CRISM THERAPEUTICS CORPORATION (FORMERLY AMUR MINERALS CORPORATION)

1.            Reporting Entity 

CRISM Therapeutics Corporation (formerly Amur Minerals Corporation) (the "Company") is a company domiciled in the British Virgin Islands. The consolidated interim financial information as at and for the six months ended 30 June 2024 comprise the results of the Company and its subsidiaries (together referred to as the "Group").

The Group has a principal activity being a biotechnology company, focused on the development of innovative drug delivery technology to improve the clinical performance of cancer treatments for solid tumours through the local delivery of chemotherapy drugs.

2.            BASIS OF PREPARATION

The financial information set out in this report is based on the consolidated financial information of CRISM Therapeutics Corporation and its subsidiary companies. The financial information of the Group for the 6 months ended 30 June 2024 was approved and authorised for issue by the Board on 18 September 2024.  The interim results have not been audited. This financial information has been prepared in accordance with the accounting policies that are expected to be applied in the Report and Accounts of CRISM Therapeutics Corporation for the year ended 31 December 2024 and are consistent with the recognition and measurement requirements of IFRS as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

The comparative amounts are CRISM Therapeutics Limited (formerly known as Extruded Pharmaceuticals Limited) for the year ended 31 December 2023 and for the 6-month period ended 30 June 2023. See note 3 for explanation.

The Group financial information is presented in GBP and values are rounded to the nearest thousand Pound. The Group changed its functional and presentation currency from US Dollars to Sterling during the period. Further information has been included in note 5. 

The same accounting policies, presentation and methods of computation are followed in the interim consolidated financial information as were applied in the Group's latest annual financial statements except for those disclosed at notes 3 to 5, which have been newly adopted.  

New standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2024 have been determined by management to have no impact on these interim financial statements,

3.            SHARE BASED PAYMENTS - REVERSE ACQUISITION

On 29 May 2024, the Company acquired CRISM Therapeutics Limited (formerly Extruded Pharmaceuticals Limited) via a reverse takeover which resulted in the Company becoming the ultimate holding company of the Group. The transaction was accounted for as a reverse acquisition since it did not meet the definition of a business combination under IFRS 3. In accordance with IFRS 2, a share-based payment expense equal to the deemed cost of the acquisition less the fair value of the net assets of the Company at acquisition was recognised. The comparatives within the consolidated statement of financial position, the consolidated statement of comprehensive income, consolidated statement of changes in equity and the consolidated cashflow statement represent that of the legal subsidiary and accounting acquirer, CRISM Therapeutics Limited for the periods-ended 30 June 2023 and 31 December 2023. In the consolidated statement of financial position, the share capital and premium as at 30 June 2024 is that of CRISM Therapeutics Corporation with the reverse acquisition reserve representing the difference between the deemed cost of the acquisition and the net assets of CRISM Therapeutics Corporation (formerly Amur Minerals Corporation) as at 29 May 2024. The consolidated statement of comprehensive income for the 12-month period to 30 June 2024 represents the results of both CRISM Therapeutics Corporation and CRISM Therapeutics Limited. For more details on the key terms of the reverse takeover ("RTO") and a breakdown of what the reverse acquisition reserve as of 30 June 2024 comprises, see note 9.

4.            INTANGIBLE ASSETS

IAS 38 Intangible Assets requires management to differentiate between research and the development phase of R&D activities and their related costs (including patent costs). In accordance with IAS 38, an intangible asset arising from development shall be recognised if, and only, if, an entity can demonstrate certain criteria. The Board continually monitors its activities against the prescribed criteria to determine the point in which the Group would enter the development phase of its activities. The entity is currently in the phases of formulation, design and evaluation of its product and therefore management is confident that the entity is in the research phase. As a result, any expenditure arising regarding patent costs are expensed in the Statement of Comprehensive Income.

5.            CHANGE IN FUNCTIONAL AND PRESENTATIONAL CURRENCY

On 29 May 2024 the functional and the presentation currency of the Group changed from US Dollars to Sterling. The change in functional currency was aligned with that of the Group's operating subsidiary, CRISM Therapeutics Ltd and was deemed to better represent the core activities of the Group.

Ordinarily, and in accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates", a change in the presentational currency of an entity should be applied retrospectively and results in a restatement of the prior period results presented into the new presentational currency. However, after applying the requirements of IFRS 2 in respect of reverse acquisition accounting principles, the prior period results of the Company have not been presented. The only restatement required is that of the Company's share capital and share premium which has been restated per IFRS 2 & IAS 21 due to the aforementioned reserve acquisition which occurred on the 29 May 2024, the opening balances have further been restated for the change in accounting currency from USD to GBP which is the functional currency of the group post RTO and as such represents the ongoing functional currency of the group. 

A change in functional currency is applied prospectively from the date of the change.

In accordance with the guidance defined in IAS 21 "The Effects of Changes in Foreign Exchange Rates", the results of CRISM Therapeutics Corporation have been translated to Sterling as follows:

o  Assets and liabilities were translated into Sterling at closing rates of exchange.

o  Trading results were translated into Sterling at average rates of exchange for the period. Differences resulting from the re-translation on the opening net assets and the results for the year have been taken to the foreign currency translation reserve (FCTR);

o  Share capital, share premiums and other reserves were translated at historic rates prevailing at the dates of transactions; and

o  All exchange rates used were extracted from the Group's underlying financial records.

The exchange rates used were as follows:

6.            GOING CONCERN

On 29 May 2024 the Company completed the acquisition of CRISM Therapeutics Ltd for aggregate consideration of £5.5 million, satisfied by the issue of 23,939,986 New Ordinary Shares. On the date of the Readmission, the Company had cash on hand of £2.356m, of which a large portion has been retained and will facilitate the Group's planned research and development activity.

The Directors have reviewed the Group's cash flow forecasts and believe the Group has sufficient cash resources to cover planned and committed expenditures over the period to 30 September 2025. Significant expenditure will be required to fund the Group's activities to the stage of generating commercial revenues.  Consequently, the Group will require further funding by way of equity issues to new and existing investors and additional grant funding. 

The Directors are confident that throughout the going concern forecast period the Group will have sufficient funds to meet obligations as they fall due, and thus, the Directors continue to prepare the consolidated financial statements on a going concern basis.

7.            LOSS PER SHARE

Basic and diluted loss per share is calculated and set out below. The effects of warrants and share options outstanding at the period end are anti-dilutive as they will serve to reduce the loss per share.

8.   TRADE AND OTHER PAYABLES

Other payables as at 30 June 2024 included £86,000 of unclaimed dividends.

Prior to the completion of the RTO, the Directors of CRISM Therapeutics Ltd agreed to waive all amounts owed to them, resulting in the forgiveness of Directors loans amounting to £298,000.

9.      Reverse acquisition

On 29 May 2024, the Company acquired the entire issued and to be issued share capital of CRISM Therapeutics Ltd. Although the transaction resulted in CRISM Therapeutics Ltd becoming a wholly owned subsidiary of the Company, the transaction constituted a reverse acquisition, as the previous shareholders of CRISM Therapeutics Ltd own a substantial majority of the Ordinary Shares of the Company and the executive management of CRISM Therapeutics Ltd became the executive management of the Company.

In substance, the shareholders of CRISM Therapeutics Ltd acquired a controlling interest in the Company and the transaction will therefore be accounted for as a reverse acquisition.

The acquisition cost of CRISM Therapeutics Ltd was £5,500,000. The consideration for the transaction was satisfied by the issue and allotment of a total of 23,939,986 Consideration Shares to the shareholders of CRISM Therapeutics Limited (the "Sellers"), such shares having an implied issue price of £0.23.

Because the legal subsidiary, CRISM Therapeutics Limited (formerly Extruded Pharmaceuticals Limited), was treated on consolidation as the accounting acquirer and the legal Parent Company, CRISM Therapeutics Corporation (formerly Amur Minerals Corporation), was treated as the accounting subsidiary, the fair value of the shares deemed to have been issued by CRISM Therapeutics Limited, was calculated at £1,004,889 using the number of CRISM Therapeutics Corporation shares held by the current shareholders at the date of acquisition (8,738,164 shares), multiplied by the closing share price of CRISM Therapeutics Corporation on the date of RTO (£0.115).

According to IFRS 2 the value of the share-based payment is calculated as the difference between the deemed cost and the fair value of the net assets as at acquisition. The following reflects these figures as at 29 May 2024;

The difference between the deemed cost (£1,004,889) and the fair value of the net assets assumed per above of £2,226,053 resulted in £1,221,164 being a deemed bargain purchase in accordance with IFRS 2, Share-based Payments, reflecting the economic gain to CRISM Therapeutics Limited shareholders of acquiring a cash shell and of obtaining a listing. This amount was taken to the merger reserve.

The reverse acquisition reserve which arose from the reverse takeover is made up as follows;

(a)   Recognition of pre-acquisition retained losses of CRISM as at 29 May 2024

(b)   CRISM Therapeutics Limited had issued share capital of £115 and share premium of £496,661. As the financial statements present the capital structure of the legal parent entity, the equity of CRISM Therapeutics Limited is eliminated.

(c)   The value of shares issued by CRISM Therapeutics Corporation in exchange for the entire share capital of CRISM Therapeutics Limited. The above entry is required to eliminate the Statement of Financial Position impact of this transaction.

10.  BORROWINGS

In January 2022 CRISM Therapeutics Limited entered into a convertible loan note ("CLN") agreement for up to £250,000, of which £80,000 was drawn. The loan was unsecured, bore 6% simple annual interest and was repayable two years after the advance. Upon a conversion event, the investor can elect to convert the outstanding advance into ordinary shares of the Company at a discount of 25% to the price of the conversion round. In accordance with the agreement the investors were also issued with a total of 57 warrants with an expiry date of ten years and a strike price of 200% above the price on conversion of the CLNs. 

In accordance with IAS 32, it was determined that the warrants attached to the 27 January 2022 CLNs should be classified as a derivative liability, however it was further assessed that the warrants were closely related to their non-derivative host and should be accounted together with the host contract.

In December 2022 the Company entered into a convertible loan note ("CLN") agreement for up to £300,000, of which £275,000 was drawn. The loan was unsecured, bore 10% simple annual interest and was repayable two years after the advance. Upon a conversion event, the investor can elect to convert the outstanding advance into ordinary shares of the Company at a discount of 25% to the price of the conversion round. There were no warrants attached to the instrument.

The RTO constituted a conversion event and on 23 April 2024, prior to the completion of the RTO, the CLN holders converted all outstanding CLNs and outstanding interest into new ordinary Shares of £0.01 each in the capital of CRISM Therapeutics Limited. This resulted in 1,012 additional shares being issued at the conversion price of £390 per share.

The movement in convertible loan is analysed as follows:

11.          share Capital and share premium

12.          EVENTS AFTER THE REPORTING DATE

On 30 July 2024 CRISM signed an agreement to provide formulation development services to imphatec Limited, a private UK biotech company, with a value of approximately £230,000.  In addition to the imphatec service contract, the Company secured £25,000 grant funding from SPARK which recognises the unmet medical need CRISM is addressing.

The Company announced on 2 September 2024, the award of an Innovation Passport from the MHRA for ChemoSeed in high grade glioma as part of the MHRA's Innovative Licensing and Access Pathway programme.