| 1. | Organization and Description of Business | |
Pharmagesic (Holdings) Inc. (the "Company") was incorporated in Canada on September 11, 2007 and its registered office address is located at 3555, Boul. Matte, Porte C, Brossard, QC, Canada, J4Y 2P4. The Company is an investment holding company where its subsidiaries are engaged in the research and development ("R&D") of Halneuron® (Tetrodotoxin) as a non-opioid analgesic for neuropathic and nociceptive pain. Halneuron® is currently being tested in human clinical trials for the treatment of chemotherapy-induced neuropathic pain.
The Company is subject to risks common to other pre-revenue biopharmaceutical companies in the R&D stage, including, but not limited to, uncertainty of successfully completing human clinical trials with Halneuron®, obtaining health authority approvals to commercialize and sell Halneuron®, competitors launching their products and therapies in the same markets and indications as Halneuron®, dependence on key personnel, protection of proprietary technology, and the ability to raise additional financing. There can be no assurance that these efforts will be successful.
Liquidity — The Company has incurred significant losses and negative cash flows from operations since its inception. As of September 30, 2024, the Company recorded net current assets of $2,028 and had cash and cash equivalents of $3,792, and its accumulated deficit was $87,600.
As further described in Note 9, the Company completed a transaction, effective from October 7, 2024, with Dogwood Therapeutics, Inc. ("Dogwood") (formerly known as Virios Therapeutics, Inc.), a Delaware corporation listed on the Nasdaq Stock Exchange, whereby Dogwood acquired 100% of the Company’s outstanding equity interests. The then immediate parent company of the Company, Dogwood, has agreed to provide adequate funds to the Company, by utilizing the loan of $19.5 million (out of which $3 million shall occur on February 18, 2025) provided to Dogwood from a wholly-owned subsidiary of CK Life Sciences Int'l., (Holdings) Inc. ("CK Life"), a limited liability company listed on the Stock Exchange of Hong Kong Limited and incorporated in the Cayman Islands, to enable the Company to meet in full its financial obligations as they fall due for the next 12 months following the issuance date of these unaudited interim condensed consolidated financial statements. The loan is for the purpose of funding operations and performing clinical and research & development activities related to Halneuron®. CK Life has also agreed to provide adequate funds to enable the Company to meet in full its financial obligations as they fall due for the next 12 months following the issuance date of these unaudited interim condensed consolidated financial statements if needed.
The Company has not generated any revenues to date from the sale of Halneuron® or any of its product candidates. The Company does not anticipate generating any revenues from the sale of Halneuron® or any of its product candidates unless and until the Company is able to successfully pass and complete required phase 2 and 3 human clinical trials, and obtain regulatory approvals to commercialize and sell Halneuron® and or any of its product candidates for the indications which Halneuron® has been tested to address.
The Company assessed it has adequate resources to meet its financial liabilities and obligations as and when they fall due and has the ability to continue as a going concern for the next 12 months following the issuance date of these unaudited interim condensed consolidated financial statements. Management’s evaluation of the events and conditions and management’s plans to mitigate these matters are also described above. Management prepared the unaudited interim condensed consolidated financial statements assuming the Company will continue as a going concern.
| 2. | SIGNIFICANT ACCOUNTING POLICIES | |
There have been no changes to the significant accounting policies described in the notes to the Company’s consolidated financial statements for the year ended December 31, 2023 that have a material impact on its condensed consolidated financial statements.
Basis of Presentation - The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). The unaudited interim condensed consolidated financial statements include the results of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated during consolidation. The consolidated balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by US GAAP on a recurring basis. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of operations, statements of comprehensive loss, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results to be expected for the full year or any other future period.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in the Company’s consolidated financial statements issued on December 18, 2024.
