from sedar-last financials ? CANNABIX TECHNOLOG
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from sedar-last financials ?
CANNABIX TECHNOLOGIES INC.
Interim Financial Statements
(Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
UNAUDITED INTERIM FINANCIAL STATEMENTS
In accordance with National Instrument 51-102 released by the Canadian Securities
Administrators, the Company discloses that its auditors have not reviewed the
unaudited interim financial statements for the nine months ended January 31, 2018.
CANNABIX TECHNOLOGIES INC.
Statements of financial position
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
2
January 31,
2018
$
April 30,
2017
$
Assets
Current assets
Cash and cash equivalents 8,589,511 3,552,838
Amounts receivable 273,759 29,646
Prepaid expenses 10,050 71,793
Total current assets 8,873,320 3,653,977
Non-current assets
Equipment (Note 4) 168,514 49,483
Deferred costs (Note 5) 3,893,163 3,893,163
Total non-current assets 4,061,677 3,942,646
Total assets 12,934,997 7,596,623
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 6) 53,809 158,456
Total liabilities 53,809 158,456
Shareholders’ equity
Share capital 17,655,101 11,439,250
Contributed surplus 3,469,376 3,251,490
Deficit (8,243,289) (7,252,573)
Total shareholders’ equity 12,881,188 7,438,167
Total liabilities and shareholders’ equity 12,934,997 7,596,623
Nature of operations and continuance of business (Note 1)
Approved and authorized for issuance on behalf of the Board of Directors on April 3, 2018:
/s/ Ravinder Mlait /s/ Bryan Loree
Ravinder Mlait, Director Bryan Loree, Director
CANNABIX TECHNOLOGIES INC.
Statements of operations and comprehensive loss
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
3
Three months
ended
January 31,
2018
$
Three months
ended
January 31,
2017
$
Nine months
ended
January 31,
2018
$
Nine months
ended
January 31,
2017
$
Revenue – – – –
Operating expenses
Research & Development (Note 6) 193,312 198,301 616,763 366,589
Consulting fees (Note 6) 98,500 82,500 263,500 247,500
Advertising & promotion 3,500 68,451 22,133 129,018
Insurance 13,450 – 13,450 10,620
Office and miscellaneous 2,046 1,031 4,616 6,188
Professional fees 7,604 2,079 24,956 12,940
Transfer agent & filing fees 14,322 4,935 40,599 15,873
Travel 3,917 905 7,987 22,642
Share-based compensation – 1,140,840 – 1,711,682
Total operating expenses 336,651 1,499,042 994,004 2,523,052
Net loss before other income (336,651) (1,499,042) (994,004) (2,523,052)
Other income
Interest Income – – 3,288 988
Net loss and comprehensive loss (336,651) (1,499,042) (990,716) (2,522,064)
Loss per share, basic and diluted
(0.00)
(0.02)
(0.01)
(0.03)
Weighted average shares outstanding 92,136,325 84,772,883 88,352,402 79,857,969
CANNABIX TECHNOLOGIES INC.
Statements of changes in equity
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
4
Share Total
Share capital subscriptions Contributed shareholders’
Number of
Shares
Amount
$
receivable
$
surplus
$
Deficit
$
equity
$
Balance, April 30, 2016 77,207,072 9,113,949 (10,000) 832,399 (3,520,378) 6,415,970
Shares issued pursuant to private placements – – 10,000 – – 10,000
Shares issued pursuant to licensing agreement 603,870 132,851 – – – 132,851
Shares issued pursuant to warrants exercised 7,951,834 1,966,933 – – – 1,966,933
Shares issued pursuant to stock options exercised 380,000 142,361 – (60,611) – 81,750
Fair value of stock options granted – – – 1,711,682 – 1,711,682
Net loss – – – – (2,522,064) (2,522,064)
Balance, January 31, 2017 86,142,776 11,356,094 – 2,483,470 (6,042,442) 7,797,122
Shares issued pursuant to warrants exercised 283,877 83,156 – (12,236) – 70,920
Fair value of stock options granted – – – 780,256 – 780,256
Net loss – – – – (1,210,131) (1,210,131)
Balance, April 30, 2017 86,426,653 11,439,250 – 3,251,490 (7,252,573) 7,438,167
Shares issued pursuant to private placements 4,850,000 5,577,500 – – – 5,577,500
Share issuance costs (607,016) – 217,886 – (389,130)
Shares issued pursuant to warrants exercised 4,359,667 1,062,867 – – – 1,062,867
Shares issued pursuant to stock options exercised 1,380,000 182,500 – – – 182,500
Net loss – – –
–
(990,716) (990,716)
Balance, January 31, 2018 97,016,320 17,655,101 – 3,469,376 (8,243,289) 12,881,188
CANNABIX TECHNOLOGIES INC.
Statements of cash flows
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
5
Three months
ended
January 31,
2018
$
Three months
ended
January 31,
2017
$
Nine months
ended
January 31,
2018
$
Nine months
ended
January 31,
2017
$
Operating activities
Net loss (336,651) (1,499,042) (990,716) (2,522,064)
Item not involving cash:
Share-based compensation – 1,140,840 – 1,711,682
Licensing fees – (132,851) – (132,851)
Changes in non-cash operating working capital:
Amounts receivable (253,273) (7,506) (244,113) (1,293)
Accounts payable and accrued liabilities 6,698 (51,844) (104,647) 32,295
Prepaid expenses (50) (218) 61,443 17,772
Net cash used in operating activities (583,276) (550,621) (1,278,033) (894,459)
Investing activities
Equipment acquisition costs – – (119,031) (44,220)
Net cash used in investing activities – – (119,031) (44,220)
Financing activities
Proceeds from issuance of common shares 6,813,717 1,453,409 6,822,867 2,181,535
Share issuance costs (607,016) – (607,016) –
Warrants issued as finder’s fees 217,886 – 217,886 –
Subscription receivable – – – 10,000
Net cash provided by financing activities 6,424,587 1,453,409 6,433,737 2,191,535
Change in cash 5,841,311 902,788 5,036,673 1,252,856
Cash, beginning of period 2,748,200 2,973,779 3,552,838 2,623,711
Cash, end of period 8,589,511 3,876,567 8,589,511 3,876,567
Cash and cash equivalents is comprised of:
Cash held in bank 6,072,261 2,159,317 6,072,261 2,159,317
Cashable Guaranteed Investment Certificates 2,517,250 1,717,250 2,517,250 1,717,250
Total cash and cash equivalents 8,589,511 3,876,567 8,589,511 3,876,567
Supplemental disclosures:
Interest paid – – – –
Income taxes paid – – – –
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
6
1. Nature of Operations and Continuance of Business
Cannabix Technologies Inc. (the “Company”) is a public company listed on the Canadian Securities
Exchange (“CSE”) and trades under the symbol 'BLO'. The Company was incorporated on April 5,
2011 under the BC Business Corporations Act as West Point Resources Inc. and on August 12,
2014 the name of the Company was changed. The Company’s corporate office is at 501 - 3292
Production Way, Burnaby, BC.
The Company’s primary business is the development of the Cannabix marijuana breathalyzer, which
is being acquired under license. The operations of the Company requires research and development
of the technology. There can be no assurance that the Company will be able to produce a product
that is technically and commercially feasible.
These financial statements have been prepared on a going concern basis, which assumes that the
Company will be able to realize its assets and discharge its liabilities in the normal course of
business. As at January 31, 2018, the Company has no source of revenue, generates negative cash
flows from operating activities, and has an accumulated deficit of $8,243,289. These factors form a
material uncertainty that may cast significant doubt about the Company’s ability to continue as a
going concern. The continued operations of the Company are dependent on its ability to generate
future cash flows from operations or obtain additional financing. Management is of the opinion that
sufficient working capital will be obtained from external financing to meet the Company’s liabilities
and commitments as they become due, although there is a risk that additional financing will not be
available on a timely basis or on terms acceptable to the Company. These financial statements do
not reflect any adjustments that may be necessary if the Company is unable to continue as a going
concern.
2. Significant Accounting Policies
(a) Statement of Compliance and Basis of Presentation
These condensed interim consolidated financial statements are prepared in accordance with
International Accounting Standard (“IAS”) 34 Interim Financial Reporting under International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board
(“IASB”). These condensed interim consolidated financial statements follow the same
accounting policies and methods of application as the Company’s most recent annual financial
statements but do not contain all of the information required for full annual financial statements.
Accordingly, these condensed interim consolidated financial statements should be read in
conjunction with the Company’s most recent annual financial statements, which were prepared
in accordance with IFRS as issued by the IASB.
These financial statements have been prepared on a historical cost basis except for certain
financial instruments which are measured at fair value as explained in Note 2(g). The financial
statements are presented in Canadian dollars, which is the Company’s functional currency.
(b) Use of Estimates and Judgments
The preparation of these financial statements in conformity with IFRS requires the Company’s
management to make judgments, estimates, and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, revenues, and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
Significant areas requiring the use of estimates include the recoverability of deferred costs, fair
value of share-based payments, and recognition of deferred income tax assets.
The assessment of whether the going concern assumption is appropriate requires management
to take into account all available information about the future, which is at least, but is not limited
to, 12 months from the end of the reporting period. The Company is aware that material
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
7
2. Significant Accounting Policies (continued)
(b) Use of Estimates and Judgments (continued)
uncertainties related to events or conditions may cast significant doubt upon the Company’s
ability to continue as a going concern.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at
the time of issuance, are readily convertible to known amounts of cash, and which are subject to
insignificant risk of changes in value to be cash equivalents.
(d) Intangible Assets
Intangible assets that are acquired by the Company and have finite useful lives are measured at
cost less accumulated amortization and accumulated impairment losses. Acquired intangible
assets with indefinite useful lives are stated at cost and are not amortized.
An intangible asset is derecognized on disposal or when no future economic benefits are
expected from its use or disposal.
(e) Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditures that are directly attributable to the acquisition of
the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probably that future economic benefits associated
with the item will flow to the Company and the cost can be measured reliably. The carrying
amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are
charged to the statement of operations during the period in which they are incurred.
Depreciation of property and equipment is provided using the straight-line method at the
following rates approximating their estimated useful lives:
Equipment 10 years
(f) Impairment of Non-Financial Assets
At each reporting date, the Company assesses whether there are indicators of impairment for its
non-financial assets. If indicators exist, the Company determines if the recoverable amount of
the asset or CGU is greater than its carrying amount. A CGU is defined as the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash
inflows of other assets or groups of assets. The Company has used geographical proximity,
geological similarities, analysis of shared infrastructure, commodity type, assessment of
exposure to market risks and materiality to define its CGUs.
If the carrying amount exceeds the recoverable amount, the asset or CGU is recorded at its
recoverable amount with the reduction recognized in the statement of operations. The
recoverable amount is the greater of the value in use or fair value less costs to sell. Fair value is
the amount the asset could be sold for in an arm’s length transaction. The value in use is the
present value of the estimated future cash flows of the asset from its continued use. The fair
value less costs to sell considers the continued development of a property and market
transactions in a valuation model.
Impairments are reversed in subsequent periods when there has been an increase in the
recoverable amount of a previously impaired asset or CGU and these reversals are recognized
in the statement of operations. The recovery is limited to the original carrying amount less
depreciation, if any, that would have been recorded had the asset not been impaired.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
8
(g) Research and Development Costs
Research costs are charged to operations as incurred. Research costs consist primarily of
consulting expenses and parts related to the design, testing, and manufacture of the Cannabix
marijuana breathalyzer. Development activities involve a plan or design for the production of new
or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product is technically and commercially
feasible, future economic benefits are probable, and the Company intends to or has sufficient
resources to complete development and to use or sell the asset. The expenditure capitalized
includes the cost of materials, direct labour and overhead costs that are directly attributable to
preparing the asset for its intended use, and borrowing costs on qualifying assets. Other
development expenditure is recognized in the statement of operations as incurred.
(h) Financial Instruments
(i) Non-derivative financial assets
The Company initially recognizes loans and receivables and deposits on the date that they
are originated. All other financial assets (including assets designated at fair value through
profit or loss) are recognized initially on the trade date at which the Company becomes a
party to the contractual provisions of the instrument.
The Company derecognizes a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risk and rewards of ownership of
the financial asset are transferred. Any interest in transferred financial assets that is created
or retained by the Company is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
Financial assets at fair value through profit or loss
Financial assets are classified as fair value through profit or loss when the financial asset is
held for trading or it is designated as fair value through profit or loss. A financial asset is
classified as held for trading if: (i) it has been acquired principally for the purpose of selling in
the near future; (ii) it is a part of an identified portfolio of financial instruments that the
Company manages and has an actual pattern of short-term profit taking; or (iii) it is a
derivative that is not designated and effective as a hedging instrument.
Financial assets classified as fair value through profit or loss are stated at fair value with any
gain or loss recognized in the statement of operations. The net gain or loss recognized
incorporates any dividend or interest earned on the financial asset. The Company’s cash and
cash equivalents are classified as fair value through profit or loss.
Held-to-maturity investments
Held-to-maturity investments are recognized on a trade-date basis and are initially measured
at fair value, including transaction costs. The Company does not have any assets classified
as held-to-maturity investments.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as
available-for-sale and that are not classified in any of the previous categories. Subsequent to
initial recognition, they are measured at fair value and changes therein, other than
impairment losses and foreign currency differences on available-for-sale equity instruments,
are recognized in other comprehensive income and presented within equity in the fair value
reserve. When an investment is derecognized, the cumulative gain or loss in other
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
9
2. Significant Accounting Policies (continued)
(h) Financial Instruments (continued)
(i) Non-derivative financial assets (continued)
comprehensive income is transferred to the statement of operations. The Company does not
have any available-for-sale financial assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables. Such assets are initially
recognized at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortized cost using the effective interest
method, less any impairment losses. Loans and receivables are comprised of amounts
receivable.
Impairment of financial assets
When an available-for-sale financial asset is considered to be impaired, cumulative gains or
losses previously recognized in other comprehensive income or loss are reclassified to the
statement of operations in the period. Financial assets are assessed for indicators of
impairment at the end of each reporting period. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial assets, the estimated future cash flows of the investments have
been impacted. For marketable securities classified as available-for-sale, a significant or
prolonged decline in the fair value of the securities below their cost is considered to be
objective evidence of impairment.
For all other financial assets objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organization.
For certain categories of financial assets, such as amounts receivable, assets that are
assessed not to be impaired individually are subsequently assessed for impairment on a
collective basis. The carrying amount of financial assets is reduced by the impairment loss
directly for all financial assets with the exception of amounts receivable, where the carrying
amount is reduced through the use of an allowance account. When an amount receivable is
considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account.
Changes in the carrying amount of the allowance account are recognized in the statement of
operations.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the previously recognized impairment
loss is reversed through the statement of operations to the extent that the carrying amount of
the investment at the date the impairment is reversed does not exceed what the amortized
cost would have been had the impairment not been recognized. In respect of available-forsale
equity securities, impairment losses previously recognized through the statement of
operations are not reversed through the statement of operations. Any increase in fair value
subsequent to an impairment loss is recognized directly in equity.
(ii) Non-derivative financial liabilities
The Company initially recognizes debt securities issued and subordinated liabilities on the
date that they are originated. All other financial liabilities (including liabilities designated at fair
value through profit or loss) are recognized initially on the date at which the Company
becomes a party to the contractual provisions of the instrument. The Company derecognizes
a financial liability when its contractual obligations are discharged, cancelled, or expire.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
10
2. Significant Accounting Policies (continued)
(h) Financial Instruments (continued)
(ii) Non-derivative financial liabilities (continued)
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
The Company has the following non-derivative financial liabilities: accounts payable and
accrued liabilities. Such financial liabilities are recognized initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortized cost using the effective interest method.
(iii) Share capital
Common shares are classified as equity. Transaction costs directly attributable to the issue of
common shares and stock options are recognized as a deduction from equity, net of any tax
effects.
(i) Foreign Currency Translation
The functional and reporting currency is the Canadian dollar. Transactions denominated in
foreign currencies are translated using the exchange rate in effect on the transaction date or a t
an average rate. Monetary assets and liabilities denominated in foreign currencies are translated
at the rate of exchange in effect at the statement of financial position date. Non-monetary items
are translated using the historical rate on the date of the transaction. Revenue and expenses are
translated at average rates for the periods. Foreign exchange gains and losses are included in
the statement of operations.
(j) Income Taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in other comprehensive income or equity
is recognized in other comprehensive income or equity and not in the statement of operations.
Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred income tax
Deferred income tax is provided using the statement of financial position method on temporary
differences at the reporting date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes. The carrying amount of deferred income tax assets is
reviewed at the end of each reporting period and recognized only to the extent that it is probable
that sufficient taxable income will be available to allow all or part of the deferred income tax
asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a
legally enforceable right exists to set off current tax assets against current income tax liabilities
and the deferred income taxes relate to the same taxable entity and the same taxation authority.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
11
2. Significant Accounting Policies (continued)
(k) Share-based Payments
The grant date fair value of share-based payment awards granted to employees is recognized as
stock-based compensation expense, with a corresponding increase in equity, over the period
that the employees unconditionally become entitled to the awards. The amount recognized as an
expense is adjusted to reflect the number of awards for which the related service and nonmarket
vesting conditions are expected to be met, such that the amount ultimately recognized as
an expense is based on the number of awards that do meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
Where equity instruments are granted to parties other than employees, they are recorded by
reference to the fair value of the services received. If the fair value of the services received
cannot be reliably estimated, the Company measures the services received by reference to the
fair value of the equity instruments granted, measured at the date the counterparty renders
service.
All equity-settled share-based payments are reflected in share-based payment reserve, unless
exercised. Upon exercise, shares are issued from treasury and the amount reflected in sharebased
payment reserve is credited to share capital, adjusted for any consideration paid.
(l) Loss Per Share
Basic loss per share is computed using the weighted average number of common shares
outstanding during the period. The treasury stock method is used for the calculation of diluted
loss per share, whereby all “in the money” stock options and share purchase warrants are
assumed to have been exercised at the beginning of the period and the proceeds from their
exercise are assumed to have been used to purchase common shares at the average market
price during the period. When a loss is incurred during the period, basic and diluted loss per
share are the same as the exercise of stock options and share purchase warrants is considered
to be anti-dilutive. As at January 31, 2018, the Company had 16,604,233 (2017 – 17,573,377)
potentially dilutive shares outstanding.
(m) Comprehensive Loss
Comprehensive loss is the change in the Company’s net assets that results from transactions,
events and circumstances from sources other than the Company’s shareholders and includes
items that are not included in the statement of operations. For the periods ended January 31,
2017 and 2016, the Company did not have any transactions impacting comprehensive income
(loss).
(n) Reclassifications
Certain reclassifications have been made to the prior year’s financial statements to conform to
the current year’s presentation.
(o) Accounting Standards Issued But Not Yet Effective
The following new standards, and amendments to standards and interpretations, are effective for
the period ended January 31, 2018, and have not been applied in preparing these financial
statements:
New standard IFRS 9, “Financial Instruments”
Amendments to IAS 1, “Presentation of Financial Statements”
The Company has not early adopted these new and revised standards and is currently
assessing the impact that these standards will have on its financial statements.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
12
2. Significant Accounting Policies (continued)
(o) Accounting Standards Issued But Not Yet Effective (continued)
Other accounting standards or amendments to existing accounting standards that have been
issued but have future effective dates are either not applicable or are not expected to have a
significant impact on the Company’s financial statements.
3. Plan of Arrangement and Distribution of Assets
On March 12, 2015, the Company completed the plan of arrangement agreement with Torino
Ventures Inc. (“Spinco”), a private Company incorporated in British Columbia. Pursuant to the plan of
arrangement agreement, the Company has transfered 100% of the Monster Lake South Property
(also known as the Hazeur Property) and $10,000 cash to Spinco in consideration for the issuance of
100% of the common shares of Spinco. These common shares have been distributed to the
Company’s shareholders on a pro rata basis pursuant to a plan of arrangement under the Business
Corporations Act (British Columbia). Shareholder and final court approval for the plan of
arrangement agreement were obtained on February 17, 2015 and February 26, 2015, respectively.
The assets were distributed at their fair value, of $22,800 for the Monster Lake Property and $10,000
for the cash for an aggregate amount of $32,800. In accordance with IFRIC 17, the $32,800
distribution of assets is recorded as an equity transaction in the statement of changes in equity. The
costs in relation to the plan of arrangement were $46,980 and were expensed as plan of
arrangement costs in the statement of operations for the year ended April 30, 2015. Accordingly, the
mineral exploration operations have been treated as discontinued operations for fiscal 2016.
Net loss from discontinued operations
Year ended
April 30,
2017
$
Year ended
April 30,
2016
$
Expenses
Mineral exploration costs (recovery) – (47,802)
Net income from discontinued operations – 47,802
4. Equipment
Equipment
$
Cost:
Balance, April 30, 2016 –
Additions 44,220
Balance, January 31, 2017 44,220
Additions 7,819
Balance, April 30, 2017 52,039
Additions 119,031
Balance, January 31, 2018 171,070
Accumulated depreciation:
Balance, April 30, 2016 and January 31, 2017 –
Additions 2,556
Balance, April 30, 2017 and January 31, 2018 2,556
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
13
4. Equipment (continued)
Carrying amounts:
As at April 30, 2016 –
January 31, 2017 44,220
As at April 30, 2017 49,483
As at January 31, 2018 168,514
5. Deferred Costs
A continuity of deferred license costs capitalized is as follows:
$
Balance, April 30, 2016 3,760,312
603,870 common shares issued Aug 8, 2016 (Note 7(c)) 132,851
Balance, January 31, 2017, April 30, 2017 & January 31, 2018 3,893,163
On June 5, 2014, the Company and a company controlled by the President of the Company,
Cannabix Breathalyzer Inc. (“Licensor”), entered into a definitive licensing agreement (the
“Agreement”). The Agreement provides the Company exclusive license rights (“License Rights”) to
make, use and sell the products and to practice the inventories covered by the medical marijuana
patent in the United States as defined in the patent application filed by the Licensor. The territory
covered in the agreement is the United States and its territories and possessions, and all other
countries that are deemed to constitute the North American Continent (“Territory”). In consideration
for the License Rights, the Company issued 7,500,000 common shares at a fair value of $375,000
and issued 7,500,000 share purchase warrants exercisable at $0.075 for expiring on June 26, 2015
at a fair value of $122,812. The fair value of the share purchase warrants was determined using the
Black-Scholes pricing model.
The Agreement outlines future share payments upon reaching the following milestones: The
issuance of 7,500,000 common shares of the Company within fourteen business days of prototype
delivery to the Company (shares issued April 9, 2015 at a fair value of $3,262,500). Furthermore,
upon receipt of the final patent, the Company will issue 5,000,000 common shares of the Company.
As the final patent has yet to be received, these 5,000,000 common shares have not yet been
issued. The Agreement is also subject to a royalty of 3% of the selling price for each product
manufactured, used, sold, or imported by the Company into the Territory that may be developed
under the patent.
There is no assurance that a prototype or that a final patent will be issued by the U.S. patent office,
however, it is management’s belief and judgement that a patent will ultimately be received. As the
patent has yet to be obtained, the $3,760,312 fair value of consideration issued to the licensor is
presented as deferred costs on the statement of financial position. On July 28, 2016, the Licensor
assigned its right, title, and interest in certain US and Canadian patent applications to the Company.
On July 25, 2016, the Company entered into an exclusive worldwide license agreement for
intellectual property relating to breath diagnostic applications of controlled substances with the
University of Florida Research Foundation, Incorporated ("UFRF"
. As consideration, the Company
issued 603,870 common shares at a fair value of $132,851 to UFRF on August 8, 2016.
6. Related Party Transactions
(a) As at January 31, 2018, the Company owed $10,081 (2017 - $34,000) to officers and directors of
the Company which was included in accounts payable and accrued liabilities.
(b) During the period ended January 31, 2018, the Company incurred consulting fees of $30,500
(2017 - $22,500) to the Chief Executive Officer of the Company.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
14
6. Related Party Transactions (continued)
(c) During the period ended January 31, 2018, the Company incurred consulting fees of $26,000
(2017 - $18,000) to the Chief Financial Officer of the Company.
(d) During the period ended January 31, 2018, the Company incurred consulting fees of $42,000
(2017 - $42,000) to a company controlled by the President of the Company.
(e) During the period ended January 31, 2018, the Company incurred research and development
costs of $26,000 (2017 - $18,000) to a director of the Company.
(f) During the period ended January 31, 2018, the Company granted nil (2017 – 1,825,000 stock
options with a fair value of $905,232) to key management personnel.
7. Share Capital
Authorized: Unlimited number of common shares without par value
Share issuance for the period ended January 31, 2018:
(a) On December 7, 2017, the Company issued 4,850,000 units at $1.15 per unit for gross proceeds
of $5,577,500. Each unit was comprised of one common share and one common share
purchase warrant exercisable at $1.60 per common share for a period of three years from the
date of closing. The Company paid finders’ fees of $350,015 and issued 240,000 share
purchase warrants with a fair value of $217,886 to the finders.
(b) During the nine month period ended January 31, 2018, the Company issued 4,359,667 common
shares for proceeds of $1,062,867 pursuant to the exercise of share purchase warrants.
(c) During the nine month period ended January 31, 2018, the Company issued 1,380,000 common
shares for proceeds of $182,500 pursuant to the exercise of share purchase options.
Share transactions for the year ended April 30, 2017:
(a) During the year ended April 30, 2017, the Company issued 8,235,711 common shares for
proceeds of $2,037,853 pursuant to the exercise of share purchase warrants. The fair value of
the share purchase warrants exercised of $12,236 was reallocated from contributed surplus to
share capital.
(b) During the year ended April 30, 2017, the Company issued 380,000 common shares for
proceeds of $81,750 pursuant to the exercise of stock options. The fair value of the stock
options exercised of $60,611 was reallocated from contributed surplus to share capital.
(c) On August 8, 2016, the Company issued 603,870 common shares with a fair value of $132,851
pursuant to a patent licence agreement. Refer to Note 5.
(d) During the year ended April 30, 2017, the Company received $10,000 for the share
subscriptions that were receivable as at April 30, 2016.
Share transactions for the year ended April 30, 2016:
(a) During the year, the Company issued 3,035,000 common shares for proceeds of $280,500
pursuant to the exercise of share purchase warrants of $280,500. The fair value of the share
purchase warrants exercised of $15,392 was reallocated from contributed surplus to share
capital.
(b) On March 14, 2016, the Company issued 13,880,027 units at $0.15 per unit for gross proceeds
of $2,082,004. Each unit was comprised of one common share and one common share
purchase warrant exercisable at $0.25 per common share for a period of two years from the date
of closing. The Company paid finders’ fees of $32,740, issued 152,267 common shares with a
fair value of $22,840, and issued 370,534 share purchase warrants with a fair value of $70,403
to the finders.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
15
8. Share Purchase Warrants
The following table summarizes the continuity of share purchase warrants:
Number of
warrants
Weighted
average
exercise
price
$
Balance, April 30, 2016 16,740,327 0.22
Exercised (7,951,834) 0.25
Expired (80,250) 0.25
Balance, January 31, 2017 8,708,243 0.24
Exercised (219,477) 0.25
Balance, April 30, 2017 8,488,766 0.24
Exercised (4,359,667) 0.25
Issued 4,850,000 1.60
Balance, January 31, 2018 8,979,099 0.97
As at January 31, 2018, the following share purchase warrants were outstanding:
Number of
warrants
outstanding
Exercise
price
$ Expiry date
2,275,547 0.25 March 14, 2018
1,540,552 0.20 December 16, 2018
313,000 0.25 December 16, 2018
4,850,000 1.60 December 7, 2020
8,979,099
Agent's Warrants
The following table summarizes the continuity of agent's warrants:
Number of
warrants
Weighted average
exercise price
$
Balance, April 30, 2016, January 31, 2017 and April 30, 2017 309,134 0.25
Issued 240,000 1.15
Balance, January 31, 2018 549,134 0.64
As at January 31, 2018, the following agent's warrants were outstanding:
Number of
warrants
outstanding
Exercise
price
$ Expiry date
306,134 0.25 March 14, 2018
240,000 1.15 December 7, 2019
549,134
On March 14, 2016, the Company issued 370,534 share purchase warrants as finders' fees. Each
share purchase warrant is exercisable into one common share at an exercise price of $0.25 per
share expiring on March 14, 2018.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
16
8. Share Purchase Warrants (continued)
On December 7, 2017, the Company issued 240,000 share purchase warrants as finders' fees. Each
share purchase warrant is exercisable into one common share at an exercise price of $1.15 per
share expiring on December 7, 2019.
The fair value for share purchase warrants issued have been estimated using the Black-Scholes
option pricing model assuming no expected dividends and forfeitures, and the following weighted
average assumptions:
2017 2016
Risk-free interest rate 1.18% 0.6%
Expected life (in years) 2 2
Expected volatility 103% 166%
9. Stock Options
The Company has adopted a stock option plan pursuant to which options may be granted to
directors, officers, employees and consultants of the Company to a maximum of 10% of the issued
and outstanding common shares. The aggregate number of options granted to any one optionee in a
one year period is limited to 5% of the issued shares of the corporation. The exercise price of each
option is set by the Board of Directors at the time of grant. Options vest immediately when granted
and can have a maximum term of ten years.
The following table summarizes the continuity of the Company’s stock options:
Number of
stock options
Weighted
average
exercise
price
$
Outstanding, April 30, 2016 3,911,000 0.13
Granted 5,025,000 0.58
Exercised (380,000) 0.10
Outstanding, January 31, 2017 8,556,000 0.38
Expired (100,000) 0.50
Outstanding, January 31, 2017 8,456,000 0.39
Exercised (1,380,000) 0.13
Outstanding, April 30, 2017 & January 31, 2018 7,076,000 0.44
Additional information regarding stock options outstanding as at January 31, 2018, is as follows:
Outstanding and exercisable
Exercise price
$
Number of
stock options
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise price
$
0.10 706,000 1.2 0.10
0.125 1,320,000 1.9 0.125
0.20 250,000 1.0 0.20
0.35 2,500,000 3.3 0.35
0.85 2,300,000 3.7 0.85
7,076,000 2.9 0.44
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
17
9. Stock Options (continued)
The fair value for stock options granted have been estimated using the Black-Scholes option pricing
model assuming no expected dividends or forfeitures and the following weighted average
assumptions:
2017 2016
Risk-free interest rate 0.96% 0.50%
Expected life (in years) 5 3
Expected volatility 166% 184%
The total fair value of stock options issued during the nine month period ended January 31, 2018
was $nil (2017 - $1,711,682) which was recorded as share-based payment reserve and charged to
operations. The weighted average fair value of the stock options granted during the nine month
period ended January 31, 2018 was $nil (2017 - $0.35) per option. The weighted average share
price for stock options exercised was $nil (2017 - $0.23).
10. Capital Management
The Company manages its capital to maintain its ability to continue as a going concern and to
provide returns to shareholders and benefits to other stakeholders. The capital structure of the
Company consists of cash and cash equivalents, and equity comprised of issued share capital,
share subscriptions receivable, and contributed surplus.
The Company manages its capital structure and makes adjustments to it in light of economic
conditions. The Company, upon approval from its Board of Directors, will balance its overall capital
structure through new share issues or by undertaking other activities as deemed appropriate under
the specific circumstances.
The Company is not subject to externally imposed capital requirements and the Company’s overall
strategy with respect to capital risk management remains unchanged from the year ended
April 30, 2017.
11. Financial Instruments and Risks
(a) Fair Values
Assets and liabilities measured at fair value on a recurring basis were presented on the
Company’s statement of financial position as at January 31, 2018, as follows:
Fair Value Measurements Using
Quoted prices in
active markets
for identical
instruments
(Level 1)
$
Significant
other observable
inputs
(Level 2)
$
Significant
unobservable
inputs
(Level 3)
$
Balance,
January 31,
2018
$
Cash and cash equivalents 8,589,511 – – 8,589,511
The fair values of other financial instruments, which include amounts receivable, and accounts
payable and accrued liabilities approximate their carrying values due to the relatively short-term
maturity of these instruments.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
18
11. Financial Instruments and Risks (continued)
(b) Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk
consist primarily of cash and cash equivalents and amounts receivable. The Company limits its
exposure to credit loss by placing its cash and cash equivalents with high credit quality financial
institutions. Amounts receivable consists of GST receivable due from the Government of Canada
and accrued interest receivable due on guaranteed investment certificates held at a financial
institution. The carrying amount of financial assets represents the maximum credit exposure.
(c) Foreign Exchange Rate Risk
The Company is not exposed to any significant foreign exchange risk.
(d) Interest Rate Risk
The Company is not exposed to any significant interest rate risk.
(e) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they
fall due. The Company currently settles its financial obligations out of cash and cash equivalents.
The ability to do this relies on the Company raising debt or equity financing in a timely manner
and by maintaining sufficient cash in excess of anticipated needs.
12. Subsequent Events
Subsequent to the period ended January 31, 2018, 2,265,734 share purchase warrants were
exercised.
CANNABIX TECHNOLOGIES INC.
Interim Financial Statements
(Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
UNAUDITED INTERIM FINANCIAL STATEMENTS
In accordance with National Instrument 51-102 released by the Canadian Securities
Administrators, the Company discloses that its auditors have not reviewed the
unaudited interim financial statements for the nine months ended January 31, 2018.
CANNABIX TECHNOLOGIES INC.
Statements of financial position
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
2
January 31,
2018
$
April 30,
2017
$
Assets
Current assets
Cash and cash equivalents 8,589,511 3,552,838
Amounts receivable 273,759 29,646
Prepaid expenses 10,050 71,793
Total current assets 8,873,320 3,653,977
Non-current assets
Equipment (Note 4) 168,514 49,483
Deferred costs (Note 5) 3,893,163 3,893,163
Total non-current assets 4,061,677 3,942,646
Total assets 12,934,997 7,596,623
Liabilities
Current liabilities
Accounts payable and accrued liabilities (Note 6) 53,809 158,456
Total liabilities 53,809 158,456
Shareholders’ equity
Share capital 17,655,101 11,439,250
Contributed surplus 3,469,376 3,251,490
Deficit (8,243,289) (7,252,573)
Total shareholders’ equity 12,881,188 7,438,167
Total liabilities and shareholders’ equity 12,934,997 7,596,623
Nature of operations and continuance of business (Note 1)
Approved and authorized for issuance on behalf of the Board of Directors on April 3, 2018:
/s/ Ravinder Mlait /s/ Bryan Loree
Ravinder Mlait, Director Bryan Loree, Director
CANNABIX TECHNOLOGIES INC.
Statements of operations and comprehensive loss
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
3
Three months
ended
January 31,
2018
$
Three months
ended
January 31,
2017
$
Nine months
ended
January 31,
2018
$
Nine months
ended
January 31,
2017
$
Revenue – – – –
Operating expenses
Research & Development (Note 6) 193,312 198,301 616,763 366,589
Consulting fees (Note 6) 98,500 82,500 263,500 247,500
Advertising & promotion 3,500 68,451 22,133 129,018
Insurance 13,450 – 13,450 10,620
Office and miscellaneous 2,046 1,031 4,616 6,188
Professional fees 7,604 2,079 24,956 12,940
Transfer agent & filing fees 14,322 4,935 40,599 15,873
Travel 3,917 905 7,987 22,642
Share-based compensation – 1,140,840 – 1,711,682
Total operating expenses 336,651 1,499,042 994,004 2,523,052
Net loss before other income (336,651) (1,499,042) (994,004) (2,523,052)
Other income
Interest Income – – 3,288 988
Net loss and comprehensive loss (336,651) (1,499,042) (990,716) (2,522,064)
Loss per share, basic and diluted
(0.00)
(0.02)
(0.01)
(0.03)
Weighted average shares outstanding 92,136,325 84,772,883 88,352,402 79,857,969
CANNABIX TECHNOLOGIES INC.
Statements of changes in equity
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
4
Share Total
Share capital subscriptions Contributed shareholders’
Number of
Shares
Amount
$
receivable
$
surplus
$
Deficit
$
equity
$
Balance, April 30, 2016 77,207,072 9,113,949 (10,000) 832,399 (3,520,378) 6,415,970
Shares issued pursuant to private placements – – 10,000 – – 10,000
Shares issued pursuant to licensing agreement 603,870 132,851 – – – 132,851
Shares issued pursuant to warrants exercised 7,951,834 1,966,933 – – – 1,966,933
Shares issued pursuant to stock options exercised 380,000 142,361 – (60,611) – 81,750
Fair value of stock options granted – – – 1,711,682 – 1,711,682
Net loss – – – – (2,522,064) (2,522,064)
Balance, January 31, 2017 86,142,776 11,356,094 – 2,483,470 (6,042,442) 7,797,122
Shares issued pursuant to warrants exercised 283,877 83,156 – (12,236) – 70,920
Fair value of stock options granted – – – 780,256 – 780,256
Net loss – – – – (1,210,131) (1,210,131)
Balance, April 30, 2017 86,426,653 11,439,250 – 3,251,490 (7,252,573) 7,438,167
Shares issued pursuant to private placements 4,850,000 5,577,500 – – – 5,577,500
Share issuance costs (607,016) – 217,886 – (389,130)
Shares issued pursuant to warrants exercised 4,359,667 1,062,867 – – – 1,062,867
Shares issued pursuant to stock options exercised 1,380,000 182,500 – – – 182,500
Net loss – – –
–
(990,716) (990,716)
Balance, January 31, 2018 97,016,320 17,655,101 – 3,469,376 (8,243,289) 12,881,188
CANNABIX TECHNOLOGIES INC.
Statements of cash flows
(Expressed in Canadian dollars)
(The accompanying notes are an integral part of these financial statements)
5
Three months
ended
January 31,
2018
$
Three months
ended
January 31,
2017
$
Nine months
ended
January 31,
2018
$
Nine months
ended
January 31,
2017
$
Operating activities
Net loss (336,651) (1,499,042) (990,716) (2,522,064)
Item not involving cash:
Share-based compensation – 1,140,840 – 1,711,682
Licensing fees – (132,851) – (132,851)
Changes in non-cash operating working capital:
Amounts receivable (253,273) (7,506) (244,113) (1,293)
Accounts payable and accrued liabilities 6,698 (51,844) (104,647) 32,295
Prepaid expenses (50) (218) 61,443 17,772
Net cash used in operating activities (583,276) (550,621) (1,278,033) (894,459)
Investing activities
Equipment acquisition costs – – (119,031) (44,220)
Net cash used in investing activities – – (119,031) (44,220)
Financing activities
Proceeds from issuance of common shares 6,813,717 1,453,409 6,822,867 2,181,535
Share issuance costs (607,016) – (607,016) –
Warrants issued as finder’s fees 217,886 – 217,886 –
Subscription receivable – – – 10,000
Net cash provided by financing activities 6,424,587 1,453,409 6,433,737 2,191,535
Change in cash 5,841,311 902,788 5,036,673 1,252,856
Cash, beginning of period 2,748,200 2,973,779 3,552,838 2,623,711
Cash, end of period 8,589,511 3,876,567 8,589,511 3,876,567
Cash and cash equivalents is comprised of:
Cash held in bank 6,072,261 2,159,317 6,072,261 2,159,317
Cashable Guaranteed Investment Certificates 2,517,250 1,717,250 2,517,250 1,717,250
Total cash and cash equivalents 8,589,511 3,876,567 8,589,511 3,876,567
Supplemental disclosures:
Interest paid – – – –
Income taxes paid – – – –
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
6
1. Nature of Operations and Continuance of Business
Cannabix Technologies Inc. (the “Company”) is a public company listed on the Canadian Securities
Exchange (“CSE”) and trades under the symbol 'BLO'. The Company was incorporated on April 5,
2011 under the BC Business Corporations Act as West Point Resources Inc. and on August 12,
2014 the name of the Company was changed. The Company’s corporate office is at 501 - 3292
Production Way, Burnaby, BC.
The Company’s primary business is the development of the Cannabix marijuana breathalyzer, which
is being acquired under license. The operations of the Company requires research and development
of the technology. There can be no assurance that the Company will be able to produce a product
that is technically and commercially feasible.
These financial statements have been prepared on a going concern basis, which assumes that the
Company will be able to realize its assets and discharge its liabilities in the normal course of
business. As at January 31, 2018, the Company has no source of revenue, generates negative cash
flows from operating activities, and has an accumulated deficit of $8,243,289. These factors form a
material uncertainty that may cast significant doubt about the Company’s ability to continue as a
going concern. The continued operations of the Company are dependent on its ability to generate
future cash flows from operations or obtain additional financing. Management is of the opinion that
sufficient working capital will be obtained from external financing to meet the Company’s liabilities
and commitments as they become due, although there is a risk that additional financing will not be
available on a timely basis or on terms acceptable to the Company. These financial statements do
not reflect any adjustments that may be necessary if the Company is unable to continue as a going
concern.
2. Significant Accounting Policies
(a) Statement of Compliance and Basis of Presentation
These condensed interim consolidated financial statements are prepared in accordance with
International Accounting Standard (“IAS”) 34 Interim Financial Reporting under International
Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board
(“IASB”). These condensed interim consolidated financial statements follow the same
accounting policies and methods of application as the Company’s most recent annual financial
statements but do not contain all of the information required for full annual financial statements.
Accordingly, these condensed interim consolidated financial statements should be read in
conjunction with the Company’s most recent annual financial statements, which were prepared
in accordance with IFRS as issued by the IASB.
These financial statements have been prepared on a historical cost basis except for certain
financial instruments which are measured at fair value as explained in Note 2(g). The financial
statements are presented in Canadian dollars, which is the Company’s functional currency.
(b) Use of Estimates and Judgments
The preparation of these financial statements in conformity with IFRS requires the Company’s
management to make judgments, estimates, and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, revenues, and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
Significant areas requiring the use of estimates include the recoverability of deferred costs, fair
value of share-based payments, and recognition of deferred income tax assets.
The assessment of whether the going concern assumption is appropriate requires management
to take into account all available information about the future, which is at least, but is not limited
to, 12 months from the end of the reporting period. The Company is aware that material
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
7
2. Significant Accounting Policies (continued)
(b) Use of Estimates and Judgments (continued)
uncertainties related to events or conditions may cast significant doubt upon the Company’s
ability to continue as a going concern.
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at
the time of issuance, are readily convertible to known amounts of cash, and which are subject to
insignificant risk of changes in value to be cash equivalents.
(d) Intangible Assets
Intangible assets that are acquired by the Company and have finite useful lives are measured at
cost less accumulated amortization and accumulated impairment losses. Acquired intangible
assets with indefinite useful lives are stated at cost and are not amortized.
An intangible asset is derecognized on disposal or when no future economic benefits are
expected from its use or disposal.
(e) Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditures that are directly attributable to the acquisition of
the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probably that future economic benefits associated
with the item will flow to the Company and the cost can be measured reliably. The carrying
amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are
charged to the statement of operations during the period in which they are incurred.
Depreciation of property and equipment is provided using the straight-line method at the
following rates approximating their estimated useful lives:
Equipment 10 years
(f) Impairment of Non-Financial Assets
At each reporting date, the Company assesses whether there are indicators of impairment for its
non-financial assets. If indicators exist, the Company determines if the recoverable amount of
the asset or CGU is greater than its carrying amount. A CGU is defined as the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash
inflows of other assets or groups of assets. The Company has used geographical proximity,
geological similarities, analysis of shared infrastructure, commodity type, assessment of
exposure to market risks and materiality to define its CGUs.
If the carrying amount exceeds the recoverable amount, the asset or CGU is recorded at its
recoverable amount with the reduction recognized in the statement of operations. The
recoverable amount is the greater of the value in use or fair value less costs to sell. Fair value is
the amount the asset could be sold for in an arm’s length transaction. The value in use is the
present value of the estimated future cash flows of the asset from its continued use. The fair
value less costs to sell considers the continued development of a property and market
transactions in a valuation model.
Impairments are reversed in subsequent periods when there has been an increase in the
recoverable amount of a previously impaired asset or CGU and these reversals are recognized
in the statement of operations. The recovery is limited to the original carrying amount less
depreciation, if any, that would have been recorded had the asset not been impaired.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
8
(g) Research and Development Costs
Research costs are charged to operations as incurred. Research costs consist primarily of
consulting expenses and parts related to the design, testing, and manufacture of the Cannabix
marijuana breathalyzer. Development activities involve a plan or design for the production of new
or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product is technically and commercially
feasible, future economic benefits are probable, and the Company intends to or has sufficient
resources to complete development and to use or sell the asset. The expenditure capitalized
includes the cost of materials, direct labour and overhead costs that are directly attributable to
preparing the asset for its intended use, and borrowing costs on qualifying assets. Other
development expenditure is recognized in the statement of operations as incurred.
(h) Financial Instruments
(i) Non-derivative financial assets
The Company initially recognizes loans and receivables and deposits on the date that they
are originated. All other financial assets (including assets designated at fair value through
profit or loss) are recognized initially on the trade date at which the Company becomes a
party to the contractual provisions of the instrument.
The Company derecognizes a financial asset when the contractual rights to the cash flows
from the asset expire, or it transfers the rights to receive the contractual cash flows on the
financial asset in a transaction in which substantially all the risk and rewards of ownership of
the financial asset are transferred. Any interest in transferred financial assets that is created
or retained by the Company is recognized as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
Financial assets at fair value through profit or loss
Financial assets are classified as fair value through profit or loss when the financial asset is
held for trading or it is designated as fair value through profit or loss. A financial asset is
classified as held for trading if: (i) it has been acquired principally for the purpose of selling in
the near future; (ii) it is a part of an identified portfolio of financial instruments that the
Company manages and has an actual pattern of short-term profit taking; or (iii) it is a
derivative that is not designated and effective as a hedging instrument.
Financial assets classified as fair value through profit or loss are stated at fair value with any
gain or loss recognized in the statement of operations. The net gain or loss recognized
incorporates any dividend or interest earned on the financial asset. The Company’s cash and
cash equivalents are classified as fair value through profit or loss.
Held-to-maturity investments
Held-to-maturity investments are recognized on a trade-date basis and are initially measured
at fair value, including transaction costs. The Company does not have any assets classified
as held-to-maturity investments.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as
available-for-sale and that are not classified in any of the previous categories. Subsequent to
initial recognition, they are measured at fair value and changes therein, other than
impairment losses and foreign currency differences on available-for-sale equity instruments,
are recognized in other comprehensive income and presented within equity in the fair value
reserve. When an investment is derecognized, the cumulative gain or loss in other
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
9
2. Significant Accounting Policies (continued)
(h) Financial Instruments (continued)
(i) Non-derivative financial assets (continued)
comprehensive income is transferred to the statement of operations. The Company does not
have any available-for-sale financial assets.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not
quoted in an active market are classified as loans and receivables. Such assets are initially
recognized at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, loans and receivables are measured at amortized cost using the effective interest
method, less any impairment losses. Loans and receivables are comprised of amounts
receivable.
Impairment of financial assets
When an available-for-sale financial asset is considered to be impaired, cumulative gains or
losses previously recognized in other comprehensive income or loss are reclassified to the
statement of operations in the period. Financial assets are assessed for indicators of
impairment at the end of each reporting period. Financial assets are impaired when there is
objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial assets, the estimated future cash flows of the investments have
been impacted. For marketable securities classified as available-for-sale, a significant or
prolonged decline in the fair value of the securities below their cost is considered to be
objective evidence of impairment.
For all other financial assets objective evidence of impairment could include:
• significant financial difficulty of the issuer or counterparty; or
• default or delinquency in interest or principal payments; or
• it becoming probable that the borrower will enter bankruptcy or financial re-organization.
For certain categories of financial assets, such as amounts receivable, assets that are
assessed not to be impaired individually are subsequently assessed for impairment on a
collective basis. The carrying amount of financial assets is reduced by the impairment loss
directly for all financial assets with the exception of amounts receivable, where the carrying
amount is reduced through the use of an allowance account. When an amount receivable is
considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account.
Changes in the carrying amount of the allowance account are recognized in the statement of
operations.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related objectively to an
event occurring after the impairment was recognized, the previously recognized impairment
loss is reversed through the statement of operations to the extent that the carrying amount of
the investment at the date the impairment is reversed does not exceed what the amortized
cost would have been had the impairment not been recognized. In respect of available-forsale
equity securities, impairment losses previously recognized through the statement of
operations are not reversed through the statement of operations. Any increase in fair value
subsequent to an impairment loss is recognized directly in equity.
(ii) Non-derivative financial liabilities
The Company initially recognizes debt securities issued and subordinated liabilities on the
date that they are originated. All other financial liabilities (including liabilities designated at fair
value through profit or loss) are recognized initially on the date at which the Company
becomes a party to the contractual provisions of the instrument. The Company derecognizes
a financial liability when its contractual obligations are discharged, cancelled, or expire.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
10
2. Significant Accounting Policies (continued)
(h) Financial Instruments (continued)
(ii) Non-derivative financial liabilities (continued)
Financial assets and liabilities are offset and the net amount presented in the statement of
financial position when, and only when, the Company has a legal right to offset the amounts
and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
The Company has the following non-derivative financial liabilities: accounts payable and
accrued liabilities. Such financial liabilities are recognized initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortized cost using the effective interest method.
(iii) Share capital
Common shares are classified as equity. Transaction costs directly attributable to the issue of
common shares and stock options are recognized as a deduction from equity, net of any tax
effects.
(i) Foreign Currency Translation
The functional and reporting currency is the Canadian dollar. Transactions denominated in
foreign currencies are translated using the exchange rate in effect on the transaction date or a t
an average rate. Monetary assets and liabilities denominated in foreign currencies are translated
at the rate of exchange in effect at the statement of financial position date. Non-monetary items
are translated using the historical rate on the date of the transaction. Revenue and expenses are
translated at average rates for the periods. Foreign exchange gains and losses are included in
the statement of operations.
(j) Income Taxes
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used
to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Current income tax relating to items recognized directly in other comprehensive income or equity
is recognized in other comprehensive income or equity and not in the statement of operations.
Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred income tax
Deferred income tax is provided using the statement of financial position method on temporary
differences at the reporting date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes. The carrying amount of deferred income tax assets is
reviewed at the end of each reporting period and recognized only to the extent that it is probable
that sufficient taxable income will be available to allow all or part of the deferred income tax
asset to be utilized. Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realized or the liability is settled, based on
tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period. Deferred income tax assets and deferred income tax liabilities are offset, if a
legally enforceable right exists to set off current tax assets against current income tax liabilities
and the deferred income taxes relate to the same taxable entity and the same taxation authority.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
11
2. Significant Accounting Policies (continued)
(k) Share-based Payments
The grant date fair value of share-based payment awards granted to employees is recognized as
stock-based compensation expense, with a corresponding increase in equity, over the period
that the employees unconditionally become entitled to the awards. The amount recognized as an
expense is adjusted to reflect the number of awards for which the related service and nonmarket
vesting conditions are expected to be met, such that the amount ultimately recognized as
an expense is based on the number of awards that do meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such
conditions and there is no true-up for differences between expected and actual outcomes.
Where equity instruments are granted to parties other than employees, they are recorded by
reference to the fair value of the services received. If the fair value of the services received
cannot be reliably estimated, the Company measures the services received by reference to the
fair value of the equity instruments granted, measured at the date the counterparty renders
service.
All equity-settled share-based payments are reflected in share-based payment reserve, unless
exercised. Upon exercise, shares are issued from treasury and the amount reflected in sharebased
payment reserve is credited to share capital, adjusted for any consideration paid.
(l) Loss Per Share
Basic loss per share is computed using the weighted average number of common shares
outstanding during the period. The treasury stock method is used for the calculation of diluted
loss per share, whereby all “in the money” stock options and share purchase warrants are
assumed to have been exercised at the beginning of the period and the proceeds from their
exercise are assumed to have been used to purchase common shares at the average market
price during the period. When a loss is incurred during the period, basic and diluted loss per
share are the same as the exercise of stock options and share purchase warrants is considered
to be anti-dilutive. As at January 31, 2018, the Company had 16,604,233 (2017 – 17,573,377)
potentially dilutive shares outstanding.
(m) Comprehensive Loss
Comprehensive loss is the change in the Company’s net assets that results from transactions,
events and circumstances from sources other than the Company’s shareholders and includes
items that are not included in the statement of operations. For the periods ended January 31,
2017 and 2016, the Company did not have any transactions impacting comprehensive income
(loss).
(n) Reclassifications
Certain reclassifications have been made to the prior year’s financial statements to conform to
the current year’s presentation.
(o) Accounting Standards Issued But Not Yet Effective
The following new standards, and amendments to standards and interpretations, are effective for
the period ended January 31, 2018, and have not been applied in preparing these financial
statements:
New standard IFRS 9, “Financial Instruments”
Amendments to IAS 1, “Presentation of Financial Statements”
The Company has not early adopted these new and revised standards and is currently
assessing the impact that these standards will have on its financial statements.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
12
2. Significant Accounting Policies (continued)
(o) Accounting Standards Issued But Not Yet Effective (continued)
Other accounting standards or amendments to existing accounting standards that have been
issued but have future effective dates are either not applicable or are not expected to have a
significant impact on the Company’s financial statements.
3. Plan of Arrangement and Distribution of Assets
On March 12, 2015, the Company completed the plan of arrangement agreement with Torino
Ventures Inc. (“Spinco”), a private Company incorporated in British Columbia. Pursuant to the plan of
arrangement agreement, the Company has transfered 100% of the Monster Lake South Property
(also known as the Hazeur Property) and $10,000 cash to Spinco in consideration for the issuance of
100% of the common shares of Spinco. These common shares have been distributed to the
Company’s shareholders on a pro rata basis pursuant to a plan of arrangement under the Business
Corporations Act (British Columbia). Shareholder and final court approval for the plan of
arrangement agreement were obtained on February 17, 2015 and February 26, 2015, respectively.
The assets were distributed at their fair value, of $22,800 for the Monster Lake Property and $10,000
for the cash for an aggregate amount of $32,800. In accordance with IFRIC 17, the $32,800
distribution of assets is recorded as an equity transaction in the statement of changes in equity. The
costs in relation to the plan of arrangement were $46,980 and were expensed as plan of
arrangement costs in the statement of operations for the year ended April 30, 2015. Accordingly, the
mineral exploration operations have been treated as discontinued operations for fiscal 2016.
Net loss from discontinued operations
Year ended
April 30,
2017
$
Year ended
April 30,
2016
$
Expenses
Mineral exploration costs (recovery) – (47,802)
Net income from discontinued operations – 47,802
4. Equipment
Equipment
$
Cost:
Balance, April 30, 2016 –
Additions 44,220
Balance, January 31, 2017 44,220
Additions 7,819
Balance, April 30, 2017 52,039
Additions 119,031
Balance, January 31, 2018 171,070
Accumulated depreciation:
Balance, April 30, 2016 and January 31, 2017 –
Additions 2,556
Balance, April 30, 2017 and January 31, 2018 2,556
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
13
4. Equipment (continued)
Carrying amounts:
As at April 30, 2016 –
January 31, 2017 44,220
As at April 30, 2017 49,483
As at January 31, 2018 168,514
5. Deferred Costs
A continuity of deferred license costs capitalized is as follows:
$
Balance, April 30, 2016 3,760,312
603,870 common shares issued Aug 8, 2016 (Note 7(c)) 132,851
Balance, January 31, 2017, April 30, 2017 & January 31, 2018 3,893,163
On June 5, 2014, the Company and a company controlled by the President of the Company,
Cannabix Breathalyzer Inc. (“Licensor”), entered into a definitive licensing agreement (the
“Agreement”). The Agreement provides the Company exclusive license rights (“License Rights”) to
make, use and sell the products and to practice the inventories covered by the medical marijuana
patent in the United States as defined in the patent application filed by the Licensor. The territory
covered in the agreement is the United States and its territories and possessions, and all other
countries that are deemed to constitute the North American Continent (“Territory”). In consideration
for the License Rights, the Company issued 7,500,000 common shares at a fair value of $375,000
and issued 7,500,000 share purchase warrants exercisable at $0.075 for expiring on June 26, 2015
at a fair value of $122,812. The fair value of the share purchase warrants was determined using the
Black-Scholes pricing model.
The Agreement outlines future share payments upon reaching the following milestones: The
issuance of 7,500,000 common shares of the Company within fourteen business days of prototype
delivery to the Company (shares issued April 9, 2015 at a fair value of $3,262,500). Furthermore,
upon receipt of the final patent, the Company will issue 5,000,000 common shares of the Company.
As the final patent has yet to be received, these 5,000,000 common shares have not yet been
issued. The Agreement is also subject to a royalty of 3% of the selling price for each product
manufactured, used, sold, or imported by the Company into the Territory that may be developed
under the patent.
There is no assurance that a prototype or that a final patent will be issued by the U.S. patent office,
however, it is management’s belief and judgement that a patent will ultimately be received. As the
patent has yet to be obtained, the $3,760,312 fair value of consideration issued to the licensor is
presented as deferred costs on the statement of financial position. On July 28, 2016, the Licensor
assigned its right, title, and interest in certain US and Canadian patent applications to the Company.
On July 25, 2016, the Company entered into an exclusive worldwide license agreement for
intellectual property relating to breath diagnostic applications of controlled substances with the
University of Florida Research Foundation, Incorporated ("UFRF"
. As consideration, the Company issued 603,870 common shares at a fair value of $132,851 to UFRF on August 8, 2016.
6. Related Party Transactions
(a) As at January 31, 2018, the Company owed $10,081 (2017 - $34,000) to officers and directors of
the Company which was included in accounts payable and accrued liabilities.
(b) During the period ended January 31, 2018, the Company incurred consulting fees of $30,500
(2017 - $22,500) to the Chief Executive Officer of the Company.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
14
6. Related Party Transactions (continued)
(c) During the period ended January 31, 2018, the Company incurred consulting fees of $26,000
(2017 - $18,000) to the Chief Financial Officer of the Company.
(d) During the period ended January 31, 2018, the Company incurred consulting fees of $42,000
(2017 - $42,000) to a company controlled by the President of the Company.
(e) During the period ended January 31, 2018, the Company incurred research and development
costs of $26,000 (2017 - $18,000) to a director of the Company.
(f) During the period ended January 31, 2018, the Company granted nil (2017 – 1,825,000 stock
options with a fair value of $905,232) to key management personnel.
7. Share Capital
Authorized: Unlimited number of common shares without par value
Share issuance for the period ended January 31, 2018:
(a) On December 7, 2017, the Company issued 4,850,000 units at $1.15 per unit for gross proceeds
of $5,577,500. Each unit was comprised of one common share and one common share
purchase warrant exercisable at $1.60 per common share for a period of three years from the
date of closing. The Company paid finders’ fees of $350,015 and issued 240,000 share
purchase warrants with a fair value of $217,886 to the finders.
(b) During the nine month period ended January 31, 2018, the Company issued 4,359,667 common
shares for proceeds of $1,062,867 pursuant to the exercise of share purchase warrants.
(c) During the nine month period ended January 31, 2018, the Company issued 1,380,000 common
shares for proceeds of $182,500 pursuant to the exercise of share purchase options.
Share transactions for the year ended April 30, 2017:
(a) During the year ended April 30, 2017, the Company issued 8,235,711 common shares for
proceeds of $2,037,853 pursuant to the exercise of share purchase warrants. The fair value of
the share purchase warrants exercised of $12,236 was reallocated from contributed surplus to
share capital.
(b) During the year ended April 30, 2017, the Company issued 380,000 common shares for
proceeds of $81,750 pursuant to the exercise of stock options. The fair value of the stock
options exercised of $60,611 was reallocated from contributed surplus to share capital.
(c) On August 8, 2016, the Company issued 603,870 common shares with a fair value of $132,851
pursuant to a patent licence agreement. Refer to Note 5.
(d) During the year ended April 30, 2017, the Company received $10,000 for the share
subscriptions that were receivable as at April 30, 2016.
Share transactions for the year ended April 30, 2016:
(a) During the year, the Company issued 3,035,000 common shares for proceeds of $280,500
pursuant to the exercise of share purchase warrants of $280,500. The fair value of the share
purchase warrants exercised of $15,392 was reallocated from contributed surplus to share
capital.
(b) On March 14, 2016, the Company issued 13,880,027 units at $0.15 per unit for gross proceeds
of $2,082,004. Each unit was comprised of one common share and one common share
purchase warrant exercisable at $0.25 per common share for a period of two years from the date
of closing. The Company paid finders’ fees of $32,740, issued 152,267 common shares with a
fair value of $22,840, and issued 370,534 share purchase warrants with a fair value of $70,403
to the finders.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
15
8. Share Purchase Warrants
The following table summarizes the continuity of share purchase warrants:
Number of
warrants
Weighted
average
exercise
price
$
Balance, April 30, 2016 16,740,327 0.22
Exercised (7,951,834) 0.25
Expired (80,250) 0.25
Balance, January 31, 2017 8,708,243 0.24
Exercised (219,477) 0.25
Balance, April 30, 2017 8,488,766 0.24
Exercised (4,359,667) 0.25
Issued 4,850,000 1.60
Balance, January 31, 2018 8,979,099 0.97
As at January 31, 2018, the following share purchase warrants were outstanding:
Number of
warrants
outstanding
Exercise
price
$ Expiry date
2,275,547 0.25 March 14, 2018
1,540,552 0.20 December 16, 2018
313,000 0.25 December 16, 2018
4,850,000 1.60 December 7, 2020
8,979,099
Agent's Warrants
The following table summarizes the continuity of agent's warrants:
Number of
warrants
Weighted average
exercise price
$
Balance, April 30, 2016, January 31, 2017 and April 30, 2017 309,134 0.25
Issued 240,000 1.15
Balance, January 31, 2018 549,134 0.64
As at January 31, 2018, the following agent's warrants were outstanding:
Number of
warrants
outstanding
Exercise
price
$ Expiry date
306,134 0.25 March 14, 2018
240,000 1.15 December 7, 2019
549,134
On March 14, 2016, the Company issued 370,534 share purchase warrants as finders' fees. Each
share purchase warrant is exercisable into one common share at an exercise price of $0.25 per
share expiring on March 14, 2018.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
16
8. Share Purchase Warrants (continued)
On December 7, 2017, the Company issued 240,000 share purchase warrants as finders' fees. Each
share purchase warrant is exercisable into one common share at an exercise price of $1.15 per
share expiring on December 7, 2019.
The fair value for share purchase warrants issued have been estimated using the Black-Scholes
option pricing model assuming no expected dividends and forfeitures, and the following weighted
average assumptions:
2017 2016
Risk-free interest rate 1.18% 0.6%
Expected life (in years) 2 2
Expected volatility 103% 166%
9. Stock Options
The Company has adopted a stock option plan pursuant to which options may be granted to
directors, officers, employees and consultants of the Company to a maximum of 10% of the issued
and outstanding common shares. The aggregate number of options granted to any one optionee in a
one year period is limited to 5% of the issued shares of the corporation. The exercise price of each
option is set by the Board of Directors at the time of grant. Options vest immediately when granted
and can have a maximum term of ten years.
The following table summarizes the continuity of the Company’s stock options:
Number of
stock options
Weighted
average
exercise
price
$
Outstanding, April 30, 2016 3,911,000 0.13
Granted 5,025,000 0.58
Exercised (380,000) 0.10
Outstanding, January 31, 2017 8,556,000 0.38
Expired (100,000) 0.50
Outstanding, January 31, 2017 8,456,000 0.39
Exercised (1,380,000) 0.13
Outstanding, April 30, 2017 & January 31, 2018 7,076,000 0.44
Additional information regarding stock options outstanding as at January 31, 2018, is as follows:
Outstanding and exercisable
Exercise price
$
Number of
stock options
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise price
$
0.10 706,000 1.2 0.10
0.125 1,320,000 1.9 0.125
0.20 250,000 1.0 0.20
0.35 2,500,000 3.3 0.35
0.85 2,300,000 3.7 0.85
7,076,000 2.9 0.44
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
17
9. Stock Options (continued)
The fair value for stock options granted have been estimated using the Black-Scholes option pricing
model assuming no expected dividends or forfeitures and the following weighted average
assumptions:
2017 2016
Risk-free interest rate 0.96% 0.50%
Expected life (in years) 5 3
Expected volatility 166% 184%
The total fair value of stock options issued during the nine month period ended January 31, 2018
was $nil (2017 - $1,711,682) which was recorded as share-based payment reserve and charged to
operations. The weighted average fair value of the stock options granted during the nine month
period ended January 31, 2018 was $nil (2017 - $0.35) per option. The weighted average share
price for stock options exercised was $nil (2017 - $0.23).
10. Capital Management
The Company manages its capital to maintain its ability to continue as a going concern and to
provide returns to shareholders and benefits to other stakeholders. The capital structure of the
Company consists of cash and cash equivalents, and equity comprised of issued share capital,
share subscriptions receivable, and contributed surplus.
The Company manages its capital structure and makes adjustments to it in light of economic
conditions. The Company, upon approval from its Board of Directors, will balance its overall capital
structure through new share issues or by undertaking other activities as deemed appropriate under
the specific circumstances.
The Company is not subject to externally imposed capital requirements and the Company’s overall
strategy with respect to capital risk management remains unchanged from the year ended
April 30, 2017.
11. Financial Instruments and Risks
(a) Fair Values
Assets and liabilities measured at fair value on a recurring basis were presented on the
Company’s statement of financial position as at January 31, 2018, as follows:
Fair Value Measurements Using
Quoted prices in
active markets
for identical
instruments
(Level 1)
$
Significant
other observable
inputs
(Level 2)
$
Significant
unobservable
inputs
(Level 3)
$
Balance,
January 31,
2018
$
Cash and cash equivalents 8,589,511 – – 8,589,511
The fair values of other financial instruments, which include amounts receivable, and accounts
payable and accrued liabilities approximate their carrying values due to the relatively short-term
maturity of these instruments.
CANNABIX TECHNOLOGIES INC.
Notes to the financial statements (Unaudited)
January 31, 2018
(Expressed in Canadian dollars)
18
11. Financial Instruments and Risks (continued)
(b) Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk
consist primarily of cash and cash equivalents and amounts receivable. The Company limits its
exposure to credit loss by placing its cash and cash equivalents with high credit quality financial
institutions. Amounts receivable consists of GST receivable due from the Government of Canada
and accrued interest receivable due on guaranteed investment certificates held at a financial
institution. The carrying amount of financial assets represents the maximum credit exposure.
(c) Foreign Exchange Rate Risk
The Company is not exposed to any significant foreign exchange risk.
(d) Interest Rate Risk
The Company is not exposed to any significant interest rate risk.
(e) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they
fall due. The Company currently settles its financial obligations out of cash and cash equivalents.
The ability to do this relies on the Company raising debt or equity financing in a timely manner
and by maintaining sufficient cash in excess of anticipated needs.
12. Subsequent Events
Subsequent to the period ended January 31, 2018, 2,265,734 share purchase warrants were
exercised.
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