Business Context and Reporting Period
This Form 8-K is a current report filed by InMed Pharmaceuticals Inc. on December 8, 2022. The registrant is a British Columbia corporation with principal executive offices in Vancouver, Canada, and its common shares trade on The Nasdaq Stock Market LLC under the symbol "INM". The company is classified as an emerging growth company.
Key Financial Metrics
This filing does not contain specific revenue, profit, cash flow, or debt figures for the current period. However, it references the independent auditor's report for the fiscal years ended June 30, 2022, and June 30, 2021, which noted that the company has incurred recurring losses and negative cash flows. The auditor's report included a separate paragraph stating that these factors, along with an accumulated deficit, raise substantial doubt about the company's ability to continue as a going concern.
Material Changes
- Resignation of Auditor: KPMG LLP resigned as the independent registered public accounting firm effective December 8, 2022, declining to stand for reelection. The Audit Committee accepted this resignation.
- Appointment of New Auditor: On December 11, 2022, the Audit Committee approved the engagement of Marcum LLP to audit the consolidated financial statements for the fiscal year ending June 30, 2023.
- Internal Control Weakness: The filing reiterates a previously reported material weakness in internal control over financial reporting (ICFR) as of June 30, 2022. This weakness, attributed to inadequate resources for non-routine financial reporting matters, resulted in material audit adjustments regarding pre-funded warrants and acquisition purchase consideration. Management expects remediation to be completed prior to the end of fiscal year 2023.
Guidance, Outlook, and Risks
The filing does not provide specific financial guidance or forward-looking revenue projections. The primary risk highlighted is the "going concern" uncertainty noted by the former auditor due to recurring losses and negative cash flows. Additionally, the company faces the risk associated with the unremediated material weakness in internal controls, which creates a reasonable possibility that material misstatements may not be prevented or detected on a timely basis. Management has implemented a remediation plan involving outside consultants and additional review procedures.
Investor Verification Checklist
- Verify the status of the "going concern" warning and the company's current liquidity position in the most recent 10-K or 10-Q.
- Confirm the timeline and progress of the remediation plan for the material weakness in internal controls over financial reporting.
- Review the letter from KPMG LLP (Exhibit 16.1) to ensure there are no undisclosed disagreements regarding accounting principles or audit scope.
- Monitor the transition to the new auditor, Marcum LLP, and any potential delays in the audit of the fiscal year ending June 30, 2023.