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FTRP Field Trip Health

Filed: 16 Aug 21, 8:00pm

Exhibit 99.1

 

 

FIELD TRIP HEALTH LTD.

 

UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

 

(Expressed in Canadian Dollars, unless otherwise noted)

 

 

 

 

FIELD TRIP HEALTH LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

     As at  As at 
(unaudited)    June 30, 2021  March 31, 2021 
(Expressed in Canadian Dollars) Notes  $  $ 
ASSETS            
CURRENT            
Cash and cash equivalents      27,630,348   38,469,057 
Funds held in trust  5   -   795,516 
Restricted cash  6   462,179   588,041 
Short-term investments  7   72,132,588   72,552,870 
Accounts receivable  8   1,052,009   813,761 
Other assets  9   2,211,264   2,890,197 
TOTAL CURRENT ASSETS      103,488,388   116,109,442 
             
NON-CURRENT            
Property, plant and equipment  10   2,696,220   2,198,817 
Intangible assets  11   505,201   427,124 
Right-of-use assets  12   11,629,016   7,182,358 
Other non-current assets  9   771,949   532,264 
TOTAL NON-CURRENT ASSETS      15,602,386   10,340,563 
TOTAL ASSETS      119,090,774   126,450,005 
             
LIABILITIES            
CURRENT            
Accounts payable and accrued liabilities  14   4,036,835   5,348,110 
Deferred revenue      68,249   42,318 
Current portion of lease obligations  13   1,325,754   1,070,435 
TOTAL CURRENT LIABILITIES      5,430,838   6,460,863 
             
NON-CURRENT            
Loan payable  15   31,986   23,112 
Lease obligations  13   10,783,369   6,403,372 
TOTAL LIABILITIES      16,246,193   12,887,347 
             
EQUITY            
Share capital  4, 16   131,472,751   130,784,175 
Warrants  17   6,253,441   6,370,660 
Share-based payments reserve  18   2,969,118   1,832,224 
Accumulated other comprehensive income      431,369   327,302 
Retained deficit      (38,282,098)  (25,751,703)
TOTAL EQUITY      102,844,581   113,562,658 
TOTAL LIABILITIES AND EQUITY      119,090,774   126,450,005 

 

Commitments (Note 30)

Subsequent events (Note 34)

 

The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.

 

Approved on behalf of the Board of Directors:  
   
/s/ Joseph Del Moral /s/ Helen Boudreau
Director Director

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

 P a g e | 2 

 

 

FIELD TRIP HEALTH LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND
COMPREHENSIVE LOSS

 

     Three months ended  Three months ended 
(unaudited)    June 30, 2021  June 30, 2020 
(Expressed in Canadian Dollars) Notes  $  $ 
          
REVENUE            
Patient services  3, 25   867,400   23,359 
Other revenue      -   240 
Total revenue      867,400   23,599 
OPERATING EXPENSES            
General and administration  20   7,685,666   1,353,920 
Occupancy costs  21   376,615   63,783 
Sales and marketing  22   986,705   151,832 
Research and development  23   1,359,390   735,002 
Depreciation and amortization  24   615,483   209,760 
Patient services  25   1,287,071   56,975 
Total operating expenses      12,310,930   2,571,272 
OTHER INCOME (EXPENSES)            
Interest income  26   131,615   2,267 
Interest expense  27   (146,587)  (37,251)
Other  28   (1,071,893)  (376,247)
Net loss before income taxes      (12,530,395)  (2,958,904)
Income taxes      -   - 
Net loss      (12,530,395)  (2,958,904)
Exchange gain from translation of foreign subsidiaries      104,067   35,794 
NET LOSS AND COMPREHENSIVE LOSS      (12,426,328)  (2,923,110)
TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:            
Shareholders of Field Trip Health Ltd.      (12,426,328)  (2,921,207)
Non-controlling interest      -   (1,903)
       (12,426,328)  (2,923,110)
NET LOSS PER SHARE            
Basic and diluted  19   (0.22)  (0.21)

 

The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

     Share Capital  Warrant
Reserve
  Share-based
Payment
Reserve
  Accumulated
Other
Comprehensive
Income (Loss)
  Retained Deficit  Non-controlling
Interest
  Shareholders'
Equity
 
(unaudited) Notes   # Shares   $   $   $   $   $   $   $ 
Balance, April 1, 2021     57,297,238   130,784,175   6,370,660   1,832,224   327,302   (25,751,703)  -   113,562,658 
Share issuance 16   150,000   225,000   -   (225,000)  -   -   -   - 
Share issuance cost         (61,307)  -   -   -   -   -   (61,307)
Share-based payments 18   -   -   -   1,412,133   -   -   -   1,412,133 
Warrants exercised 17   144,377   405,974   (117,219)  -   -   -   -   288,755 
Stock options exercised 18   70,583   118,909   -   (50,239)  -   -   -   68,670 
Exchange gain from translation of foreign subsidiaries     -   -   -   -   104,067   -   -   104,067 
Net loss     -   -   -   -   -   (12,530,395)  -   (12,530,395)
Balance, June 30, 2021     57,662,198   131,472,751   6,253,441   2,969,118   431,369   (38,282,098)  -   102,844,581 

 

     Share Capital  Warrant
Reserve
  Share-based
Payment
Reserve
  Accumulated
Other
Comprehensive
Income (Loss)
  Retained Deficit  Non-controlling
Interest
  Shareholders'
Equity
 
  Notes  # Shares  $  $  $  $  $  $  $ 
                            
Balance, April 1, 2020     20,941,923   12,781,270   -   330,703   (50,041)  (2,641,920)  8,344   10,428,356 
Share issuance - Class A 16   -   -   -   -   -   -   -   - 
Share issuance - Class B 16   76,240   95,617   -   -   -   -   -   95,617 
Share issuance cost 16   -   (17,829)  -   -   -   -   -   (17,829)
Share-based payments 18   -   -   -   691,572   -   -   -   691,572 
Exchange loss from translation of foreign
subsidiaries
     -   -   -   -   35,701   -   91   35,972 
Purchase of non-controlling interest     -   -   -   -   553   9,817   (10,370)  - 
Net loss     -   -   -   -   -   (2,960,839)  1,935   (2,958,904)
Balance, June 30, 2020     21,018,163   12,859,058   -   1,022,275   (13,787)  (5,592,942)  -   8,274,604 

 

The accompanying notes are an integral part of these Condensed Interim Consolidated Financial Statements.

 

Field Trip Health Ltd. ▪ Unaudited Interim Condensed Consolidated Financial Statements First Quarter 2022

 

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FIELD TRIP HEALTH LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Three months ended  Three months ended 
(unaudited)    June 30, 2021  June 30, 2020 
(Expressed in Canadian Dollars) Notes  $  $ 
OPERATING ACTIVITIES            
Net loss      (12,530,395)  (2,958,904)
Items not involving current cash flows:            
Depreciation and amortization      615,483   209,760 
Share-based payments  18   1,412,133   691,572 
Fair value gain on government assistance      976   - 
Interest expense on lease commitments  27   145,611   37,234 
Interest income on shareholders' loan  26   (653)  (621)
Interest income on refundable lease deposits  26   (4,402)  (1,646)
Interest income on short term investments      (92,395)  -- 
Unrealized foreign exchange loss      1,074,954   - 
Government assistance - CEBA loan      (12,102)  - 
Net change in non-cash working capital  29   (1,508,654)  61,828 
CASH USED IN OPERATING ACTIVITIES      (10,899,444)  (1,960,777)
INVESTING ACTIVITIES            
Acquisition of property, plant and equipment  10   (673,899)  (327,411)
Acquisition of intangible assets  11   (112,412)  (119,173)
Refundable security deposit paid for right-of-use assets      (237,734)  (54,512)
CASH USED IN INVESTING ACTIVITIES      (1,024,045)  (501,096)
FINANCING ACTIVITIES            
Proceeds on issuance of common shares  16   -   95,617 
Proceeds from exercise of stock options  16   68,670   - 
Proceeds from exercise of warrants  17   288,755   - 
Share issuance cost paid      -   (17,829)
Repayment of lease obligation  13   (339,069)  (211,668)
Loans received  15   20,000   - 
CASH PROVIDED BY FINANCING ACTIVITIES      38,356   (133,880)
Net change in cash during the period      (11,885,133)  (2,595,753)
Effect of exchange rate on changes in cash      125,046   46,325 
Cash and cash equivalent at beginning of the period      39,852,614   9,690,758 
CASH AND CASH EQUIVALENT AT END OF THE PERIOD      28,092,527   7,141,330 
             
SUPPLEMENTAL INFORMATION            
Cash and cash equivalents      27,630,348   7,041,330 
Restricted cash      462,179   100,000 
CASH AND CASH EQUIVALENT AT END OF THE PERIOD      28,092,527   7,141,330 
Composed of:            
Cash      9,389,387   7,141,330 
Cash equivalents      18,703,140   - 
             
Interest income received      102,766   27 
             
Interest expense paid      138,947   37,234 

 

The accompanying notes are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.

 

Field Trip Health Ltd. ▪ Unaudited Interim Condensed Consolidated Financial Statements First Quarter 2022

 

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FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

(unaudited)

 

1. NATURE OF OPERATIONS 

 

Field Trip Health Ltd. (the “Group”, the “Company” or “Field Trip”) was formed on September 30, 2008, pursuant to an amalgamation under the Business Corporations Act (Alberta). Prior to October 1, 2020, the Company’s operations were conducted through Field Trip Psychedelics Inc. (“FTP”). FTP was incorporated under the laws of the province of Ontario, Canada as Field Trip Ventures Inc. on April 2, 2019. On October 10, 2019, the Company amended its name to Field Trip Psychedelics Inc. The Company’s registered office and head office is located at 30 Duncan Street, Suite 401, Toronto, ON, M5V 2C3.

 

On October 1, 2020, FTP completed a reverse takeover transaction (the “Transaction”) with Newton Energy Corporation (“Newton”) and Newton’s wholly-owned subsidiary Newton Energy Subco Limited (“Newton Subco”). The Transaction constituted a Reverse Takeover under applicable securities law and was structured as a three-cornered amalgamation, which resulted in FTP becoming a wholly-owned subsidiary of Newton by amalgamating with Newton Subco, and the security holders of FTP becoming security holders of Newton. As a result, the consolidated statements of financial position are presented as a continuance of FTP and the comparative figures presented are those of FTP (see Note 4 Reverse Takeover for details). Immediately prior to the closing of the Transaction, Newton filed an Article of Amendment to change its name from Newton Energy Corporation to “Field Trip Health Ltd.”

 

Field Trip is a global leader in the development and delivery of psychedelic-assisted psychotherapy (“PAP”). PAP is gaining traction in response to clinical research and academic studies showing compelling evidence of its safety and profound efficacy in the treatment of mood disorders, such as severe depression, anxiety and PTSD, which are part of a growing, global mental health crisis.

 

Field Trip’s primary focus is to develop proprietary, competitive and differentiated psychedelic-assisted therapies (both through novel psychedelic molecules and innovation in therapeutic protocols), which achieve the best patient outcomes in the treatment of mood disorders. Structurally, the focus of our research and development strategies is established by our Field Trip Discovery (“FT Discovery'') division, which is then executed through contract research and manufacturing organizations for molecule development through Field Trip Psychedelics Inc. and our botanical research arm through Field Trip Natural Products Inc. (“FTNP”), as well as our Field Trip Health (“FT Health”) division, which operates clinics across North America and Europe, for therapeutic protocol research and innovation. In addition to the research and innovation focus, the clinics operated by FT Health operate as patient treatment centers where our medical teams can develop hands-on knowledge and experience to further improve on the existing therapeutic protocols to optimize and customize the safe and effective delivery of PAP, identify new indications with existing and novel psychedelic medicines, such as FT-104 and future pipeline drugs under well-controlled conditions, and to evaluate the safe and effective use of digital tools developed by our Field Trip Digital (“FT Digital”) division to support and enhance the patient outcomes and experience.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

(unaudited)

 

 

 

Note: The above organizational chart excludes non-operating holding companies, which are immaterial to Field Trip’s operations.

 

Exchange Listings

 

On June 7, 2021 Field Trip’s Common Shares and warrants commenced trading on the TSX under the ticker symbols “FTRP” and “FTRP.WT” respectively. In connection with the TSX listing, the Common Shares and warrants were delisted from the Canadian Securities Exchange (“CSE”).

 

On July 23, 2021, Field Trip announced that it has received conditional approval from The NASDAQ Stock Market LLC (“NASDAQ”) to list its issued and outstanding common shares on the NASDAQ Global Select Market and on July 27, 2021, the Company received final approval from NASDAQ to list its common shares on the NASDAQ Global Select Market. The Company’s shares began trading at market open on July 29, 2021 with the ticker symbol FTRP.

 

The Company’s common stock will continue to trade in Canada on the TSX Exchange under its current symbol FTRP; and concurrent with the listing of Field Trip’s common shares on NASDAQ in the US, the shares will cease to be quoted on the OTCQX. The Company has previously completed the process to ensure its shares are eligible for electronic clearing through the Depository Trust Company (DTC).

 

2. BASIS OF PREPARATION

 

Statement of Compliance

 

The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”) and interpreted by the IFRS Interpretations Committee (“IFRIC”). These condensed interim consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the most recent audited annual consolidated financial statements of the Company, including the notes thereto, for the fiscal years ended March 31, 2021 and 2020.

 

These condensed interim consolidated financial statements were approved for issue by the Board of Directors on August 16, 2021.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

 P a g e | 7 

 

  

FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Basis of Presentation

 

These consolidated financial statements have been prepared on a going concern basis, under the historical cost convention, except for certain financial instruments that are measured at fair value, as detailed in the Group’s accounting policies in the most recent audited annual consolidated financial statements.

 

Functional Currency

 

The Group’s functional currency is the Canadian dollar. Transactions undertaken in foreign currencies are translated into Canadian dollars at daily exchange rates prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are translated at period-end exchange rates and non-monetary items are translated at historical exchange rates. Realized and unrealized exchange gains and losses are recognized in the consolidated statements of loss and comprehensive loss.

 

The assets and liabilities of foreign operations are translated into Canadian dollars using the period-end exchange rates. Income, expenses, and cash flows of foreign operations are translated into Canadian dollars using average exchange rates. Exchange differences resulting from the translation of foreign operations into Canadian dollars are recognized in other comprehensive (loss) income and accumulated in equity.

 

Basis of Consolidation

 

These Condensed Consolidated Financial Statements include the accounts of the Group, its subsidiaries and ketamine clinics in the United States that are owned solely by state-licensed physicians and organized as physician practices or professional medical corporations (“PCs”).

 

Subsidiaries

 

Subsidiary Jurisdiction Functional Currency % Ownership 
Field Trip Psychedelics Inc. Ontario, Canada Canadian Dollars  100%
Field Trip Health Canada Inc. Ontario, Canada Canadian Dollars  100%
Field Trip Health USA Inc. Delaware, USA United States Dollars  100%
Field Trip Health B.V. Netherlands Euros  100%
Field Trip Digital LLC Delaware, USA United States Dollars  100%
Field Trip Natural Products Limited (i) Kingston, Jamaica United States Dollars  100%

 

(i)On June 3, 2020, Field Trip Psychedelics Inc., Darwin Inc., a third party, and Field Trip Natural Products Limited (“FTNP”) entered into a Share Purchase Agreement whereby Field Trip Psychedelics Inc. purchased 120 shares of FTNP from Darwin Inc. for a nominal amount of $120 USD. As a result of the share transfer, the Group increased its ownership from 20% to 100% of the authorized capital of FTNP. The Company as part of this arrangement entered into a share-based compensation agreement with Darwin Inc. as detailed in Note 18 Share-based Payments.

 

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly and indirectly, to govern the financial and operating policies of an entity and be exposed to the variable returns from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date the control ceases. All significant intercompany balances and transactions have been eliminated upon consolidation.

 

Professional Medical Corporations

 

Field Trip’s agreements with the PCs generally consist of Management Services Agreements (“MSAs”), which provide for various administrative and management services to be provided by the Company to the PC, and Succession Agreements, which provide for transition of ownership of the PCs under certain conditions.

 

The MSAs typically provide that the term of the arrangements is twenty years with automatic renewal for successive five-year terms, subject to termination by Field Trip or the PC in certain specified circumstances. The Company has the right to receive income as an ongoing administrative fee in an amount that represents fair value of services rendered and has provided all financial support through loans to the PCs. Field Trip is the sole and exclusive provider of all non-medical business management, information management, marketing, support and personnel, equipment and supplies as are reasonably necessary for the day-to-day administration, operation and non-medical management of the PCs. The Company directs and trains PC staff in the use of its proprietary psychotherapy protocols and establishes the guidelines for the employment and compensation of the physicians and other employees of the PCs. The PCs are branded as Field Trip clinics using its marketing collaterals and logo. In addition, Field Trip holds a security interest in all PC revenue and proceeds as collateral.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Under the terms of the Succession Agreement, Field Trip has the right to designate a successor shareholder in the event of a succession event. The outstanding voting equity instruments of the PCs are owned by successor shareholders appointed by Field Trip or other shareholders who are also subject to the terms of the Succession Agreements.

 

Based upon the provisions of these agreements, Field Trip determined that the PCs are controlled by the Company. The contractual arrangement to provide management services allows Field Trip to direct the economic activities that most significantly affect the PC. Accordingly, the Company is the primary beneficiary of the PCs and consolidates the PCs in accordance with IFRS 10 Consolidated Financial Statements. Furthermore, as a direct result of nominal initial equity contributions by the physicians, the financial support Field Trip provides to the PCs (e.g., loans) and the provisions of the successor shareholder succession arrangements described above, the interests held by noncontrolling interest holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the PCs. Therefore, all income and expenses recognized by the PCs are allocated to Field Trip shareholders. The aggregate carrying value of the current assets and liabilities included in the consolidated balance sheets for the PCs after elimination of intercompany transactions and balances were $830,225 and $724,445 respectively, as of June 30, 2021 and $525,985 and $224,535, respectively, as of March 31, 2021. The PCs did not have noncurrent assets or liabilities.

 

3. SIGNIFICANT ACCOUNTING POLICIES

 

The accounting policies and use of estimates and judgments described in the Company’s annual consolidated financial statements have been applied consistently to all periods presented in these condensed interim consolidated statements unless otherwise indicated. The accounting policies have been applied consistently by all subsidiaries and PCs.

 

Use of Estimates and Judgments

 

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of these condensed interim consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and such differences could be material. The Group reviews its estimates and underlying assumptions on an ongoing basis. Revisions are recognized in the period in which the estimates are revised and may impact future periods. The significant accounting estimates and judgments have been set out in Notes 2 and 3 to the Company’s consolidated financial statements for the fiscal years ended March 31, 2021 and 2020. There have been no significant changes in estimates and judgments in the three months ended June 30, 2021.

 

Impact of Coronavirus

 

While the precise impact of the recent novel coronavirus (“COVID-19”) outbreak remains unknown, it has introduced uncertainty and volatility in Canadian and global economies. The Group is monitoring developments and preparing for any impacts related to COVID-19. The Group has a comprehensive business continuity plan that ensures its readiness to appropriately address and mitigate regulatory and business risks as they arise including, but not limited to, impacts on patients, practitioners and employees.

 

4. REVERSE TAKEOVER

 

On October 1, 2020, FTP completed its previously announced going public transaction (the “Transaction”) pursuant to the terms of an agreement entered into on August 21, 2020 between FTP, Newton and Newton Subco. On September 30, 2020, immediately prior to the closing of the Transaction, Newton filed articles of amendment to: (i) consolidate its outstanding common shares on an eight (8) old for one (1) new basis; and (ii) change its name from Newton Energy Corporation to "Field Trip Health Ltd.".

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

(unaudited)

 

The Transaction constituted a Reverse Takeover by way of a three-cornered amalgamation under applicable securities law, with FTP as the reverse takeover acquirer and Newton as the reverse takeover acquiree.

 

Pursuant to the terms of the agreement, Newton acquired all the issued and outstanding common shares of FTP. Holders of FTP common shares received one post-consolidation common share of Newton in exchange for each FTP share held. Newton became the direct parent and sole shareholder of FTP, changed its year end from December 31 to March 31 and continued under the Canada Business Corporations Act ("CBCA") by Certificate and Articles of Continuance.

 

In connection with the completion of the Transaction, Newton common shares listed on the NEX board of the TSXV were delisted on September 30, 2020. Field Trip Health Ltd. shares commenced trading on the Canadian Stock Exchange (“CSE”) on October 6, 2020, under the stock symbol FTRP. The Common Shares were subsequently delisted from the CSE and listed on the TSX and NASDAQ (see Note 34 – Subsequent Events).

 

The Transaction does not constitute a business combination as Newton does not meet the definition of a business under IFRS 3 Business Combinations. Immediately after the Transaction, shareholders of FTP owned 100% of the voting rights of Newton. As a result, the Transaction has been accounted for as a capital transaction with FTP being identified as the accounting acquirer and the equity consideration being measured at fair value, using the acquisition method of accounting. The Transaction has been accounted for in the consolidated financial statements as a continuation of the financial statements of FTP.

 

Purchase price consideration

 

FTP is deemed to have acquired the former Newton as part of the Transaction. The Transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair value at the acquisition date. The acquisition did not meet the criteria for a business combination and is therefore treated a recapitalization under the scope of IFRS 2 Share Based Payments. The consideration consisted entirely of shares and options of Field Trip Health Ltd. which were measured at the estimated fair value on the date of acquisition. The fair value of the Common Shares issued to the former Newton shareholders was determined to be $1,590,212 based on the fair value of the shares issued (795,106 shares at $2.00 per share). The fair value of the Newton Options was determined to be $74,982 using a Black Scholes model based on the following assumptions: Stock price volatility - 70%; Risk-free interest rate – 0.29 - 0.33%; Stock price at October 1, 2020 - $2.00 and an expected life of 2.52 – 3.86 years. In connection with the acquisition of Newton, the Company incurred transaction costs of $571,435, of which $375,713 was settled in cash and the remaining $195,722 in Company stock options.

 

  Total 
  $ 
Consideration: Newton Commons Shares  1,590,212 
Consideration: Newton Options  74,982 
Total consideration  1,665,194 
Transaction costs  571,435 
   2,236,629 
Identifiable assets acquired: Newton Cash  66,487 
Listing Expense  2,170,142 

 

5. FUNDS HELD IN TRUST

 

 June 30, 2021  March 31, 2021 
As at $  $ 
Funds held in trust  -   795,516 
   -   795,516 

 

As at June 30, 2021, funds held in trust of $nil (March 31, 2021 - $795,516) represents unrestricted funds held at a Canadian chartered bank by the Group’s corporate counsel, representing proceeds from the March Bought Deal Offering which were released in April 2021 (See Note 16 (ix) Share Capital).

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

 P a g e | 10 

 

 

 

 

FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

 

(unaudited)

 

6. RESTRICTED CASH

 

 June 30, 2021  March 31, 2021 
As at $  $ 
Funds held as collateral  100,501   100,501 
Funds held at PCs  361,678   487,540 
   462,179   588,041 

 

As at June 30, 2021, the Group had $100,501 (March 31, 2021 - $100,501) of restricted cash held as collateral against Field Trip Psychedelics Inc. credit card limit. The funds are invested in two cashable GIC accounts. $35,176 matures on November 4, 2021, and $65,325 matures on January 20, 2022. The Group also had $361,678 (March 31, 2021 - $487,540) of restricted cash held at the PCs which, under the terms of the MSA, must be used to pay PC personnel and expenses before satisfying prior and current management fees.

 

7. SHORT TERM INVESTMENTS

 

  June 30, 2021  March 31, 2021 
As at $  $ 
Short term investments  72,132,588   72,552,870 

 

Short term investments of $72,132,588 (March 31, 2021 - $72,552,870) represent non-redeemable GICs held with financial institutions as at June 30, 2021. These investments have maturities ranging from 6 months to one year, and interest rates from 0.25% to 0.80% (March 31, 2021 - 0.35% to 0.80%)

 

8. ACCOUNTS RECEIVABLE

 

  June 30, 2021  March 31, 2021 
As at $  $ 
Trade receivables  449,087   21,253 
Sales tax receivable  579,969   768,981 
Other receivables  22,953   23,527 
   1,052,009   813,761 

 

Trade receivables relates to amounts receivable from patients for treatments completed at the clinics. Other receivables relate to refunds owed to Field Trip for marketing materials.

 

During the three months ended June 30, 2021 and 2020, no expected credit loss allowance was recorded for accounts receivable. No receivables were written off during these periods.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

 P a g e | 11 

 

 

FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

 

(unaudited)

 

9. OTHER ASSETS

 

  June 30, 2021  March 31, 2021 
As at $  $ 
Prepaid expenses  2,093,339   2,810,369 
Lease security deposits  819,716   539,028 
Prepaid additional (non-lease) rent  18,984   22,543 
Shareholder loans receivable (Note 33)  51,174   50,521 
   2,983,213   3,422,461 
Less amounts due within one year  (2,211,264)  (2,890,197)
Non-current balance  771,949   532,264 

 

As at June 30, 2021, prepaid expenses included $1,657,463 of insurance costs and $435,876 of other operating expenses (March 31, 2021 - $2,180,945 of insurance costs and $629,424 of other operating expenses).

 

10. PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consist of the following:

 

  Leasehold
Improvements
  Furniture &
Fixtures
  Computer
Equipment &
Software
  Medical &
Laboratory
Equipment
  Construction
in Progress
  Total 
Cost $  $  $  $  $  $ 
Balance, April 1, 2021  1,243,119   334,600   447,753   276,949   252,732   2,555,153 
Additions  30,889   118,175   81,464   32,631   410,740   673,899 
Foreign currency translation adjustment  (12,840)  (3,541)  (3,890)  (3,986)  (1,042)  (25,299)
Balance, June 30, 2021  1,261,168   449,234   525,327   305,594   662,430   3,203,753 
                         
Accumulated depreciation                        
Balance, April 1, 2021  (228,264)  (32,817)  (71,050)  (24,205)  -   (356,336)
Depreciation expense  (77,527)  (19,671)  (41,492)  (14,293)  -   (152,983)
Foreign currency translation
adjustment
  1,163   153   259   211   -   1,786 
Balance, June 30, 2021  (304,628)  (52,335)  (112,283)  (38,287)  -   (507,533)
Net book value as at                        
June 30, 2021  956,540   396,899   413,044   267,307   662,430   2,696,220 
March 31, 2021  1,014,855   301,783   376,703   252,744   252,732   2,198,817 

 

On April 6, 2020, FTNP entered into a partnership with the University of West Indies (“UWI”) to provide advanced research and development on psilocybin producing mushrooms. FTNP agreed to lease property from UWI on which to construct a laboratory (the “Jamaica Facility”), contribute up to US$1,000,000 of initial capital for the Jamaica Facility and psilocybin research and a total of US$100,000 to fund student development initiatives at UWI over a 36-month period (see Note 30 Commitments). In October 2020, construction of the Jamaica Facility was completed. $263,121 was transferred from construction in progress to leasehold improvements in the period ended March 31, 2021.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

 

(unaudited)

 

11. INTANGIBLE ASSETS

 

Intangible assets consist of the following:

 

  Field Trip Health
Website
  Field Trip Health
Portal
  Trip App  Total 
Cost $  $  $  $ 
Balance, April 1, 2021  175,314   165,854   149,117   490,285 
Additions  7,591   48,504   56,317   112,412 
Balance, June 30, 2021  182,905   214,358   205,434   602,697 
                 
Accumulated amortization                
Balance, April 1, 2021  (43,257)  (10,728)  (9,176)  (63,161)
Amortization expense  (11,016)  (12,032)  (11,287)  (34,335)
Balance, June 30, 2021  (54,273)  (22,760)  (20,463)  (97,496)
Net book value as at                
June 30, 2021  128,632   191,598   184,971   505,201 
March 31, 2021  132,057   155,126   139,941   427,124 

 

12. RIGHT-OF-USE ASSETS

 

The Group leases real property for its Toronto office, clinical locations in North America and Europe and its research facility in Jamaica. Right-of-use assets (“ROU”) consist of the following:

 

  Total 
Cost $ 
Balance, April 1, 2021  8,266,366 
Additions  4,958,110 
Foreign currency translation adjustment  (90,958)
Balance, June 30, 2021  13,133,518 
     
Accumulated depreciation    
Balance, April 1, 2021  (1,084,008)
Depreciation expense  (428,165)
Foreign currency translation adjustment  7,671 
Balance, June 30, 2021  (1,504,502)
Net book value as at    
June 30, 2021  11,629,016 
March 31, 2021  7,182,358 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

 P a g e | 13 

 

 

FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

 

(unaudited)

 

13. LEASE OBLIGATIONS

 

Lease obligations consist of the following:

 

  Total 
  $ 
As at April 1, 2021  7,473,807 
Additions during the period  4,914,595 
Foreign currency translation adjustment  (85,821)
Payments during the period  (339,069)
Interest expense during the period  145,611 
   12,109,123 
Less amounts due within one year  (1,325,754)
Long-term balance  10,783,369 

 

The Group expenses payments for short-term leases and low-value leases as incurred. These payments for short-term leases and low-value leases were $98,350 for the three months ended June 30, 2021 and $33,469 for the three months ended June 30 2020.

 

The Group’s future cash outflows may change due to variable lease payments, renewal options, termination options, residual value guarantees and leases not yet commenced to which the Group is committed that are not reflected in the lease obligations. The following is a maturity analysis for undiscounted lease payments that are reflected in the lease obligations as at June 30, 2021:

 

  Total 
  $ 
Less than 1 year  1,970,881 
1 to 2 years  1,824,272 
2 to 3 years  1,677,327 
3 to 4 years  1,716,323 
4 to 5 years  1,756,391 
Beyond 5 years  6,518,658 
   15,463,852 

 

See Note 30 Commitments for additional information on estimated additional rent payment obligations related to the Group’s leases on its clinical and office locations.

 

14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

 

  June 30, 2021  March 31, 2021 
As at $  $ 
Trade payables  918,921   3,126,120 
Accrued liabilities  3,117,914   2,221,990 
   4,036,835   5,348,110 

 

As at March 31, 2021, trade payables included $1,731,213 of insurance costs and $252,882 of transaction costs incurred for the January and March 2021 bought deal offerings (see Notes 16(viii) and (ix) Share Capital).

 

As at June 30, 2021 accrued liabilities included $449,327 of transaction costs incurred for the January and March 2021 bought deal offerings (see Notes 16(viii) and (ix) Share Capital), $1,401,432 of accrued payroll liabilities, and $1,267,155 of other expenses, primarily relating to professional fees. As at March 31, 2021 accrued liabilities included $893,219 of transaction costs incurred for the January and March 2021 bought deal offerings (see Notes 16(viii) and (ix) Share Capital), $763,536 of accrued payroll liabilities and $565,235 of other expenses, primarily relating to professional fees.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

  

 P a g e | 14 

 

 

FIELD TRIP HEALTH LTD. 

Notes to the Condensed Interim Consolidated Financial Statements 

For the three months ended June 30, 2021 and 2020

 

(unaudited)

 

15. LOAN PAYABLE

 

The Group applied for and received on September 17, 2020, the $40,000 Canada Emergency Business Account (“CEBA”), which is an interest-free loan to cover operating costs which was offered in the context of the COVID-19 pandemic outbreak. Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of $10,000. On December 31, 2022, the Corporation has the option to extend for 3 years the loan and it will bear a 5% interest rate. To estimate the fair value at initial recognition, the debt component was estimated first at $21,319, considering the forgiveness and interest free aspects. A 15% effective rate was used which corresponds to a market rate that the Corporation would have obtained for a similar loan. The $18,681 residual value was attributed to government assistance that is presented as other income in the statement of loss and other comprehensive loss.

 

On June 3, 2021, the Group applied for and received a $20,000 CEBA loan expansion. With a total loan payable of $60,000, the debt forgiveness is not available unless the initial $40,000 is repaid. The loan forgiveness is calculated as follows: 25% on the initial $40,000; plus 50% on amounts above $40,000 and up to $60,000. The maximum amount of debt forgiven is $20,000.

 

16. SHARE CAPITAL

 

Share Capital Authorized

 

The authorized share capital of the Group consists of an unlimited number of common shares (“Common Shares”), issuable in Series, and an unlimited number of preferred shares (“Preferred Shares”) issuable in series. As at June 30, 2021, the Group also has outstanding 2,071,090 warrants (“Warrants”) (March 31, 2021 – 2,071,090 warrants), which are listed and posted for trading on the TSX.

 

Common Shares

 

Holders of Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of Field Trip. Each Common Share confers the right to one vote at all meetings of the shareholders, except meetings at which only holders of a specified class of shares are entitled to vote. Subject to the prior rights and privileges attached to any other class of shares of Field Trip, the holders of the Common Shares are entitled to receive any dividend declared by Field Trip.

 

In the event of the liquidation, dissolution or winding-up of Field Trip, whether voluntary or involuntary, subject to the prior rights and privileges attached to any other class of shares of Field Trip, the holders of the Common Shares are entitled to receive the remaining property and assets of Field Trip.

 

The Common Shares carry no pre-emptive rights, conversion or exchange rights, or redemption, retraction, repurchase, sinking fund or purchase fund provisions. There are no provisions requiring a holder of Shares to contribute additional capital, and no restrictions on the issuance of additional securities by Field Trip. There are no restrictions on the repurchase or redemption of Common Shares by Field Trip except to the extent that any such repurchase or redemption would render Field Trip insolvent. The Preferred Shares may, if issued, be made convertible into Common Shares at such rate and upon such basis as the board of directors of Field Trip ("Board"), in its discretion, may determine.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Voting Rights

 

Each holder of Class A Series Common Shares is entitled to receive notice of and to attend all meetings of shareholders of the Corporation and at all such meetings shall be entitled to one (1) vote in respect of each such share held by such holder. The foregoing, however, shall not apply to separate meetings of the holders of other classes or series of shares in accordance with the Shareholders Agreement. On any matter presented to the shareholders of the Corporation for their action or consideration at any meeting of shareholders of the Corporation (or by written consent of shareholders in lieu of meeting), each holder of outstanding Class B Series Common Shares is entitled to cast the number of votes equal to the number of Class B Series Common Shares held by the holder. Except as provided by law or by the other provisions of the Articles, holders of Class B Series Common Shares shall vote together with the holders of Class A Series Common Shares as a single class.

 

Class B Series Common Shares Automatic Conversion

Upon the completion of a private placement of Class A Series Common Shares from treasury for gross proceeds of at least USD $2,500,000 in one or multiple closings (the "Qualified Financing"), then all of the Class B Series Common Shares will automatically and concurrently be converted into Class A Series Common Shares (the “Automatic Conversion”) as follows:

 

(a)If the price paid per Class A Series Common Share in the Qualified Financing is equal to or greater than USD $1.125, then each Class B Series Common Share will convert into one Class A Series Common Share; or
(b)If the price paid per Class A Series Common Share in the Qualified Financing is less than USD $1.125, then the Class B Series Common Shares held by each holder will be converted into a number of Class A Series Common Shares determined by dividing the Subscription Amount by an amount equal to the product of the price paid per Class A Series Common Share in the Qualified Financing, multiplied by 0.80. For the purposes of this calculation, “Subscription Amount” means the number of Class B Series 1 Shares held by the holder multiplied by USD $ 0.90.

 

The brokered and non-brokered private placements completed on August 14 and September 21, 2020 met the definition of a Qualified Financing and all outstanding and issued Class B Series Common Shares were converted into Class A Series Common Shares on a 1:1 basis upon closing (see (vii) and (viii) below).

 

Preferred Shares

 

The Preferred Shares may be issued at any time or from time to time in one or more series. Subject to the provisions of the Canada Business Corporations Act, the Board may by resolution alter the articles of Field Trip to create any series of Preferred Shares and to fix before issuance, the designation, rights, privileges, restrictions and conditions to attach to the Preferred Shares of each series. The issuance of Preferred Shares and the terms selected by the Board could decrease the amount of earnings and assets available for distribution to holders of Common Shares or adversely affect the rights and powers, including the voting rights, of the holders of the Common Shares without any further vote or action by the holders of the Common Shares, if permitted by the Canada Business Corporations Act. The issuance of Preferred Shares, or the issuance of rights to purchase Preferred Shares, could make it more difficult for a third-party to acquire a majority of Field Trip's outstanding Common Shares and thereby have the effect of delaying, deferring or preventing a change of control of Field Trip or an unsolicited acquisition proposal or of making the removal of management more difficult. Additionally, the issuance of Preferred Shares may have the effect of decreasing the market price of the Common Shares.

 

There are currently no Preferred Shares outstanding (March 31, 2021 – nil).

 

Warrants

The Warrants are governed by the Warrant Indenture. Each Warrant entitles the holder thereof to acquire, subject to adjustment in certain circumstances pursuant to the Warrant Indenture, one Common Share at an exercise price of $5.60 until July 5, 2022. The Warrant Indenture provides for adjustment in the number of Common Shares issuable upon the exercise of the Warrants and/or the exercise price per Common Share upon the occurrence of certain events where the cumulative effect of such adjustment or adjustments would result in a change of at least 1% in the exercise price. No fractional Common Shares are issuable upon the exercise of any Warrants and no cash or other consideration will be paid in lieu of fractional Common Shares in such circumstances. The Warrant Indenture further provides that Field Trip has the right, but not the obligation, to accelerate the expiry date of the Warrants upon not less than fifteen (15) trading days’ notice by way of a news release, if the volume weighted average price of the Common Shares on the TSX exceeds $9.00 for any ten (10) consecutive trading days. Holders of Warrants do not have any voting or pre-emptive rights or any other rights which a holder of Common Shares would have.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Share Capital Issued as at March 31, 2021

 

  Number of  Amount 
Class of Shares Shares Issued  $ 
A  (i-x)  57,297,238   130,784,175 
   57,297,238   130,784,175 

 

(i)On May 20, 2020, the Group issued 76,240 Class B Series Common Shares as follows: 11,113 Class B Series Common Shares at a price of $0.90 USD per share, yielding gross proceeds of $10,002 USD or $13,935 CAD. Real estate brokerage commissions of $63,853 were settled via the issuance of 50,911 Class B Series Common Shares at a price of $0.90 USD or $1.2542 CAD per share. Share issuance costs of $17,829 were settled via the issuance of 14,216 Class B Series Common shares at a price of $0.90 USD or $1.2542 CAD per share.

 

(ii)On August 11, 2020, directors of FTP exercised options to purchase 9,000,900 Class A Shares at a price of $0.00001 for gross proceeds of $90.

 

(iii)On August 14, 2020, the Group completed brokered and non-brokered private placements (the “FTP Private Placements”) of an aggregate of 5,516,724 Class A shares in the capital of Field Trip, at a price of $2.00 per share, for aggregate gross proceeds of $11,033,448. Canaccord Genuity Corp. and Stifel Nicolaus Canada Inc. jointly acted as lead agents in connection with the brokered portion of the Private Placement, for which they were paid a cash commission of $391,082, and were issued 55,167 Class A shares and 299,753 compensation warrants (the “FTP Compensation Warrants”). Each FTP Compensation Warrant is exercisable into one Class A Common Share of Field Trip at a price of $2.00 per share until August 14, 2022 (see Note 17 Warrants). The Series B Financing is a Qualified Financing (as defined below); therefore, all of the Class B Series Common Shares were automatically converted into Class A Series Common Shares upon closing of this transaction.

 

(iv)On September 21, 2020, Field Trip completed a follow-on non-brokered private placement of an aggregate of 816,932 Class A Series Common Shares at a price of $2.00 per share for gross proceeds of $1,633,864.

 

(v)The Company incurred share issuance costs of $707,263 relating to the August 14 and September 21, 2020 private placements.

 

(vi)On September 25, 2020, 600,000 Class A Series Common Shares were issued as payment of milestone shares under the Jamaican SPA (see Note 18 Share-based Payments for further details).

 

(vii)On October 1, 2020, 795,106 Class A Series Common Shares were issued upon closing of the Transaction (see Note 4 Reverse Takeover for details). Upon closing of the Transaction, the Group had only Common Shares outstanding.

 

(viii)On January 5, 2021 the Company completed a bought deal offering (the “January BD Offering”) resulting in the issuance of 4,448,200 Units of the Company at a price per Unit of $4.50 for gross proceeds of $20,016,900. Each Unit comprised one common share (“Common Share”) of the Company and one-half of one Common Share purchase warrant (each whole Common Share purchase warrant, a “Warrant”).

 

Each Warrant entitles the holder thereof to purchase one Common Share (a “Warrant Share”) at an exercise price of $5.60 per Warrant Share until July 5, 2022. In the event that the volume weighted average trading price of the Common Share for ten (10) consecutive trading days exceeds $9.00, the Company shall have the right to accelerate the expiry date of the Warrants upon not less than 15 trading days’ notice (see Note 17 Warrants). The Warrants commenced trading on the CSE under the symbol "FTRP.WT on January 5, 2021.

 

In consideration of the services rendered by the underwriters in connection with the January BD Offering, the Company paid a cash commission equal to $763,046 and issued 169,565 compensation warrants (the "Compensation Warrants"). Each Compensation Warrant is exercisable to acquire one Common Share at an exercise price of $4.50 per Compensation Share until January 5, 2023 (see Note 17 Warrants).

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 P a g e | 17 

 

FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

In connection with the January BD Offering, the short form prospectus qualified the distribution of 8,170 Common Shares and 49,016 additional FTP Compensation Warrants, for services rendered by the agents in connection with the FTP Private Placements (see Note 17 Warrants).

 

(ix)On March 17, 2021 the Company completed a bought deal offering (the “March BD Offering”) resulting in the issuance of 14,661,499 Common Shares of the Company at a price of $6.50 per Common Share for gross proceeds of $95,299,744. In consideration of the services rendered by the underwriters in connection with the March BD Offering, the Company paid a cash commission equal to $4,961,472 and issued 865,303 compensation warrants (the "Compensation Warrants"). Each Compensation Warrant is exercisable to acquire one Common Share at an exercise price of $6.50 per Compensation Share until March 17, 2023 (see Note 17 Warrants).

 

(x)During the fiscal year ended March 31, 2021, 9,218,767 options were exercised for gross proceeds of $208,698.

 

Share Capital Issued as at June 30, 2021

 

  Number of  Amount 
Class of Shares Shares Issued  $ 
A  (xi-xiii)  57,662,198   131,472,751 
   57,662,198   131,472,751 

 

(xi)On June 22, 2021, Field Trip issued the second instalment of the Jamaica Facility shares under the SPA, being a total of 150,000 shares (see Note 18 Share-based payments).

 

(xii)On June 22, 2021, 144,377 FTP Compensation Warrants were exercised at a price of $2.00 for gross proceeds of $288,755.

 

(xiii)During the three months ended June 30, 2021, 70,583 options were exercised for gross proceeds of $68,670.

 

Share Capital Reserved for Issuance

 

A summary of shares reserved for issuance is as per below:

 

  As at  As at 
Class of Shares June 30, 2021  March 31, 2021 
Common Share Stock Options  5,896,769   5,150,798 
Warrants  2,071,090   2,071,090 
FTP Compensation Warrants  198,892   343,269 
Compensation Warrants  1,034,868   1,034,868 
Jamaica Facility Shares (Note 18)  450,000   600,000 
   9,651,619   9,200,025 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 P a g e | 18 

 

FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

17. WARRANTS

 

The following is a schedule of the warrants outstanding:

 

   FTP             
   Compensation  Compensation          
   Warrants  Warrants  Warrants  Total Warrants  Amount 
   #  #  #  #  $ 
Balance, March 31, 2021   343,269   1,034,868   2,071,090   3,449,227   6,370,660 
Exercised   (144,377)  -   -   (144,377)  (117,219)
Balance, June 30, 2021   198,892   1,034,868   2,071,090   3,304,850   6,253,441 

 

The weighted average remaining life for warrants outstanding as at June 30, 2021 was 1.2 years (March 31, 2021 – 1.4 years). The weighted average market fair value of shares purchased through warrant exercises during the three months ended June 30, 2021 was $1.89.

 

FTP Compensation Warrants

 

  August 
  2020 
Warrants Issued  348,769 
Exercised  (149,877)
Outstanding, June 30, 2021  198,892 
Exercise Price $2.00 
Expiry Date  August 14, 2022 

 

The Company issued 299,753 FTP Compensation Warrants to the underwriter in connection with the completion of the FTP Private Placements which closed on August 14, 2020 (see Note 16(iii) Share Capital). In connection with the January BD Offering, the short form prospectus qualified the distribution of 49,016 additional FTP Compensation Warrants, for services rendered by the agents in connection with the FTP Private Placements (see Note 16(iii) Share Capital). The warrants have an expiry date of August 14, 2022. Each warrant entitles the holder to purchase one Class A share at $2.00 until the expiry date. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 75-110%, (iii) risk-free rate of 0.19-0.31%, (vi) share price of $2, (v) forfeiture rate of 0%, and (vi) expected life of 1.6-2 years.

 

Compensation Warrants

 

        Total 
  January  March  Compensation 
  2021  2021  Warrants 
Warrants Issued  169,565   865,303   1,034,868 
Exercised  -   -   - 
Outstanding, June 30, 2021  169,565   865,303   1,034,868 
Exercise Price $4.50  $6.50     
Expiry Date  January 5, 2023   March 17, 2023     

 

The Company issued 169,565 Compensation Warrants to the underwriter in connection with the January BD Offering which was completed on January 5, 2021(see Note 16(viii) Share Capital). The warrants have an expiry date of January 5, 2023. Each Compensation Warrant entitles the holder to purchase one Common Share at $4.50 until expiry. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 110%, (iii) risk-free rate of 0.19%, (vi) share price of $3.56, (v) forfeiture rate of 0%, and (vi) expected life of 2 years.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

The Company issued 763,303 Compensation Warrants to the underwriter in connection with the March BD Offering which was completed on March 17, 2021 (see Note 16(ix) Share Capital). The warrants have an expiry date of March 17, 2023. Each Compensation Warrant entitles the holder to purchase one Common Share at $6.50 until expiry. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 110%, (iii) risk-free rate of 0.27%, (vi) share price of $6.16, (v) forfeiture rate of 0%, and (vi) expected life of 2 years. An additional 102,000 Compensation Warrants were issued to a consultant in connection with the March BD Offering.

 

Warrants

 

  January 
  2021 
Warrants Issued  2,224,100 
Exercised  (153,010)
Outstanding, June 30, 2021  2,071,090 
Exercise Price $5.60 
Expiry Date  July 5, 2022 

 

The Company issued 2,224,100 Warrants in connection with the completion of the January BD Offering which closed on January 5, 2021 (see Note 16(viii) Share Capital). The warrants have an expiry date of July 5, 2022. Each warrant entitles the holder to purchase one Common Share, at an exercise price of $5.60 until expiry. The fair value was estimated using the Black-Scholes option pricing model with the following assumptions: (i) expected dividend yield of 0%, (ii) expected volatility of 110%, (iii) risk-free rate of 0.18%, (vi) share price of $3.56, (v) forfeiture rate of 0%, and (vi) expected life of 1.5 years.

 

The terms of the FTP Compensation Warrants, Compensation Warrants and Warrants specify that these instruments will be settled by Field Trip exchanging a fixed amount of cash for a fixed number of its own Common Shares. These terms meet the “fixed for fixed” criteria outlined in IAS 32 Financial Instruments for the warrants to be classified and accounted for as equity in the consolidated statements of financial position.

 

18. SHARE-BASED PAYMENTS

 

The Group has two share-based compensation plans: the “Stock Option Plan” and the “Long Term Incentive Option Plan”.

 

Long Term Incentive Option Plan

 

On April 2, 2019, the directors of the Group authorized option agreements with each of the five founding executives of the Group. Under the terms of the agreement, each option holder received 1,800,180 options to purchase Class A shares at an exercise price of $0.00001. The options vest over a period of four years and expire on the fifth anniversary of the grant date.

 

On August 11, 2020, the Group accelerated the vesting of all 9,000,900 outstanding long term incentive options which were immediately exercised and recognize in the consolidated statements of loss and comprehensive loss.

 

Stock Option Plan

 

On August 1, 2019, the directors of the Group authorized the establishment of the “Stock Option Plan”. The maximum number of common shares that will be reserved for issuance under the Stock Option Plan shall be 15% of the issued and outstanding Common Shares from time to time, on a non-diluted basis. For the avoidance of doubt, Long Term Incentive Options are excluded from the Stock Option Plan maximum. Common Shares in respect of Options that have been exercised, cancelled, surrendered, or terminated or that expire without being exercised shall again be available for issuance under the Plan.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

On October 6, 2020, in conjunction with the closing of the Transaction, Field Trip amended its Stock Option Plan. The maximum number of common shares reserved for issuance under the Stock Option Plan pursuant to options not intended as Incentive Stock Options (“ISOs”) shall be 15% of the issued and outstanding Common Shares from time to time, on a non-diluted basis, excluding Long Term Incentive Options. The maximum number of Common shares reserved for issuance under the Stock Option Plan pursuant to ISOs is 7,500,000.

 

As at June 30, 2021, the number of Common Shares available for issuance under the Stock Option Plan pursuant to options not intended as ISO’s was 2,752,561. The number of Common Shares available for issuance under the Stock Option Plan pursuant to ISOs was 6,623,917.

 

Under the Stock Option Plan, the Group may grant options to purchase common shares to officers, directors, employees or consultants of the Group or its affiliates. Options issued under the Stock Option Plan are granted for a term not exceeding ten years from the date of grant. All options issued to-date have a life of ten years or less. In general, options have vested either immediately upon grant or over a period of one to ten years or upon the achievement of certain performance-related measures or milestones.

 

The following is a schedule of the options outstanding as at June 30, 2021 and March 31, 2021:

 

June 30, 2021

 

     Range of  Weighted Average 
  Options  Exercise Price  Exercise Price 
  #  $  $ 
Balance, April 1, 2021  5,150,798   0.50-8.25    2.29 
Stock Option Plan - Granted  969,888   5.53-7.00   6.19 
Stock Option Plan - Forfeited  (153,334)  0.50-5.74   2.94 
Stock Option Plan - Exercised  (70,583)  0.50-2.00   0.97 
Balance, June 30, 2021  5,896,769   0.50-8.25   2.93 

 

March 31, 2021

 

     Range of  Weighted Average 
  

Options

  Exercise Price  Exercise Price 
  #  $  $ 
Balance, April 1, 2020  11,377,706   0.00001-0.50   0.10 
Stock Option Plan - Granted  3,160,193   0.50-8.25   3.47 
Stock Option Plan - Forfeited  (168,334)  0.50-2.00   0.89 
Stock Option Plan - Exercised  (9,218,767)  0.00001-2.00   0.02 
Balance, March 31, 2021  5,150,798   0.50-8.25   2.29 

 

The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model.

 

Option model inputs for options granted during the three months ended June 30, 2021 and 2020 were as follows:

 

June 30, 2021

 

Options    Share
Price
  Exercise
Price
  Risk-free
Interest
Rate
 Expected
Life
  Volatility
Factor
 Forfeiture
Rate
  Fair
Value per
Option
 
#  Grant Date $  $  % (years)  % %  $ 
 969,888  April 1, 2021 - June 30, 2021  5.53 – 7.00   5.53 – 7.00  1.3 – 1.5  9.3  104 – 107  3   4.79 – 6.14 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

During the three months June 30, 2021, the Group issued stock options for Field Trip Shares as follows:

 

  Options  Exercise Price 
Date issued #  $ 
30-Apr-21  229,888   6.05 
31-May-21  385,000   5.53 
30-Jun-21  355,000   7.00 
   969,888   6.19 

 

The following table summarizes the unvested outstanding and exercisable options held by directors, officers, employees and consultants as at June 30, 2021 and March 31, 2021:

 

June 30, 2021

 

      Outstanding  Exercisable 
Exercise Price
Range
  Options  Remaining
Contractual Life
 Weighted
Average
Exercise Price
  Vested Options  Weighted
Average
Exercise Price
 
$  #  (years) $  #  $ 
 0.50 – 8.25   5,896,769  8 - 10  2.93   1,010,699   0.74 

 

March 31, 2021

 

      Outstanding  Exercisable 
Exercise Price
Range
  Options  Remaining
Contractual Life
 Weighted
Average
Exercise Price
  Vested Options  Weighted
Average
Exercise Price
 
$  #  (years) $  #  $ 
 0.5 - 8.25   5,150,798  8 - 10  2.29   785,241   0.80 

 

Jamaica Facility Shares

 

Field Trip Psychedelics Inc. will issue 1,200,000 fully paid-up Common Shares to Darwin Inc. (the “Jamaica Facility Shares”); 600,000 upon commencement of research in the newly renovated research facility, 150,000 one year from the initial closing date (“Cliff”), and 450,000 on a prorated basis quarterly, commencing on the first calendar quarter following the Cliff and ending on the date that is 36 months following the Cliff. On September 25, 2020 Field Trip issued the first installment of the Jamaica Facility shares, being a total of 600,000 Common Shares at a deemed price per Field Trip Common Share of $2.00. On June 22, 2021 Field Trip issued the second installment of the Jamaica Facility shares of 150,000 Common Shares (See Note 16(xi) Share Capital).

 

The fair value of the Jamaica Facility Shares is measured at the date of grant using the Black-Scholes pricing model.

 

Black-Scholes model inputs for the Jamaican Facility Shares for the three months ended June 30, 2021 were as follows:

 

Shares to be Issued  Grant Date Share Price  Risk-free
Interest Rate
  Expected
Life
  Volatility
Factor
  Fair Value per
Share
 
#    $  %  (years)  %  $ 
 1,200,000  3-Jun-20  2.00(i)  0.62   4   75   2 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Summary of Stock-based Compensation

 

  2021  2020 
Three months ended June 30, $  $ 
Stock option compensation expense - Stock Option Plan  1,332,089   69,634 
Stock option compensation expense - Long Term Incentive Options  -   34,035 
Stock-based compensation expense – Jamaica Facility Shares  80,044   587,903 
Stock-based compensation expense  1,412,133   691,572 

 

  2021  2020 
Three months ended June 30, $  $ 
Stock option compensation expense - General and administration  1,022,455   75,540 
Stock option compensation expense - Patient service expense  209,477   11,915 
Stock option compensation expense - Research and development  119,682   601,194 
Stock option compensation expense - Sales and marketing  60,519   2,923 
Stock-based compensation expense  1,412,133   691,572 

 

19. NET LOSS PER SHARE

 

For the three months ended June 30, 2021 and 2020, basic loss per share and diluted loss per share were the same, as the Group recorded a net loss for both periods and the exercise of any potentially dilutive instruments would be anti-dilutive.

 

Three months ended June 30, 2021  2020 
Loss attributable to common shares ($)  (12,530,395)  (2,958,904)
Dilutive effect on income  -   - 
Weighted average number of shares outstanding – basic (#)  57,340,680   14,020,892 
Weighted average number of shares outstanding – diluted (#)  57,340,680   14,020,892 
Loss per common share, basic ($)  (0.22)  (0.21)
Loss per common share, diluted ($)  (0.22)  (0.21)

 

Warrants and options disclosed in Notes 17 – Warrants and 18 – Share-based Compensation have been excluded from net loss per share as their effect would be anti-dilutive.

 

20. GENERAL AND ADMINISTRATION

 

  2021  2020 
Three months ended June 30, $  $ 
Personnel costs  2,965,840   749,840 
External services  2,476,527   432,892 
Share-based payments (Note 18)  1,332,888   103,669 
Travel and entertainment  375,856   9,040 
IT and technology  453,566   54,448 
Office and general  80,989   4,031 
Total general and administration  7,685,666   1,353,920 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Personnel costs include compensation paid to its corporate headquarters and operations staff, as well as medical office administration (“MOA”) staff located at its various clinic locations. External services comprise professional and consulting fees, investor relations and insurance expense.

 

21. OCCUPANCY COSTS

 

  2021  2020 
Three months ended June 30, $  $ 
Operating rent expense  98,350   33,469 
Taxes, maintenance, insurance  4,754   7,009 
Minor furniture and fixtures  240,860   1,284 
Utilities and services  32,651   22,021 
Total occupancy costs  376,615   63,783 

 

Operating rent expense comprises additional (non-lease) variable rent payments which are excluded from the right-of-use asset or lease obligations (see Note 30 Commitments for further details).

 

22. SALES AND MARKETING

 

  2021  2020 
Three months ended June 30, $     $ 
Brand and public relations  367,564   62,463 
Conference fees  14,604   20,392 
Personnel costs  116,908   31,317 
External marketing services  450,094   37,660 
Other marketing  37,535   - 
Total sales and marketing  986,705   151,832 

 

23. RESEARCH AND DEVELOPMENT

 

  2021  2020 
Three months ended June 30, $  $ 
External services  889,927   590,514 
Personnel costs  198,640   142,421 
Supplies and services  270,823   2,067 
Total research and development  1,359,390   735,002 

 

The expenditures above relate to research and development activities which do not qualify for capitalization based on the Group’s accounting policies for capitalization of development costs. They have therefore been recognised as an expense during the three months ended June 30, 2021 and 2020.

 

External services fees relate primarily to fees paid to third parties to (i) further FT-104 development; and ii) manage the construction and project management of the Jamaica Facility, oversee the operations of the Jamaica Facility, provide legal advice and manage government relations.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

24. DEPRECIATION AND AMORTIZATION

 

  2021  2020 
Three months ended June 30, $  $ 
Depreciation and Amortization - Leasehold Improvements  77,527   23,221 
Depreciation and Amortization - Furniture & Fixtures  19,671   2,802 
Depreciation and Amortization - Computer Equipment & Software  41,492   7,474 
Depreciation and Amortization - Medical Lab and Equipment  14,293   270 
Depreciation and Amortization - Right of use asset  428,165   166,567 
Depreciation and Amortization - Intangible assets  34,335   9,426 
Total depreciation and amortization  615,483   209,760 

 

25. PATIENT SERVICES EXPENSE

 

  2021  2020 
Three months ended June 30, $  $ 
Personnel costs  1,215,389   53,288 
Supplies and services  52,565   3,493 
Payment provider fees  19,117   194 
Total patient services expense  1,287,071   56,975 

 

Patient services expense is comprised of direct costs incurred by the clinics to generate patient services revenue.

 

26. INTEREST INCOME

 

  2021  2020 
Three months ended June 30, $  $ 
Interest income on shareholders' loan  653   621 
Interest income on refundable lease deposit  4,402   1,646 
Interest income on bank balances  126,560   - 
Total interest income  131,615   2,267 

 

27. INTEREST EXPENSE

 

  2021  2020 
Three months ended June 30, $  $ 
Interest expense on leases  145,611   37,234 
Interest expense on loan  976   - 
Interest expense on bank balances  -   17 
Total interest expense  146,587   37,251 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

28. OTHER INCOME (EXPENSE)

 

 2021  2020 
Three months ended June 30, $  $ 
Unrealized foreign exchange loss  (1,074,954)  (394,120)
Realized foreign exchange loss  (9,041)  (127)
Government assistance - CEBA loan (i)  12,102   - 
Government assistance - wage subsidy (ii)  -   18,000 
Total other income (expense)  (1,071,893)  (376,247)

 

The Company applied for, and received, governmental assistance related to the COVID-19 pandemic:

 

(i)The Canada Emergency Business Account (CEBA) program provides an interest-free loan of $60,000, of which and if required conditions are met, only 75% or $ 40,000 of the loan amount is repayable by December 31, 2022. Government assistance is comprised of the fair value of the loan amount forgiven using an 15% effective interest rate (see Note 15 Loan Payable).

 

(ii)The 10% Temporary Wage Subsidy for Employers (TWS) program provides a subsidy of 10% of wages from March 18, to June 19, 2020 up to $1,375 for each eligible employee. The maximum total is $25,000 for each eligible employer. For the three months ended June 30, 2021, the Company received wage subsidies of $nil (June 30, 2020 - $18,000).

 

29. CHANGE IN NON-CASH WORKING CAPITAL

 

 2021  2020 
Three months ended June 30, $  $ 
Accounts receivable  (299,555)  (115,810)
Other current assets  635,418   (152,189)
Other non-current assets  3,104   (18,614)
Accounts payable and accrued liabilities  (1,873,552)  346,441 
Deferred revenue  25,931   2,000 
Net changes in non-cash working capital  (1,508,654)  61,828 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

30. COMMITMENTS

 

Lease obligations

 

The Group leases real property for its clinical and office locations in North America and Europe. The Group is committed for estimated additional variable (non-lease) rent payment obligations as follows:

 

   Additional
Rent
Payments
  < 1 year  1-2 years  2-3 years  3-4 years  4-5 years  More than
5 years
 
  Expiry $  $  $  $  $  $  $ 
Amsterdam Clinic October 31, 2026  338,858   63,536   63,536   63,536   63,536   63,536   21,178 
Atlanta Clinic January 31, 2031  264,453   27,595   27,595   27,595   27,595   27,595   126,478 
Chicago Clinic September 30, 2031  584,116   58,412   58,412   58,412   58,412   58,412   292,056 
Houston Clinic March 31, 2026  252,279   51,311   51,311   51,311   51,311   47,035   - 
Santa Monica Clinic June 30, 2030  534,440   59,937   59,937   59,937   59,937   59,937   234,755 
Toronto Clinic and Headquarters October 31, 2023  260,237   111,530   111,530   37,177   -   -   - 
San Carlos Clinic August 31, 2031  588,603   49,050   58,860   58,860   58,860   58,860   304,113 
Jamaica November 30, 2021  9,296   9,296   -   -   -   -   - 
     2,832,282   430,667   431,181   356,828   319,651   315,375   978,580 

 

These additional (non-lease) rent payments are variable, and therefore have not been included in the right-of-use asset or lease obligations.

 

In addition to variable rent payments, the Company has committed to base rent payments at its Canadian and United States clinics that have been excluded from right-of-use asset and lease obligation balances, as the leases have been executed but have not yet commenced.

 

   Additional
Rent
Payments
  < 1 year  1-2 years  2-3 years  3-4 years  4-5 years  More than 5
years
 
  Expiry $  $  $  $  $  $  $ 
San Diego Clinic January 31, 2032  2,613,826   57,426   234,139   241,042   248,521   255,999   1,576,699 
Seattle Clinic December 31, 2028  1,629,100   106,390   216,106   222,754   229,404   236,054   618,392 
Vancouver Clinic August 31, 2031  977,128   137,333   58,667   57,426   234,139   241,042   248,521 
Fredericton Clinic July 31, 2031  1,095,794   58,667   57,426   234,139   241,042   248,521   255,999 
Austin Clinic March 31, 2032  3,040,956   54,333   221,677   265,023   291,302   300,028   1,908,593 
Connecticut Clinic May 31, 2032  1,568,397   11,929   143,390   146,257   149,182   152,244   965,395 
     10,925,201   426,078   931,405   1,166,641   1,393,590   1,433,888   5,573,599 

 

Jamaica Facility

 

   Total  1 year  2-3 years  4-5 years  More than 5
years
 
  Expiry $  $  $  $  $ 
Jamaica Facility April 6, 2023  733,665   677,373   56,292   -   - 

 

In connection with its partnership with UWI, FTNP agreed to lease property from UWI, contribute up to US$1,000,000 of initial capital for the Jamaica Facility and psilocybin research, and a total of US$100,000 to fund student development initiatives at UWI over a 36-month period. $263,121 was transferred from construction in progress to leasehold improvements during the three months ended June 30, 2021 (see Note 10 Property Plant and Equipment).

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

31. SEGMENT REPORTING

 

Information reported to the Chief Operating Decision Maker (“CODM”) for the purpose of resource allocation and assessment of segment performance focuses on the nature of the operations. The Group operates in three segments:

 

·Clinical Operations which encompass the Group’s psychedelic assisted psychotherapy clinics across North America.

 

·Research which consists of the research of fungi at the Group’s facility in Jamaica and research focused employees of Field Trip Psychedelics, and

 

·Corporate which encompasses the operations of Field Trip headquarters.

 

Factors considered in determining the operating segments include the Group’s business activities, the management structure directly accountable to the CODM, availability of discrete financial information and strategic priorities within the organizational structure.

 

  Clinical
Operations
  Research  Corporate  Total 
Segment Information $  $  $  $ 
Three months ended June 30, 2021                
Net revenue  867,400   -   -   867,400 
Net loss  (6,183,594)  (1,594,605)  (4,752,196)  (12,530,395)
Property, plant, and equipment  2,154,885   442,449   98,886   2,696,220 
Intangible assets  505,201   -   -   505,201 

 

  Clinical
Operations
  Research  Corporate  Total 
Segment Information $  $  $  $ 
Three months ended June 30, 2020                
Net revenue  23,599   -   -   23,599 
Net loss  (457,343)  (726,886)  (1,774,675)  (2,958,904)
Property, plant, and equipment  719,149   71,643   82,865   873,657 
Intangible assets  234,727   -   -   234,727 

 

  Canada  United States  Jamaica  Netherlands  Total 
Geographic Information $  $  $  $  $ 
Three months ended June 30, 2021                    
Net revenue  280,866   586,534   -   -   867,400 
Net loss  (7,349,494)  (4,131,394)  (224,920)  (824,587)  (12,530,395)
Property, plant, and equipment  483,523   1,373,601   442,449   396,647   2,696,220 
Intangible assets  505,201   -   -   -   505,201 
                     
Three months ended June 30, 2020                    
Net revenue  23,599   -   -   -   23,599 
Net loss  (2,222,389)  (703,374)  (33,141)  -   (2,958,904)
Property, plant, and equipment  443,682   358,332   71,643   -   873,657 
Intangible assets  234,727   -   -   -   234,727 

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

32. FINANCIAL INSTRUMENTS

 

Classification of Financial Instruments

 

Financial assets and financial liabilities are measured on an ongoing basis at fair value or amortized cost. The classification of the financial instruments, as well as their carrying values, are shown in the table below:

 

  As at  As at 
  June 30, 2021  March 31, 2021 
  $  $ 
Financial assets at fair value through profit and loss        
Cash and cash equivalent (Level 1)  27,630,348   38,469,057 
Funds held in trust (Level 1)  -   795,516 
Restricted cash (Level 1)  462,179   588,041 
Financial assets at amortized cost        
Short term investment  72,132,588   72,552,870 
Accounts receivable  1,052,009   813,761 
Shareholders’ loan receivable  51,174   50,521 
Total financial assets  101,328,298   113,269,766 
Financial liabilities at amortized cost        
Accounts payable and accrued liabilities  4,036,835   5,348,110 
Loan payable  31,986   23,112 
Total financial liabilities  4,068,821   5,371,222 

 

Fair Value

 

IFRS 13 - Fair Value Measurements requires disclosure of a three-level hierarchy that reflects the significance of the inputs used in making fair value measurements. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets

 

Level 2 - Observable inputs other than quoted prices in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data

 

Level 3 - Significant unobservable inputs that are supported by little or no market activity

 

Cash, restricted cash, accounts receivable, and accounts payable and accrued liabilities are all short-term in nature and, as such, their carrying values approximate fair values. There have been no transfers between any levels of the fair value hierarchy.

 

Credit Risk

 

The Group, in the normal course of business, is exposed to credit risk from its customers. Credit risk is the risk of an unexpected loss if a counterparty to a financial instrument fails to meet its contractual obligations. The Group is exposed to credit risk on its cash and accounts receivable. The Group’s objective with regard to credit risk in its operating activities is to reduce its exposure to losses. As the Group does not utilize credit derivatives or similar instruments, the maximum exposure to credit risk is the full amount of the carrying value of its cash and cash equivalents, restricted cash, short term investments, and accounts receivable.

 

The Group’s cash and cash equivalents, restricted cash and short-term investments are held with financial institutions in various bank accounts. These financial institutions are major banks in Canada, the United States, and Jamaica which the Group believes lessens the degree of credit risk.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Liquidity Risk

 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The Group manages its liquidity risk by reviewing on an ongoing basis its capital requirements. The Group typically settles its financial obligations in cash. The ability to settle obligations in cash is dependent on the Group raising financing in a timely manner and by maintaining sufficient cash in excess of anticipated needs. As at June 30, 2021, the Group had $28,092,527 (March 31, 2021 - $39,852,614) of cash and cash equivalents.

 

Undiscounted contractual obligations as of June 30, 2021 and March 31, 2021 are as follows:

 

June 30, 2021

 

  Total  Less than 1
year
  1 year to
3 years
  3 years to
5 years
  Over 5 years 
  $  $  $  $  $ 
Accounts payable and accrued liabilities  4,036,835   4,036,835   -   -   - 
Loan payable  40,000   -   40,000   -   - 
Lease obligations  15,463,852   1,970,881   3,501,599   3,472,714   6,518,658 
                     
Total financial liabilities  19,540,687   6,007,716   3,541,599   3,472,714   6,518,658 
                     
Total commitments  14,491,148   1,534,118   2,942,347   3,462,504   6,552,179 
                     
Total  34,031,835   7,541,834   6,483,946   6,935,218   13,070,837 

 

March 31, 2021

 

  Total  Less than 1 year  1 year to
3 years
  

3 years to

5 years

  Over 5 years 
  $  $  $  $  $ 
Accounts payable and accrued liabilities  5,348,110   5,348,110   -   -   - 
Loan payable  30,000   -   30,000   -   - 
Lease obligations  9,463,505   1,477,942   2,295,745   1,988,112   3,701,706 
                     
Total financial liabilities  14,841,615   6,826,052   2,325,745   1,988,112   3,701,706 
                     
Total commitments  10,889,733   1,402,761   2,561,337   2,420,290   4,505,345 
                     
Total  25,731,348   8,228,813   4,887,082   4,408,402   8,207,051 

 

Interest Rate Risk

 

Financial instruments that potentially subject the Group to cash flow interest rate risk are those assets and liabilities with a variable interest rate. Currently, the Group has no assets or liabilities with a variable interest rate. Financial assets and financial liabilities that bear interest at fixed rates are subject to fair value interest rate risk. The Group’s lease obligations are at fixed rates of interest.

 

Currency Risk

 

The Group is exposed to currency risk related to the fluctuation of foreign exchange rates and the degree of volatility of those rates. Currency risk is limited to the portion of the Group’s business transactions denominated in currencies other than the Canadian dollar, which are primarily expenses in United States dollars. As at June 30, 2021, the Group held USD dollar denominated cash of $45,645,732 USD (March 31, 2021 - $45,902,622 USD), USD denominated accounts receivable of $344,983 USD (March 31, 2021 - $32,989) and had USD dollar denominated accounts payable and accrued liabilities in the amounts of $632,258 USD (March 31, 2021 - $487,541 USD). Therefore, a 1% change in the foreign exchange rate would have a net impact as at June 30, 2021 of $562,173 (March 31, 2021 - $571,509). USD dollar revenue for the three months ended June 30, 2021 were $477,911 USD (2020 - $ nil USD) and USD dollar expenses for the three months ended June 30, 2021 were $3,712,379 USD (2020 - $814,957 USD). Varying the foreign exchange rate for the three months ended June 30, 2021 to reflect a 1% strengthening of the U.S. dollar would have increased the net loss by approximately $39,725 (2020 - $11,298) assuming that all other variables remained constant.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

1% strengthening of the U.S. dollar would have increased the net loss by approximately $39,725 (2020 - $11,298) assuming that all other variables remained constant.

 

33. RELATED PARTY TRANSACTIONS

 

The Group’s related parties include certain investors and shareholders, key management personnel, and entities owned by key management personnel.

 

Shareholders

 

Field Trip entered into shareholder loan agreements with two of its advisors for a total of $60,000 in July 2019. The notes are non-interest bearing (i.e., not on commercial terms) and are due on demand or five years from the date of note issuance. These loans are expected to be repaid in full at maturity. The Group measured the loans at fair value at initial recognition using an appropriate market interest rate. The below-market element of the loans was determined at initial recognition as the difference between the loan principal amount and fair value. This difference was recognized in equity as distribution to these shareholders. Total distribution arising from the initial fair value measurement of shareholders’ loan was $13,596. The fair values at initial recognition were accounted for as amortized cost financial assets in accordance with IFRS 9. The amortized cost of the loans as at June 30, 2021 was $51,174 (see Note 9 Other Assets) and total interest income accrued at market rate in profit or loss for the three months then ended was $653 (see Note 26 Interest Income).

 

Key Management Personnel

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including directors. Key management as at June 30, 2021 includes twelve directors and executive officers of the corporation. Key management personnel compensation for the three months ended June 30, 2021 and 2020 was comprised of:

 

 2021  2020 
Three months ended June 30, $  $ 
Salaries  497,827   142,152 
Share-based compensation (Note 18)  406,812   37,356 
   904,639   179,508 

 

34. SUBSEQUENT EVENTS

 

Clinic Openings

 

Dallas, Texas

 

On July 06, 2021 , the Group executed a lease agreement to build its Dallas, Texas clinic, commencing on December 1, 2022 and ending March 31, 2032. Total commitments under the lease are approximately $1,975,759.

 

Miami, Florida

 

On July 14, 2021, the Group executed a lease agreement to build its Miami, Florida clinic, commencing on the same date and ending July 31, 2031. Total commitments under the lease are approximately $4,098,144.

 

Toronto Lease

 

On July 15, 2021, the Group executed a lease agreement for an additional 4,674 sq. ft. at its Toronto headquarters location, commencing on August 1, 2021 and ending September, 2026. Total commitments under the lease are approximately $790,651.

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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FIELD TRIP HEALTH LTD.

Notes to the Condensed Interim Consolidated Financial Statements

For the three months ended June 30, 2021 and 2020

(unaudited)

 

Scottsdale, Arizona

 

On July 22, 2021, the Group executed a lease agreement to build its Scottsdale, Arizona clinic, commencing on the same date and ending April 30, 2032. Total commitments under the lease are approximately $1,527,948.

 

Nasdaq Listing

 

On July 27, 2021, the Company received final approval from NASDAQ to list its common shares on the NASDAQ Global Select Market. The Company’s shares began trading at market open on July 29, 2021 with the ticker symbol FTRP.

 

The Company’s common stock will continue to trade in Canada on the TSX Exchange under its current symbol FTRP; and concurrent with the listing of Field Trip’s common shares on NASDAQ in the US, the shares will cease to be quoted on the OTCQX. The Company has previously completed the process to ensure its shares are eligible for electronic clearing through the Depository Trust Company (DTC).

 

Field Trip Health Ltd ▪ Condensed Interim Consolidated Financial Statements (unaudited)

 

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