Law & Regulation
Going concern warnings cloud Xtacy Therapeutics’ shrunk losses
The company issued common shares to settle debts after the reporting period.
The post Going concern warnings cloud Xtacy Therapeutics’ shrunk losses…
Canadian-based Xtacy Therapeutics Corp. (CSE: XTCY) (OTCQB: XTCYF), formerly known as Global Wellness Strategies Inc., posted financials for the fiscal years ending Sept. 30, 2023, and 2022, showing an uphill battle to keep its doors open.
The company, which operates as a merchant bank focused on the wellness and biotech industries, reported a net loss of C$519,936 in fiscal year 2023, an improvement versus the C$1.37 million loss recorded in the previous year.
However, huge challenges persist, especially as an early-stage company heavily reliant on external funding sources to support its operations and research projects.
As of Sept. 30, 2023, the company reported a working capital deficit of C$584,008 and has an accumulated deficit of C$42.3 million. To manage some of its obligations, Xtacy said it resorted to issuing common shares for debt settlements, acquisitions, and investment commitments, according to audited financial statements.
The company also said it remains under a voluntary management cease trade order (MCTO) due to its failure to file the required documents on time, according to a Monday news release. Xtacy will continue to be in default until it files its first quarter interim financial statements for the period ending Dec. 31, 2023, along with the usual associated filings.
And aside from the information disclosed in previous press releases and material change reports, management confirmed that there have been no significant business developments other than the filing of the annual financials.
The uncertainty surrounding its future has been formally acknowledged by its auditors, who have expressed doubts about the firm’s ability to continue as a going concern in their report.
Over the past year, Xtacy saw a recovery of bad debts from Biominerales Pharma Corp. (Biopharma), which had previously received a now-impaired convertible loan from the company. Biopharma agreed to repay US$350,000 (approximately C$476,000) over 29 months, resulting in a recovery of bad debts of C$379,794 for Xtacy.
Xtacy also acquired 100% of KaleidoMyco, LLC, a functional mushroom and wellness products company, as well as Shanti Therapeutics PTY Ltd., an Australian firm researching psychedelic MDMA-based drug development. The deals, accounted for as asset acquisitions, were completed through a combination of common shares, commitments to issue shares, and contingent considerations based on performance measures, according to filings.
Additionally, Xtacy entered into a non-binding LOI with AVM Biotechnology Inc. in February, paving the way for a potential acquisition. The deal, subject to approvals, could expand the company’s footprint, it said.
The company hopes the investments could position it to benefit from growing interest in alternative wellness solutions and the potential of psychedelic-based therapies.
Meris Kott, Xtacy’s president and CEO, also heads Shiny Health & Wellness Corp. (TSXV: SNYB), which operates ShinyBud adult-use dispensaries in Ontario.
The post Going concern warnings cloud Xtacy Therapeutics’ shrunk losses appeared first on Green Market Report.
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