17, 2014
(5)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 3, 2014
(6)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with SEC on November 18, 2014
(7)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on August 11, 2015
(8)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on October 17, 2017
(9)Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 13, 2018
(10)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on December 31, 2018
(11)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2019
(12)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2020
(13)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on April 14, 2020
(14)Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2020
(15)Filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the SEC on September 15, 2020
(16)Filed as an exhibit to the Company’s Quarterly Report on Form 10-Q filed with the SEC on January 14, 2021
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Cell MedX Corp. | |
|
| |
Date: April 9, 2021 | By: | /s/ Frank McEnulty |
|
| Frank McEnulty |
|
| Chief Executive Officer and Director |
|
| (Principal Executive Officer) |
|
|
|
|
|
|
Date: April 9, 2021 | By: | /s/Yanika Silina |
|
| Yanika Silina |
|
| Chief Financial Officer and Director |
|
| (Principal Accounting Officer) |
15