InMed Pharmaceuticals Inc

Business

InMed Pharmaceuticals Inc. (“InMed” or the “Company”) was incorporated in the Province of British Columbia on May 19, 1981 under theBusiness Corporations Act of British Columbia. InMed is a clinical stage pharmaceutical company developing a pipeline of prescription-based products, including rare cannabinoids and novel cannabinoid analogs, targeting the treatment of diseases with high unmet medical needs as well as developing proprietary manufacturing technologies to produce rare cannabinoids for sale in the health and wellness industry.

The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “INM”. InMed’s office and principal place of business is located at #310 – 815 West Hastings Street, Vancouver, B.C., Canada, V6C 1B4.

Going Concern

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

Through December 31, 2023, the Company has funded its operations primarily with proceeds from the sale of common stock. The Company has incurred recurring losses and negative cash flows from operations since its inception, including net losses of approximately $4.0 million and $5.6 million for the six months ended December, 2023 and 2022, respectively. In addition, the Company had an accumulated deficit of approximately $105.4 million as of December 31, 2023. The Company expects to continue to generate operating losses for the foreseeable future.

As of the issuance date of these condensed consolidated interim financial statements, the Company expects its cash, cash equivalents and short-term investments of $9.5 million as of December 31, 2023, will be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of calendar 2024, depending on the level and timing of realizing BayMedica revenues from the sale of bulk rare cannabinoids in the health and wellness sector as well as the level and timing of the Company’s operating expenses. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The Company expects to continue to seek additional funding through equity financings, debt financings or other capital sources, including collaborations with other companies, government contracts or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s existing shareholders.

These condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its commitments, realize its assets and discharge its liabilities in the normal course. These condensed consolidated interim financial statements do not reflect adjustments to the carrying values of assets and liabilities that would be necessary if the Company was unable to continue as a going concern and such adjustments could be material.

Basis of Presentation

These unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information. Accordingly, these financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto for the fiscal year ended June 30, 2023.

These unaudited condensed consolidated interim financial statements reflect all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months and six months ended December 31, 2023 and 2022 are not necessarily indicative of results that can be expected for a full year. These unaudited condensed consolidated interim financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the fiscal year ended June 30, 2023.

Reclassifications

Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities. During the three months and six months ended December 31, 2023, we adopted a change in presentation on our consolidated statements of operations loss in order to include foreign exchange loss in operating expenses. Prior periods have been revised to reflect this change in the presentation.

Use of Estimates

The preparation of financial statements in compliance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, and the corresponding revenues and expenses for the periods reported. It also requires management to exercise judgment in applying the Company’s accounting policies. In the future, actual experience may differ from these estimates and assumptions. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these consolidated financial statements are the estimate of useful life of intangible assets, the application of the going concern assumption, and determining the fair value of share-based payments, income tax provisions, write-down of inventories to net realizable value, and warrant valuations.

Actual results could differ from those estimates.

Basis of Consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries, including subsidiaries: InMed Pharmaceutical Ltd., BayMedica, LLC, Biogen Sciences Inc., and Sweetnam Consulting Inc. A subsidiary is an entity that the Company controls, either directly or indirectly, where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company transactions and balances including unrealized income and expenses arising from intercompany transactions are eliminated in preparing these condensed consolidated interim financial statements.

Foreign Currency

The functional currency of the Company and its subsidiaries is the U.S. Dollar. These consolidated financial statements are presented in U.S. Dollars. References to “$” and “US$” are to United States (“U.S.”) dollars and references to “C$” are to Canadian dollars.

Accounts Receivable

Accounts receivable are recorded at invoiced amounts, net of any allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable.

The Company evaluates the collectability of accounts receivable on a regular basis based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts and economic factors or events expected to affect future collections experience. Expected credit losses on our accounts receivable were $66,775 as of December 31, 2023 and June 30, 2023.

Inventories

Inventories are initially valued at weighted average cost and subsequently valued at the lower of weighted average cost and net realizable value. Costs included in inventories are the purchase price of goods and cost of services rendered, freight costs, warehousing costs, purchasing costs and production and labor costs related to manufacturing.

In determining any valuation allowances, the Company reviews inventory for obsolete, redundant, and slow-moving goods. As of December 31, 2023 and June 30, 2023, the Company has $357,224 and $93,820 respectively, as a valuation allowance to reduce weighted average cost to net realizable value. During the three months ended December 31, 2023 and 2022, the Company recorded an inventory write-down of $170,474 and$0, respectively. During the six months ended December 31, 2023 and 2022, the Company recorded an inventory write-down of $263,404 and $576,772 respectively.

Cost of Sales

Cost of sales consists primarily of the purchase price of goods and cost of services rendered, freight costs, warehousing costs, and purchasing costs. Cost of sales also includes production and labor costs for the Company’s manufacturing business.

Concentration of Credit Risk and Other Risks and Uncertainties

At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) or Canadian Deposit Insurance Corporation (“CDIC”) insurable limits. The Company has not experienced any losses related to these balances. The uninsured cash balance as of December 31, 2023, was $5.1 million. The Company does not believe it is exposed to significant credit risk on cash and cash equivalents.

The Company’s customers are primarily concentrated in the United States.

As of December 31, 2023, the Company had three customers with an accounts receivable balance representing 57%,28% and 11% of total accounts receivable, respectively. As of June 30, 2023, we had three customers with an accounts receivable balance representing 41%,30% and 15% of total accounts receivable.

For the three months ended December 31, 2023, the Company had two customers that accounted for 51% and 20% of revenue, respectively. For the three months ended December 31, 2022, the Company had four customers that accounted for 21%,18%,15% and 11% of revenue, respectively.

For the six months ended December 31, 2023, the Company had four customers that accounted for 44%,14%,13% and 10% of revenue, respectively. For the six months ended December 31, 2022, the Company had four customers that accounted for 20%,17%,12%, and 10% of revenue, respectively. This change is reflective of the Company’s evolution to a primarily distributor model in 2023.

Financial Assets and Liabilities

Financial Assets* ***

Financial assets are initially recognized at fair value, plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses. No financial assets are or elected to be carried at fair value through profit or loss or where changes in fair value are recognized in the consolidated statements of operations and comprehensive loss in other comprehensive loss.

Short-term investments are subsequently recorded at cost plus accrued interest, which approximates fair value due to short term nature. Accounts receivable are reported at outstanding amounts, net of provisions for uncollectable amounts.

Financial Liabilities* ***

To determine the fair value of financial instruments, the Company uses the fair value hierarchy for inputs used to measure the fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).

The carrying value of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable and accrued liabilities, approximate their carrying values as of December 31, 2023 and June 30, 2023 due to their immediate or short-term maturities.

Earnings (Loss) Per Share

Basic earnings (loss) per common share (“EPS”) is computed by dividing the net income or loss applicable to common shares of the Company by the weighted average number of common shares outstanding for the relevant period. The Company has 3,012,049 pre-funded warrants and 932,954 abeyance shares included in the basic earnings (loss) per share. Diluted earnings (loss) per common share (“Diluted EPS”) is computed by dividing the net income or loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding for the three and six months ended December 31, 2023, if potentially dilutive instruments were converted. If the conversion of outstanding stock options and warrants into common share is anti-dilutive, then diluted EPS is not presented separately from EPS.

The following table sets forth the number of potential shares of common stock that have been excluded from diluted net income (loss) per because their effect was anti-dilutive:

Recent Accounting Pronouncements

The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that there was no material impact or no material impact is expected in the consolidated financial statements as a result of future adoption.

Inventories consisted of the following:

During the three months ended December 31, 2023 and 2022, the write-down of inventories to net realizable value was $170,474 and$0, respectively. During the six months ended December 31, 2023 and 2022, the write-down of inventories to net realizable value was $263,404 and $576,772, respectively. Contributing factors to the decrease in net realizable value included lower demand and downward pricing pressure for certain products. As of December 31, 2023 and June 30, 2023, the Company has $357,224 and $93,820, respectively, as a valuation allowance to reduce weighted average cost to new basis.

Property, equipment and ROU assets consisted of the following:

Depreciation expense on computer equipment, lab equipment and furnishing for the three months ended December 31, 2023 and 2022, was $14,242 and $8,056, respectively, and was recorded in general and administrative expenses. Amortization expense related to the right-of-use assets for the three months ended December 31, 2023 and 2022, was $93,085 and $90,389, respectively, and was recorded in general and administrative expenses.

Depreciation expense on computer equipment, lab equipment and furnishing for the six months ended December 31, 2023 and 2022, was $28,080 and $16,111, respectively, and was recorded in general and administrative expenses. Amortization expense related to the right-of-use assets for the six months ended December 31, 2023 and 2022, was $191,909 and $197,767, respectively, and was recorded in general and administrative expenses

The following table summarizes the Companies intangible assets:

Acquired intellectual property is recorded at cost and is amortized on a straight-line basis over 18 years. Acquired patents consist of patents related to the development of cannabinoid analogs. This intangible asset is being amortized over an estimated useful life of 18 years. As of December 31, 2023, the definite-lived intangible assets had a weighted average estimated remaining useful life of approximately 12 years.

Amortization expense on intangible assets for the three months ended December 31, 2023 and 2022 was $40,993 and $40,993, respectively. Amortization expense on intangible assets for the six months ended December 31, 2023 and 2022 was $81,986 and $81,986, respectively.

The Company expects amortization expense to be incurred over the next five years as follows:

Accounts payable and accrued liabilities consist of the following:

Authorized

As of December 31, 2023, the Company’s authorized share structure consisted of: (i) an unlimited number of common shares without par value; and (ii) an unlimited number of preferred shares without par value. No preferred shares were issued and outstanding as of December 31, 2023 and June 30, 2023.

The Company may issue preferred shares and may, at the time of issuance, determine the rights, preference and limitations pertaining to these shares. Holders of preferred shares may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding up of the Company before any payment is made to the holders of common shares.

On October 24, 2023, the Company entered into a securities purchase agreement with two accredited institutional investors for the sale of 3,012,049 pre-funded warrants of the Company’s common stock at a purchase price of $0.83 per share. The warrants have an exercise price of $0.0001 and do not have an expiration date. The pre-funded warrants had a fair value of $1,248,376. In addition, the Company agreed to issue to the purchasers unregistered preferred investment options to purchase up to an aggregate of 3,012,049 common shares. These preferred investment options have an exercise price of $0.83 and has a term of 5.5 years from issuance. The preferred investment options had a fair value of $1,251,449. As of the date of this filing, none of these warrants have been exercised.

Concurrently with the Company’s entry into the purchase agreement, the Company also entered into an inducement offer letter agreement with the holders of existing preferred investment options to purchase up to an aggregate of 3,272,733 common shares of the Company issued to the holders on November 21, 2022. Pursuant to the inducement letter, the holders agreed to exercise for cash their existing preferred investment options to purchase an aggregate of 3,272,733 common shares of the Company at a reduced exercise price of $0.83 per share in consideration of the Company’s agreement to issue new unregistered preferred investment options to purchase up to an aggregate of 6,545,466 shares of the Company’s common shares at an exercise price of $0.83. Due to ownership limitations the accredited institutional investors had 1,796,552 shares held in abeyance as of the closing of the private placement. The abeyance shares had a fair value of $1,491,138 and the common stock issued had a fair value of $1,225,230 on the issuance date. As of December 31, 2023, the investors drew down 863,598 abeyance shares. Subsequent to December 31, 2023, the investors pulled down 389,000 abeyance shares.

The inducement is considered a warrant modification due to the changing of the terms of the warrants. The modification had a fair value of $3.5 million using a Black-Scholes model and is recognized as an equity issuance cost in accordance with ASC 718-20-35-3.

On October 26, 2023, the parties consummated the offerings. The Company received gross proceeds of approximately $5.2 million from the private placement and paid approximately $560,000 in cash fees relating to this offering. The Company also issued 408,511 warrants to our placement agent. These warrants have an exercise price of $1.0375 and a term of 5.5 years. The placement agent warrants had a fair value of $325,699 using a Black-Scholes model and were recorded in as an equity issuance cost.

Common Stock Warrant

The assumptions used in the Black-Scholes model to value the new warrants issue during the six months ended December 31, 2023, are set forth in the table below.

The assumptions used in the Black-Scholes model to value the modification of warrants issue during the six months ended December 31, 2023, are set forth in the table below.

A summary of the Company’s warrant activity and related information follows:

As of December 31, 2023, the warrants exercisable and outstanding have an intrinsic value of $1,252,711 with a weighted average remaining life of 4 years.

On March 24, 2017, and as amended on November 20, 2020, the Company’s shareholders approved: (i) the adoption of a new stock option plan (the “Plan”) pursuant to which the Board of Directors may, from time to time, in its discretion and in accordance with regulatory requirements, grant to directors, officers, employees and consultants of the Company, non-transferable options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed twenty percent (20%) of the issued and outstanding common shares at the date the options are granted (on a non-diluted and rolling basis); and (ii) the application of the new stock option plan to all outstanding stock options of the Company that were granted prior to March 24, 2017 under the terms of the Company’s previous stock option plan. On December 19, 2023, the board of directors approved the reservation of an additional 700,000 shares of common stock under the Plan.

As of December 31, 2023 and June 30, 2023, there were 223,881 and 51,633 options, respectively, immediately available for future allocation pursuant to SEC rules. The maximum number of options issuable under the terms of the Plan equates to 20% of the then issued and outstanding shares. The option price under each option shall not be less than the closing price on the day prior to the date of grant. All options vest upon terms as set by the Board of Directors, either over time, up to 36 months, or upon the achievement of certain corporate milestones.

Stock options granted prior to May 2021 were granted with Canadian dollar exercise prices (United States dollar amounts for weighted average exercise prices and aggregate intrinsic value are calculated using prevailing rates as at June 30, 2022). Commencing in May 2021, stock options are granted with United States dollar exercise prices.

On December 23, 2023, the Company issued 452,000 options to our employees. The options have an exercise price of $0.37 with a term of 5 years. The options vest in equal installments monthly over three years.

On December 23, 2023, the Company issued 50,000 options to consultants. The options have an exercise price of $0.37 with a term of 5 years. The options vest in equal installments monthly over three years.

On December 23, 2023, the Company issued 28,400 options to members of the Company’s board of Directors. The options have an exercise price of $0.37 with a term of 5 years. The options vest December 23, 2024 or immediately prior to the next Annual General Meeting, whichever is sooner.

The assumptions used in the Black-Scholes model during the six months ended December 31, 2023, are set forth in the table below.

The following is a summary of changes in outstanding options from July 1, 2023 to December 31, 2023:

Total expenses arising from share-based payment transactions recognized during the three months ended December 31, 2023 and 2022 were $18,264 and $70,638, respectively, of which $10,136 and $44,042, respectively, was allocated to general and administrative expenses and the remaining $8,128 and $26,596, respectively, was allocated to research and development expenses.

Total expenses arising from share-based payment transactions recognized during the six months ended December 31, 2023 and 2022 were $43,455 and $187,319, respectively, of which $25,567 and $109,114, respectively, was allocated to general and administrative expenses and the remaining $17,889 and $78,205, respectively, was allocated to research and development expenses.

Unrecognized compensation cost at December 31, 2023 related to unvested options was $187,634 which will be recognized over a weighted-average vesting period of 1.5 years.

The Company is committed to minimum lease payments as follows:

On October 5, 2023, BayMedica amended its lease located at 458 Carlton Court, Suite C, South San Francisco, California. The Company agreed to extend its lease to May 14, 2027. The Company is obligated to pay $1,095,104 over the three-year period unless terminated before the end of the period. The Company used an incremental borrowing rate of 6.15% and recognized a right-of-use asset and corresponding operating lease liability of $968,376.

As of the closing of the BayMedica acquisition, the Company aligned into two operating and reportable segments, the InMed segment and the BayMedica segment. The Company reports segment information based on the management approach which designates the internal reporting used by the Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer, for making decisions and assessing performance as the source of the Company’s reportable segments. The CODM allocates resources and assesses the performance of each operating segment based on potential licensing opportunities, historical and potential future product sales, operating expenses, and operating income (loss) before interest and taxes. The Company has determined its reportable segments to be InMed and BayMedica based on the information used by the CODM. Other than cash, cash equivalents and short-term investments (“Unrestricted cash”) balances, the CODM does not regularly review asset information by reportable segment and, therefore, the Company does not report asset information by reportable segment.

The InMed segment is largely organized around the research and development of cannabinoid-based pharmaceuticals products and the BayMedica segment is largely organized around developing proprietary manufacturing technologies to produce rare cannabinoids for sale in the health and wellness industry. Total assets held in the InMed segment as of December 31, 2023 and June 30, 2023 are $10,214,317 and $9,498,752, respectively. Total assets as of December 31 and June 30, 2023, held in the BayMedica segment are $5,041,146 and $4,607,588, respectively.

The following table presents information about the Company’s reportable segments for the three months ended December 31, 2023 and 2022:

Pursuant to the terms of agreements with various contract research organizations, as of December 31, 2023, the Company is committed for contract research services and materials at a cost of approximately $1.9 million, expected to occur in the following twelve months period.

Pursuant to the terms of agreements with various vendors, as of December 31, 2023, the Company is committed for contract materials and equipment at a cost of approximately $0.9 million, expected to occur in the twelve months following December 31, 2023.

Pursuant to the terms of a May 31, 2017, Technology Assignment Agreement between the Company and the University of British Columbia (“UBC”), the Company is committed to pay royalties to UBC on certain licensing and royalty revenues received by the Company for biosynthesis of certain drug products that are covered by the agreement. To date, no payments have been required to be made.

Pursuant to the terms of a December 13, 2018 Collaborative Research Agreement with UBC in which the Company owns all rights, title and interests in and to any intellectual property, in addition to funding research at UBC, the Company is committed to make a one-time payment upon filing of any PCT patent application arising from the research. To date, one such payment has been made to UBC.

Pursuant to the terms of a November 1, 2018 Contribution Agreement with National Research Council Canada, as represented by its Industrial Research Assistance Program (NRC-IRAP), under certain circumstances contributions received, including the disposition of the underlying intellectual property developed in part with NRC-IRAP contributions, may become repayable.

Short-term investments include guaranteed investment certificates, with one-year terms of $44,462 and $44,422 as of December 31, 2023 and June 30, 2023, respectively, that are pledged as security for a corporate credit card.

The Company has entered into certain agreements in the ordinary course of operations that may include indemnification provisions, which are common in such agreements. In some cases, the maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial general liability insurance. This insurance limits the Company’s liability and may enable the Company to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements and it believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

Pursuant to a technology licensing agreement, the Company is committed to issue, subject to regulatory approval, up to 700 warrants to purchase 700 common shares upon the achievement of certain milestones. The exercise price of the warrants will be equal to the five-day VWAP of the common shares prior to each milestone achievement and the warrants will be exercisable for a period of three years from the issuance date.

BayMedica LLC, a wholly-owned subsidiary of the Company, entered into a patent license agreement (“Agreement”) with a third party (the “Licensor”) in an agreement dated February 15, 2021. The Company is required to make future royalty payments to the Licensor based on net sales of licensed products, with minimum payments required starting in 2021 to maintain an exclusive license. In December 2021, the Company amended the License Agreement including the deferral of the 2021 minimum payments to 2022. As of June 30, 2023, the Company has paid $300,000 for the minimum payments under the agreement. On February 10, 2023, BayMedica received a letter from the Licensor alleging a breach of the Agreement and asserting a right to monies thereunder. On April 6, 2023, BayMedica sent a letter to the Licensor disputing the Licensor’s interpretation of the Agreement and considering the counterparty’s only remedy under the Agreement to be either (a) the conversion of an exclusive technology license into a non-exclusive one or (b) to terminate the Agreement. The interpretation of a contract under Ontario law requires consideration of the surrounding circumstances at the time the contract was negotiated, and BayMedica is of the view that the text of the Agreement and the surrounding circumstances show that the remedy discussed above reflects the intention of the parties. To date, the Licensor has not initiated a lawsuit. If a lawsuit is brought alleging a breach of the Agreement, the proceeding will be subject to final, binding and non-appealable arbitration under the Arbitration Act, 1991 (Ontario) and determined pursuant to Ontario law. BayMedica intends to vigorously defend its position. At this time, it is not possible to reasonably estimate a potential loss due to the terms of the Agreement, the nature of the legal theory advanced by the counterparty, and the requirement under Ontario law that a contract must be interpreted in light of the “surrounding circumstances” at the time the contract was formed. Management will be better positioned to determine whether it is possible to estimate any potential loss following documentary and oral discovery, if any.

From time to time, the Company may be subject to various legal proceedings and claims related to matters arising in the ordinary course of business. The Company does not believe it is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred.

On September 19, 2023, the Company received written notice from the listing qualifications department staff of The Nasdaq Capital Market (“Nasdaq”) notifying it that the average closing bid price of the Company’s common shares over a period of 30 consecutive trading days was below the minimum $1.00 per share requirement for continued listing on the Nasdaq under Nasdaq Listing Rule 5550(a)(2).

In accordance with applicable Nasdaq procedures, the Company has a period of 180 calendar days following the receipt of the written notice mentioned above to cure the deficiency and regain compliance. The notice has no immediate impact on the listing of the Company’s common shares, which will continue to trade on the Nasdaq subject to the Company’s continued compliance with the other listing requirements of the Nasdaq. The common shares of the Company will continue to trade under the symbol “INM”. The Company intends to monitor the closing share price for its common shares and explore available options to regain compliance.

In the event the Company does not evidence compliance with the minimum bid price requirement during the 180-day grace period, it is expected that Nasdaq would notify the Company that its common shares are subject to delisting. At such time, the Company may appeal such determination to a Nasdaq Hearings Panel (the “Panel”) and it is expected that the Company’s securities would continue to be listed and available to trade on Nasdaq at least pending the completion of the appeal process. There can be no assurance that any such appeal would be successful or that the Company would be able to evidence compliance with the terms of any extension that may be granted by the Panel.

On February 11, 2022, the Board of Directors appointed Janet Grove as a director of the Company. Ms. Grove is a Partner of Norton Rose Fulbright Canada LLP (“NRF”). During the three months ended December 31, 2023 and 2022, NRF rendered legal services in the amount of $116,951 and $167,768, respectively, to the Company. During the six months ended December 31, 2023 and 2022, NRF rendered legal services in the amount of $131,154 and $368,666, respectively, to the Company. These transactions were in the normal course of operations and were measured at the exchange amount which represented the amount of consideration established and agreed to by NRF. No legal services rendered by NRF were rendered by Ms. Grove directly.

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were issued. Based upon this review, other than as disclosed in Note 7, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which are included but are not limited to statements with respect to InMed Pharmaceuticals Inc.’s (the “Company” or “InMed”) anticipated results and progress of the Company’s operations, research and development in future periods, plans related to its business strategy, and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We may, in some cases, use words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements in this Form 10-Q include, but are not limited to, statements about:

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the section heading: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are based only on the information available to us at that time. Except as required by law, we disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.