Exhibit 99.1

CLEARMIND MEDICINE INC.

Condensed Interim Consolidated Financial Statements

For The Three and Nine Months Ended July 31, 2023

(Expressed in United States Dollars) 

(Unaudited)

CLEARMIND MEDICINE INC. 

Condensed Interim Consolidated Statements of Financial Position

(Expressed in United States Dollars)

(Unaudited)

Approved and authorized for issuance on behalf of the Board of Directors on September 13, 2023:

(The accompanying notes are an integral part of these condensed interim consolidated financial statements) 

CLEARMIND MEDICINE INC.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss

(Expressed in United States Dollars)

(Unaudited)

(The accompanying notes are an integral part of these condensed interim consolidated financial statements)

CLEARMIND MEDICINE INC.

Condensed Interim Statements of Changes in Shareholders’ Equity (Deficit)

(Expressed in United States Dollars)

(Unaudited)

(The accompanying notes are an integral part of these condensed interim consolidated financial statements)

CLEARMIND MEDICINE INC.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

(Unaudited)

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

On November 14, 2022, the Company completed a public offering for aggregate gross proceeds of US$7.5 million and up listing to the Nasdaq Capital Market (“Nasdaq”), see note 6c (i). The Company trades under the symbol CMND on both the Nasdaq and the Canadian Securities Exchange (“CSE”) in Toronto.

On April 6, 2023, the Company completed an underwritten public offering for aggregate gross proceeds of US$3.5 million. Net proceeds of US$2.9 million. See note 6c (iii).

These condensed interim consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. For the nine months ended July 31, 2023, the Company has not generated any revenues and has negative cash flow from operations of $5,548,304. As of July 31, 2023, the Company has an accumulated deficit of $14,698,264. The continued operations of the Company are dependent on its ability to generate future cash flows or obtain additional financing through debt or equity. As of the date of approval of these condensed interim consolidated financial statements, the Company anticipates that its cash and cash equivalents will provide sufficient liquidity for at least twelve months. The actual amount of cash that the Company will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials. The Company is dependent upon significant future financing to provide the cash necessary to execute its current and future operations, including the commercialization of any of its drug candidates. These factors may cast substantial doubt on the Company’s ability to continue as a going concern. These condensed interim consolidated financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.

On September 30, 2022, the Company’s Board of Directors (the ”Board”) approved a 1-for-30 reverse split of its issued and outstanding ordinary shares, effective as of September 30, 2022, pursuant to which holders of the Company’s ordinary shares received 0.0333 of a common share for every one ordinary share.

All issued and outstanding common shares or instruments convertible into common shares contained in these financial statements prior to the reverse share split have been retroactively adjusted to reflect the reverse share split for all periods presented, unless explicitly stated otherwise.

The financial statements of each company within the consolidated group are measured using their functional currency which is the currency of the primary economic environment in which an entity operates. The Company changed its functional currency from the Canadian dollar (C$) to the United States dollar (US$) as of November 1, 2022. The change in presentation currency is a voluntary change which is accounted for retrospectively. For comparative reporting purposes, historical financial information has been translated to United States dollars using the exchange rate as of November 1, 2022, which is the date of the change in the functional and presentation currency.

These consolidated financial statements are presented in United States dollars. As of November 1, 2022, the Company’s functional currency is the Unites States dollar (as described above). The functional currency of Clearmindmed Ltd. is the United States dollar.

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

The accompanying condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board on a going concern basis.

These condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Clearmindmed Ltd. and Clearmind Labs Corp. (inactive). All inter-company balances and transactions have been eliminated on consolidation.

These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial assets and liabilities (including derivatives) which are presented at fair value through profit or loss, and are presented in United States dollars, which is the Company’s functional currency.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with IFRS have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements as of and for the year ended October 31, 2022 and the notes thereto (the “2022 Annual Report”).

The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements, except for the change in functional and presentational currency (Note 1d). In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the nine months ended July 31, 2023 are not necessarily indicative of the results for the year ending October 31, 2023, or for any future period.

As of July 31, 2023, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2022 Annual Report, except for the change in functional and presentational currency (Note 1d).

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

Significant Estimates

Share-based Compensation

Fair values are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company’s stock options. 

Warrant Liability

The Company uses the Black-Scholes option-pricing model to estimate fair value of options and the warrant liability at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the options and warrants.

Significant Judgments

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

Going Concern

The application of the going concern assumption requires management to take into account all available information about the future, which is at least but not limited to, 12 months from the year end of the reporting period. The Company is aware that material uncertainties related to events or conditions may cast significant doubt upon the Company’s ability to continue as a going concern.

As of July 31, 2023, the Company holds 27,778 common shares of Medigus Ltd (“Medigus”) (approximately 0.11%) with a total fair value of $122,779. The fair value of common shares held was determined by reference to public price quotations in an active market.

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

On April 6, 2023, the Company issued 4,505,718 warrants in connection with its April 2023 Public Offering. At the time of the grant, these warrants were recorded at their fair value as a derivative liability as the terms of the warrant include a cashless exercise provision and repricing provisions, under certain circumstances, and are therefore revalued at the end of each reporting period. During the three and nine month periods ended July 31, 2023, the Company recorded a gain on the revaluation of the total warrant liability of $482,331 and $121,774 respectively, in the Condensed Interim Consolidated Statements of Operations and Comprehensive Loss.

The Black-Scholes option pricing model was used to measure the derivative warrant liability with the following assumptions:   

The following table presents the changes in the warrants liability during the period:

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

In addition, the Company granted Aegis Capital Corp. (“Aegis”), who acted as the underwriters for the deal, a 45-day option to purchase up to 173,077 additional common shares, equal to 15% of the number of common shares sold in the offering solely to cover over-allotments, if any (“Over-Allotment”). The public purchase price per additional common share would have been US$6.50 per share. The Over-Allotment was not exercised.

Aegis received 57,692 underwriter warrants, each such warrant entitling the agents to receive one common share upon payment of US $8.125 per share, exercisable six months after the commencement of sales of this offering and expiring on a date which is no more than five years after the commencement of sales of the offering. The fair value for underwriter warrants total of $282,287 and have been credited to the warrant reserve. The fair value has been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:

In connection with the offering, the Company’s common shares were approved for listing on the Nasdaq and began trading on the Nasdaq (in addition to the CSE) under the symbol “CMND” on November 15, 2022.

Following the public offering, Medigus were entitled to receive 44,829 common shares and 2,241 warrants pursuant to an anti-dilution clause included in the agreement signed between the Company and Medigus on June 29, 2022. On May 23, 2023, the Company issued the 44,829 common shares and 2,241 warrants.

The anti-dilution feature was recorded as a derivative liability as of October 31, 2022 and has been classified to equity upon completion of the IPO.

CLEARMIND MEDICINE INC.

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

Pursuant to the Cash Financing, the Company issued 39,747 units at $24.00 per unit for proceeds of $698,897.

In connection with the Cash Financing, the Company incurred finder’s fees of $69,890, which have been charged to the condensed interim statement of changes in equity.

Pursuant to the Share Exchange, the Company issued 26,498 units with a fair value of $455,487, consisting of common shares with a fair value of $372,745 and warrants with a fair value of $82,742. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions: Risk-free rate of 1.43%, expected life of 1.5 years, and volatility of 107.46%.

In connection with the Share Exchange, the Company incurred finder’s fees of $50,000, which were allocated to the base cost of the shares in Medigus.

In addition, Medigus will be entitled to 10% of the initial equity of a potential venture in the area of psychedelics, in connection with a research project currently conducted according to an agreement between the Company and the commercialization arm of a leading Israeli academic institution. 

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

The following table summarizes the changes in the Company’s share purchase warrants:

As of July 31, 2023, the following share purchase warrants were outstanding:

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements

(Expressed in United States Dollars)

(Unaudited)

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

The fair value for stock options previously granted to certain consultants for ongoing services measured during the period have been estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions:

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of July 31, 2023, as follows:

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of October 31, 2022, as follows:

The fair value of other assets and liabilities, which include cash, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency. The Company’s subsidiary operates in Israel and has certain monetary financial instruments denominated in New Israeli Shekel and CAD. The Company has not entered into foreign exchange rate contracts to mitigate this risk.

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

The following table indicates the impact of foreign currency exchange risk on net working capital as of July 31, 2023. The table below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company’s net loss by the amounts shown in the table below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as of July 31, 2023.

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.

The following amounts are the contractual maturities of financial liabilities as of July 31, 2023 and October 31, 2022:

CLEARMIND MEDICINE INC. 

Notes to the Condensed Interim Consolidated Financial Statements 

(Expressed in United States Dollars)

(Unaudited)

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued share capital, RSU reserve, warrants reserve, and options reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the nine months ended July 31, 2023.

As of July 31, 2023, the Company has one operating segment, research and development of psychedelic medicine, which takes place primarily in Israel.

The Company’s non-current assets by geographical location are as follows:

F-19

Exhibit 99.2

CLEARMIND MEDICINE INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS 

For the Three and Nine Months Ended July 31, 2023

(Expressed in United States Dollars)

(Unaudited)

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

This Management’s Discussion and Analysis (“MD&A”) of Clearmind Medicine Inc. (“Clearmind” or the “Company”), prepared as of September 13, 2023, should be read in conjunction with the unaudited condensed interim consolidated financial statements and the notes thereto for the three and nine months ended July 31, 2023, which were prepared in accordance with International Financial Reporting Standards (“IFRS”). All amounts are expressed in United States dollars unless otherwise indicated.

Additional information about the Company is available on SEDAR at www.sedar.com.

Cautionary Statement Regarding Forward-Looking Information

This MD&A may contain “forward-looking statements” which reflect the Company’s current expectations regarding future results of operations, performance and achievements of the Company. The Company has tried, wherever possible, to identify these forward-looking statements by, among other things, using words such as “anticipate,” “believe,” “estimate,” “expect” and similar expressions. The statements reflect the current beliefs of the management of the Company, and are based on currently available information. Accordingly, these statements are subject to known and unknown risks, uncertainties and other factors, which could cause the actual results, performance, or achievements of the Company to differ materially from those expressed in, or implied by, these statements.

The Company undertakes no obligation to publicly update or review the forward-looking statements whether as a result of new information, future events or otherwise.

Historical results of operations and trends that may be inferred from the following discussions and analysis may not necessarily indicate future results from operations.

Description of Business and Company Overview

Corporate Information

The Company was incorporated under the name Cyntar Ventures Inc. on July 18, 2017, pursuant to the provisions of the Business Corporations Act (British Columbia). On March 24, 2021, the name of the Company was changed to Clearmind Medicine Inc. The Company’s principal executive offices are located at 101 – 1220 W. 6th Ave, Vancouver, BC V6H1A5 and its operational offices are located at 20 Rahul Wallenberg, Tel Aviv, Israel.

Originally, the Company operated as a mineral resource exploration operations company. In September 2020, the Company announced a shift of the focus of the business to the development of innovative psychedelic therapies. This process involved the acquisition of all rights, title and interests in several patent applications for the treatment of alcohol use disorders, or AUD, and various other non-controlled binge behaviors. As part of this process, the Company announced a Change of Business, or COB listing, on the CSE. The COB became effective in November 2020. In May 2021, the Company completed all of the requirements of the CSE for a COB listing. The Company’s common shares trade on the Canadian Securities Exchange under the symbol “CMND”.

On September 30, 2022, the Company’s Board of Directors approved a 1-for-30 reverse split of its issued and outstanding ordinary shares, effective as of September 30, 2022, pursuant to which holders of the Company’s ordinary shares received 0.0333 of an ordinary share for every one ordinary share.

Significant developments during the period

On November 14, 2022, the Company completed a public offering for aggregate gross proceeds of US$7.5 million and up listing to the Nasdaq Capital Market (“Nasdaq”). Net proceeds of the offering were $6.4 million. As a result, the Company also trades under the symbol “CMND” on the Nasdaq.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

In March 2023, the Company announced that it had submitted an IND application with the FDA, requesting approval to initiate our first-in-human Phase I/IIa clinical trial with CMND-100 in patients suffering from AUD. Subsequently, in May 2023, the Company initiated the CM-CMND-001 clinical trial in both Israel and the United States.

The Israeli study is be led by Prof. Mark Weiser, M.D., head of the Psychiatric Division at the Sheba Medical Center in the Tel Aviv suburb of Ramat Gan. Our first U.S. site for the CM-CMND-001 clinical trial is at the Yale School of Medicine’s Department of Psychiatry. The site is led by Anahita Bassir Nia, MD, a specialist in substance abuse, including alcohol abuse. In addition, the Company intends to open a second site in the United States for the CM-CMND-001 clinical trial.

The CM-CMND-001 clinical trial is designed to be a multinational, multi-center, Phase I/IIa single- and multiple-dose tolerability, safety and pharmacokinetic study in healthy volunteers and AUD subjects.

In the Phase I part of the trial of the clinical trial, oral capsules (CMND-100) will be administered once to healthy volunteers and AUD subjects respectively with single, ascending dose of CMND-100, for evaluation of tolerability, safety and pharmacokinetics/ pharmacodynamics. or PK/PD. In the Phase IIa part of the clinical trial which is a randomized, double-blind, placebo-controlled part, CMND-100 oral capsules will be administered once daily for ten consecutive days to healthy volunteers and AUD subjects for evaluation of safety, PK/PD and preliminary efficacy. The patients will report their drinking patterns and craving for alcohol (and cigarettes) during the clinical trial period.

The primary end-point of the trial is to find the tolerable dose and characterize the safety, tolerability and PK/PD of single and repeated doses of CMND-100 in healthy subjects and in those with AUD. The secondary end-point is to evaluate preliminary efficacy of CMND-100 in reduction of drinking patterns and craving in individuals with moderate-to-severe AUD.

On April 6, 2023, the Company completed an underwritten public offering for aggregate gross proceeds of US$3.5 million. Net proceeds of the offering were $2.9 million (“April 2023 Public Offering”)

Company Overview

The Company is a pre-clinical pharmaceutical company approaching phase 1 clinical trials, that develops novel psychedelic medicines to solve widespread, yet under-served, health problems. The Company’s goal is to develop and provide a new type of treatment for mental health disorders, including AUD, binge drinking and eating disorders, where there is significant unmet need and lack of innovation. The Company sees psychedelic therapies, which previously may have been overlooked or underused, as the future of treatment for a variety of indications. The Company believes that its solution for AUD can help solve one of the world’s biggest health problems, which costs the United States alone roughly $250 billion each year.

The Company’s flagship treatment and focus for the short term is on AUD, which is incredibly common. It varies from mild to excessive and describes a person’s inability to restrict their alcohol consumption, despite negative social, occupational, or health consequences. Alcohol consumption contributes to 3 million deaths each year globally and is the third most common preventable cause of death in the United States. Apart from potentially changing people’s lives, the Company believes that the Company’s treatment could potentially reduce the amount currently being spent on the consequences of AUD in the United States, Europe, India, China and other countries around the world. The Company also believes that its treatment may address binge drinking. 95,000 people die every year in the United States alone due to binge drinking.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

The Company has completed a series of pre-clinical IND enabling studies in the United States and China that are required before the Company can study its compound for the first time in humans. These studies include pharmacokinetic and toxicological studies in rats and dogs in order to assess the safety profile of the Company’s compound and characterization of the drug metabolism. The Company has conducted several metabolism studies designed to better understand the way 5-Methoxy-2-aminoindane, or MEAI, is digested in several species. In addition, the Company has conducted a pre-clinical animal model of AUD to characterize the effect of MEAI on alcohol consumption. This study involved testing the effect of MEAI’s ability to curb alcohol cravings after exposing mice to prolonged alcohol consumption over a short period, mimicking binge alcohol consumption in humans.

The Company intends to submit the Company’s IND request and to initiate the Phase I/IIa clinical study in the first quarter of 2023. As part of this strategy, the Company had a pre-IND meeting with the U.S. Food and Drug Administration, or FDA, in May 2022. The Company plans to submit applications to conduct the Phase I/IIa study in Europe, the United States and Israel. Upon completion of the Phase I/IIa studies, if successful, the Company will be required to conduct additional clinical trials subject to securing additional financing.

Research and development work

In addition to the Company’s research programs on the uses of MEAI, the Company has plans to conduct 12 other research programs on different molecules, which are to be led by the Company’s highly skilled, focused team, with deep expertise in their respective fields, several of whom have taken products from the discovery phase to clinical trials in the United States in their previous respective roles, as well as key members of the Company’s scientific advisory board who have participated in numerous clinical trials in the areas of alcoholism and addiction.

These 12 additional drug programs can be separated into two categories. Nine of these programs are in the pre-discovery phase, and are primarily aimed at discovering innovative molecules designed for the treatment of mental health diseases such as depression, anxiety and post-traumatic stress disorder, or PTSD. Of the remaining three of these programs which are all in the discovery phase, one is aimed at the treatment of depression and treatment resistant depression, or TRD, while the other two are aimed at studying substances that can replicate the effects of 3,4-methylenedioxymethamphetamine, or MDMA, for therapeutic purposes.

In the Company’s research program aimed at treating depression and TRD, the Company has been studying the effects of administering 2-fluorodeschloroketamine, or 2-FDCK. The Company investigated 2-FDCK in a pre-clinical proof-of-concept study. In the Company’s two research programs aimed at finding substances that can be utilized for the same therapeutic purposes as MDMA, the Company will be studying 1-(Benzofuran-5-yl)-N-methylpropan-2-amine, or 5-MAPB and 1-Benzofuran-6-yl propan-2-amine, or 6-APB. The Company believes these treatments may be beneficial for fail-safes for MDMA based on a September 2016 article from Naunyn-Schmiedeberg’s Archives of Pharmacology, which reported the receptor binding profiles of 5-MAPB and 6-APB are different enough from MDMA to effectively perform a substitute role in the therapy while being similar enough so as not to have to change the therapeutic protocol.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Strategy

With respect to the Company’s AUD programs, the Company developed MEAI as a new chemical entity (NCE) drug candidate. The Company intends to seek regulatory approval through the FDA’s 505(b)(1) regulatory path. The FDA’s 505(b)(1) regulatory path is typically used for novel drugs that have not previously been studied or approved, and drug development pursuant to this path requires drug developers to conduct all studies needed to demonstrate the safety and efficacy of the drug. Given its nature, this type of submission requires extensive research, including both clinical and nonclinical studies, to prove the product’s safety and efficacy for the indication being sought.

Pursuant to the Company’s pre-IND meeting correspondence with the FDA, the FDA informed the Company that the Phase I portion of the Company’s Phase I/IIa study could not include only AUD patients (i.e., the Company’s target population). Accordingly, at the pre-IND meeting, the Company discussed a hybrid model for the Phase I portion of the study, where the Company would study both healthy volunteers and AUD patients, and the FDA did not rule this out as a possibility. While the Company cannot guarantee that the FDA will approve the Company’s request, if approved, such special accommodation would allow the Company’s to start the first in-human study with the target population rather than with healthy volunteers. If the FDA grants the Company the ability to use the hybrid model that includes AUD patients, the Company’s timeline for the clinical development of MEAI could be accelerated as it will potentially allow the Company’s to submit only one IND application, IRB application and one set of study reports for both Phase I and Phase IIa of the Company’s clinical trial. Furthermore, this model allows the Company to reach the Company’s target population quicker, hence getting more substantial safety data on the Company’s target population at an earlier stage.

Prior Use of Proceeds Disclosure

The table below describe the difference between the Company’s anticipated use of proceeds from public offerings completed since November 2022, as disclosed in previous news releases. The table shows the amounts actually spent for the period from November 1, 2022 through to July 31, 2023, The Company notes the below variances do not have a material impact on the Company’s ability to achieve its business objectives and milestones.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Selected Financial Information

The following financial data prepared in accordance with IFRS in United States dollars is presented for the three and nine month periods ended July 31, 2023 and 2022.

Three-month period ended July 31, 2023, compared to the three-month period ended July 31, 2022

Research Costs

Research costs are comprised primarily of (i) Salaries and wages to Company employees at and (ii) pre-clinical trials.

For the three-month period ended July 31, 2023, research costs amounted to $263,954 as compared to $325,321 for the three-month period ended July 31, 2022.

General and Administrative Expenses

For the three-month period ended July 31, 2023, general and administrative expenses amounted to $838,925 as compared to $1,025,554 for the three-month period ended July 31, 2022.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Finance incomes (expenses)

For the three-month period ended July 31, 2023, financial incomes amounted to $521,061 as compared to financial expenses of ($132,137) for the three-month period ended July 31, 2022. The financial incomes during the three-month period ended July 31, 2023 consist of change in warrant liability of $482,331, foreign exchange gain of $33,645, unrealized loss on short-term investment of $12,222 and finance income, net of $17,307.

Loss for the period

The Company reported a loss for the three-month period ended July 31, 2023 of $575,187 as compared to a loss of $1,483,012 for the three-month period ended July 31, 2022.

Nine-month period ended July 31, 2023, compared to the nine-month period ended July 31, 2022

Research Costs

Research costs are comprised primarily of (i) Salaries and wages to Company employees at and (ii) pre-clinical trials.

For the nine-month period ended July 31, 2023, research costs amounted to $1,169,156 as compared to $1,796,916 for the nine-month period ended July 31, 2022.

General and Administrative Expenses

For the nine-month period ended July 31, 2023, general and administrative expenses amounted to $3,422,798 as compared to $3,301,755 for the nine-month period ended July 31, 2022. The amount incurred in 2023 is consistent with the amount spent in 2022.

Finance incomes (expenses)

For the nine-month period ended July 31, 2023, financial incomes amounted to $30,380 as compared to financial expenses of ($230,892) for the nine-month period ended July 31, 2022. The financial expenses during the nine-month period ended July 31, 2023 consist of change in warrant liability of $121,774, foreign exchange loss of $61,711, unrealized loss on short-term investment of $70,971 and finance income, net of $41,288

Loss for the period

The Company reported a loss for the nine-month period ended July 31, 2023 of 4,551,038 as compared to a loss of $5,329,563 for the nine-month period ended July 31, 2022.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Financial Summary of Quarterly Results

The following is a summary of the Company’s financial results for the eight most recently completed quarters.

Factors causing significant variations in quarterly results are as follows:

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Liquidity and Capital Resources

As of July 31, 2023, the Company had cash on hand of $3,847,259 and positive working capital of $2,695,028, compared to $128,777 and negative working capital of $1,497,720 as of October 31, 2022, respectively. During the nine-month period ended July 31, 2023, the Company’s overall position of cash increased by $3,718,482 from the year ended October 31, 2022. This increase in cash can be attributed to the following:

The Company anticipates that its cash and cash equivalents will provide sufficient liquidity for at least twelve months, however, the Company may have capital requirements in excess of its currently available resources in order to advance all it its programs. The actual amount of cash that the Company will need to operate is subject to many factors, including, but not limited to, the timing, design and conduct of clinical trials. The Company is dependent upon significant future financing to provide the cash necessary to execute its current operations, including the commercialization of any of its drug candidates. 

In the event the Company’s plans change, its assumptions change or prove inaccurate, or its capital resources in addition to projected cash flow, if any, prove to be insufficient to fund operations, the Company may be required to seek additional financing. There can be no assurance that the Company will have sufficient financing to meet its future capital requirements or that additional financing will be available on terms acceptable to the Company in the future.

Capital Management

The Company manages its capital to maintain its ability to continue as a going concern and to provide returns to shareholders and benefits to other stakeholders. The capital structure of the Company consists of cash and equity comprised of issued capital, shares issuable, warrants reserve and share-based payment reserve.

The Company manages its capital structure and makes adjustments to it in light of economic conditions. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share issuances or by undertaking other activities as deemed appropriate under the specific circumstances.

The Company is not subject to externally imposed capital requirements and the Company’s overall strategy with respect to capital risk management remains unchanged from the year ended October 31, 2022.

Off Balance Sheet Arrangements

There are no off-balance sheet arrangements to which the Company is committed.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Transactions With Related Parties

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Financial Instruments and Risk Management

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of July 31, 2023, as follows:

Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s statement of financial position as of October 31, 2022, as follows: 

The fair values financial instruments, which include cash, amounts receivable, accounts payable and accrued liabilities, and amounts due to related parties, approximate their carrying values due to the relatively short-term maturity of these instruments.

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash. The Company limits its exposure to credit loss by placing its cash with high credit quality financial institutions. The carrying amount of financial assets represents the maximum credit exposure.

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in a foreign currency. The Company’s subsidiary operates in Israel and has certain monetary financial instruments denominated in New Israeli Shekel and CAD. The Company has not entered into foreign exchange rate contracts to mitigate this risk.

The following table indicates the impact of foreign currency exchange risk on net working capital as at July 31, 2023. The table below also provides a sensitivity analysis of a 10% strengthening of the foreign currency against functional currencies identified which would have increased (decreased) the Company’s net loss by the amounts shown in the table below. A 10% weakening of the foreign currency against the functional currencies would have had the equal but opposite effect as of July 31, 2023.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risk as it does not have any liabilities with variable rates.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company relies on raising debt or equity financing in a timely manner.

The following amounts are the contractual maturities of financial liabilities as of July 31, 2023, and October 31, 2022:

Accounting Standards Issued But Not Yet Effective

A number of new standards, and amendments to standards and interpretations, are not yet effective for the nine months ended July 31, 2023, and have not been early adopted in preparing these condensed interim consolidated financial statements. These new standards, and amendments to standards and interpretations are either not applicable or are not expected to have a significant impact on the Company’s condensed interim consolidated financial statements.

Significant Accounting Estimates and Judgments

The preparation of condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Significant Estimates

Share-based Compensation

Fair values are determined using the Black-Scholes option pricing model. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and, therefore, existing models do not necessarily provide reliable measurement of the fair value of the Company’s stock options.

Warrant Liability

The Company uses the Black-Scholes option-pricing model to estimate fair value of options and the warrant liability at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company’s shares and the expected life of the options and warrants.

Significant Judgments

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

Going Concern

The application of the going concern assumption which requires management to take into account all available information about the future, which is at least but not limited to, 12 months from the year end of the reporting period. The Company is aware that material uncertainties related to events or conditions may cast significant doubt upon the Company’s ability to continue as a going concern.

Additional Disclosure for Companies Without Significant Revenue

An analysis of material components of the Company’s general and administrative expenses is disclosed in the condensed interim consolidated financial statements for the nine and three-months ended July 31, 2023, to which this MD&A relates.

Disclosure of Outstanding Share Data

Authorized share capital consists of unlimited number of common shares without par value.

As of July 31, 2023, and September 13, 2023, the Company had 7,118,213 and 7,137,096 common shares issued and outstanding, respectively.

As of July 31, 2023, and September 13, 2023, the Company had 144,333 stock options outstanding.

As of July 31, 2023, and September 13, 2023, the Company had 4,881,895 and 4,815,650 share purchase warrants outstanding, respectively.

As of July 31, 2023, and September 13, 2023, the Company had 78,088 and 62,539 RSU’s outstanding.

CLEARMIND MEDICINE INC.

Management’s Discussion and Analysis

For the Three and Nine Months Ended July 31, 2023

Risks and Uncertainties

The Company business, and investing in the Company’s securities, are subject to numerous risks, as more fully described in the section entitled “Risk Factors” beginning on page 9 and other risk factors contained in the Company’s Annual Information Form filed in SEDAR on December 1, 2022. If any of these risks actually occur, the Company’s business, financial condition or results of operations would likely be materially adversely affected. In each case, the trading price of the Company’s securities would likely decline, and investors may lose all or part of their investment. The following is a summary of some of the principal risks the Company faces:

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