BetterLife Pharma : Annual Report for Fiscal Year Ending January 31, 2026 (Form 20-F)

About this update from Betterlife Pharma Inc.

Operating and Financial Review and Prospects A. Operating Results YEAR ENDED January 31, 2026 January 31, 2025 January 31, 2024 Revenue $ nil $ nil $ nil Operating expenses (1,607,739 ) (5,000,113 ) (3,240,241 ) Other income (expense): Accretion expense on convertible debentures (77,547 ) (154,387 ) (5,353 ) Change in unrealized gains/losses on derivative liabilities 197,923 (33,436 ) (137,764 ) Financial guarantee recovery (expense) (30,426 ) 758,834 (34,050 ) Gain on forgiveness/extinguishment of debts 149,993 110,219 469,129 9,949 nil nil Interest expense (154,392 ) (165,087 ) (45,544 ) Other (679 ) 9 (945 ) Penalties recovery (expense) nil 305,437 (33,742 ) Settlements and legal provisions, net nil 556,640 130,000 Net loss $ (1,512,918 ) $ (3,621,884 ) $ (2,898,510 ) -16- Net loss for the year ended January 31, 2026 decreased from the year ended January 31, 2025. Operating expenses decreased due primarily to decreases in consulting fees and wages, salaries and employment expenses, as described below. Within other income and expenses, the following contributed to this decrease in net loss: · Accretion expense decreased due to conversions on principal amounts of convertible debentures totaling $618,000 during the year ended January 31, 2026. · In fiscal 2026, we recorded a gain on change in fair values of warrant liabilities of approximately $198,000, compared to a loss of approximately $33,400 reported in fiscal 2025. Our foreign currency denominated warrants continued to be out-of-money as the term to expiry decreased. · In fiscal 2025, we recorded a recovery on financial guarantee (discussed below) compared to interest on financial guarantee in the current year, as well as recovery on penalty expense and gain from legal claim (discussed below). Net loss for the year ended January 31, 2025 increased from the year ended January 31, 2024. Operating expenses increased due primarily to an increase in share-based payment expense, as described below. Accretion and interest expense increased due to convertible debentures we issued from December 2023 through April 2024 for net proceeds of $1.2 million. The following items offset the increase in net loss in fiscal 2025. Approximately $759,000 was recorded as a financial guarantee recovery to reflect financial guarantee liability at the amount issued as judgement against us by the Superior Court of Quebec (discussed below under "Commitments and Contingencies"). The amount issued as judgement was lower than what we had previously estimated. In addition, we recorded a gain from legal claim of approximately $557,000 pursuant to the conclusion of claims against us and our subsidiary, MedMelior, in the State and Federal Courts (defined and discussed below under "Commitments and Contingencies"). Expenses YEAR ENDED January 31, 2026 January 31, 2025 January 31, 2024 Consulting fees $ 169,982 $ 1,122,455 $ 399,810 Foreign exchange (gain) loss (200,861 ) 275,182 30,352 General and administrative 203,883 260,500 271,731 Professional fees 265,483 499,307 526,503 Research and development 85,672 424,337 570,947 Wages, salaries and employment expenses 1,083,580 2,418,332 1,440,898 Operating expenses $ 1,607,739 $ 5,000,113 $ 3,240,241 Operating expenses decreased for the year ended January 31, 2026 as compared to the year ended January 31, 2025. The decrease was mainly attributable to a decrease in consulting fees and wages, salaries and employment expenses as there were no significant stock options granted and share-based payment expenses on performance stock units decreased. In a fiscal year in which no financing was secured, we reduced all other discretionary expenses within general and administrative, professional fees and research and development expenses. Operating expenses increased for the year ended January 31, 2025 as compared to the year ended January 31, 2024. Consulting fees and wages, salaries and employment expenses included approximately $639,000 and $1.41 million of share-based payment expense, respectively, related to 2.15 million of stock options and 6 million of performance stock units granted us and 2.2 million of stock options granted by MedMelior. Capital markets continued to be challenging during fiscal 2025 for financings and, due to cash constraints, we granted non-cash awards to key personnel and consultants to ensure retention of our human resources. Other areas of operating expenses, such as general and administrative expenses, professional fees and research and development expenses, decreased as we continued to minimize expenditures. Foreign exchange loss increased due to weakening of the Canadian dollar during the year ended January 31, 2025. -17- The table below presents material components of general and administrative expense: YEAR ENDED January 31, 2026 January 31, 2025 January 31, 2024 Business licenses $ nil $ 654 $ nil Conferences nil 2,690 6,716 Information technology 7,894 2,224 4,446 Investor relations 72,000 96,000 96,000 Office 19,795 26,278 30,815 Press release 14,872 28,258 33,749 Public listing expense 59,498 57,354 64,482 Shareholder expense 10,767 11,736 9,761 Telecommunications 2,662 2,159 nil Travel, meals and entertainment 3,454 15,257 6,984 Website costs 12,941 17,890 18,778 $ 203,883 $ 260,500 $ 271,731 General and administrative expenses have been on a decline since fiscal 2024 as we continue to make efforts at minimizing cash outflows. Investor relations expense decreased due to the termination of our investor relations contract. During fiscal 2026, we did not attend any paid conferences, which correspondingly reduced our travel, meals and entertainment expenses. During the year ended January 31, 2025, we reduced the number of paid conferences we attended as compared to the year ended January 31, 2024, but we incurred higher travel, meals and entertainment expenses as we focused on meetings with targeted potential investor groups and strategic partnerships. B. Liquidity and Capital Resources We manage our liquidity risk by reviewing, on an ongoing basis, capital requirements and capital structure. We make adjustments to our capital structure in light of changes in economic conditions and the risk characteristics of our assets. To maintain or adjust our capital structure, we may issue new common shares or debenture, acquire or dispose of assets or adjust the amount of cash. As of January 31, 2026, we believe we have adequate available liquidity to meet operating requirements and fund product development initiatives and capital expenditures. While we have incurred losses to date, with an accumulated deficit of $120,091,493 at January 31, 2026, we anticipate the success and eventual profitability from research, development and commercialization of our product portfolio. We also ensure that we have access to public capital markets. However, there can be no assurance that we will gain adequate market acceptance for our products or be able to generate sufficient positive cash flow to achieve our business plans. Therefore, we are subject to risks including, but not limited to, inability to raise additional funds through equity and/or debt financing to support ongoing operations. See "Risk Factors". -18- Working Capital The following table presents our working capital as at January 31, 2026 and 2025: January 31, 2026 January 31, 2025 Current assets $ 219,903 $ 224,963 Current liabilities 6,679,109 7,537,997 Working capital deficiency $ (6,459,206 ) $ (7,313,034 ) Working capital deficiency improved as compared to January 31, 2025. During the year ended January 31, 2026, we settled approximately $1.5 million of accounts payable and accrued liabilities, as well as amounts due to related parties, by issuing 14,999,303 common shares. In addition, principal balance of convertible debentures totaling $618,000, plus accrued interest of approximately $89,400, were converted into 7,073,987 units. These events contributed to a decrease in current liabilities reported as at January 31, 2026. Statements of Cash Flows The following table presents our cash flows for the years ended January 31, 2026, 2025 and 2024: YEAR ENDED Net cash provided by (used in): January 31, 2026 January 31, 2025 January 31, 2024 Operating activities $ (625,455 ) $ (2,021,752 ) $ (2,472,410 ) Investing activities nil nil nil Financing activities 629,263 1,992,540 2,501,543 Effect of foreign exchange rate changes on cash 582 8 (56 ) Increase (decrease) in cash for the period $ 4,390 $ (29,204 ) $ 29,077 During the year ended January 31, 2026, we utilized less cash in operating activities, as compared to the previous two fiscal years, primarily due to continued challenges in securing financing during the year. Financing activities included proceeds from promissory notes from related parties totaling $411,000, subscriptions received of approximately $198,200 and proceeds received from warrant exercise of $25,000. During the year ended January 31, 2025, financing activities resulted in the issuance of convertible debentures for net proceeds of $1.2 million and common shares and share purchase warrants for proceeds of $705,000. Cash used in operating activities decreased from the year ended January 31, 2024 as cash flow from financing activities decreased. Commitments and Contingencies In November 2019, our former chief executive officer filed an originating application with the Superior Court in the province of Quebec for damages stemming from a termination of employment. The former chief executive officer was seeking payment of amounts totaling approximately $1 million, exercisability of his share purchase options until the original expiry dates, issuance of 600,000 share purchase options and an order that we not issue further common shares. In December 2023, this claim was settled for $120,000, which was paid in 12 equal monthly instalments from January 1, 2024 to December 1, 2024. -19- In March 2021, Olymbec Development Inc. ("Olymbec") filed a judicial demand before the Superior Court (Civil Division) of Quebec and a judgement for a safeguard order was obtained by Olymbec against Pivot Pharmaceuticals Manufacturing Corp. ("Pivot"), a former subsidiary, and BetterLife, as guarantor of the lease at 285-295 Kesmark Street, Quebec (the "Lease"), ordering Pivot and BetterLife to jointly pay the full amount of the Lease on the first day of each month. In May 2021, a judgement for a safeguard order was issued ordering Pivot and BetterLife to provide post-dated cheques for monthly lease payments for the months of June through November 2021. In June 2021, a judgement granted Pivot and BetterLife until June 30, 2021 to pay the outstanding lease totaling $124,223 and to deliver post-dated cheques each in the amount of $49,410.51 for monthly lease payments for the months of July through November 2021, which were completed. On October 25, 2023, due to non-payment of rent by Pivot, Olymbec terminated the Lease. An order for Pivot's bankruptcy ("Pivot Bankruptcy") was granted on December 11, 2023 by the Superior Court (Commercial Division) of Quebec. On December 16, 2024, the Superior Court (Civil Division) of Quebec issued a judgment ordering us to pay Olymbec $367,428, representing lease unpaid by Pivot and administrative charges, plus $15,000 as punitive damages. On March 17, 2025, this judgment was registered with the Supreme Court of British Columbia. We intend to settle the judgment under terms agreeable by both parties. BetterLife is a guarantor on the Lease, which was assigned together with the sale of Pivot in October 2020 pursuant to which we have recorded a financial guarantee liability of $412,854 (January 31, 2025 - $382,428). BetterLife and MedMelior were named as defendants in a lawsuit before the Supreme Court of the State of New York, New York County ("State Court") by a former director of MedMelior, who served as director prior to MedMelior's amalgamation with the Company. This former director filed a verified complaint on January 20, 2022, seeking compensatory and punitive damages in amounts believed by us to be in excess of US$2 million and US$10 million, respectively. During March 2022, we filed a motion to dismiss the complaint on the basis of inconvenient forum and for lack of jurisdiction. On December 1, 2022, following oral argument on the motion, the State Court dismissed the complaint in its entirety. On April 29, 2022, in response to our then-pending motion to dismiss, the former director filed a separate, parallel action, naming BetterLife and MedMelior before the United States District Court for the Southern District of New York ("Federal Court"), asserting substantially the same claims as in the State Court action. On March 3, 2023, we filed a motion to dismiss the claims filed in the Federal Court on the basis of inconvenient forum and for lack of jurisdiction. On November 27, 2023, the Federal Court dismissed the claims in their entirety, following which the former director noticed a federal appeal. In November 2024, the former director allowed the time to perfect the federal appeal to lapse. With dismissals by both the State and Federal Courts and the lapse in appeal, the former director's claims are concluded without any payment or penalties against BetterLife and MedMelior. During the year ended January 31, 2025, we recorded $556,640 as a gain from the legal claim within "Settlement and legal provisions, net" in the consolidated statements of loss and comprehensive loss. At January 31, 2026, certain of our research and development programs, with a total contracted amount of $1.97 million, were in progress of which we have paid $1.59 million and a further $370,000 remains to be paid in future periods. At January 31, 2026, there may be a contingent liability related to potential interest or penalties that vendors may charge on our aged accounts payables. Due to the absence of reliable estimates for this amount, no provisions have been recorded by the Company. -20- C. Research and Development, Patents and Licenses, etc. We rely on a combination of copyright, trademark and trade secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary and intellectual property rights. These laws, procedures and restrictions provide only limited protection. We endeavor to enter into agreements with our employees, contractors, distributors, resellers, business partners and other third parties with which we do business or wish to do business in order to limit access to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use, disclosure or reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive with ours or that infringe our intellectual property rights. The enforcement of our intellectual property rights also depends on any legal actions against these infringers being successful, but these actions may not be successful, even when our rights have been infringed. Furthermore, effective patent, trademark, copyright and trade secret protection may not be available in every country in which our products, services and solutions are sold. In addition, the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain and still evolving. D. Trend Information Trend information is included throughout the other sections of this Item 5. In addition, we expect our operating results to continue to fluctuate in future quarters, and in light of the current pandemic situation (see "Risk Factors"). E. Off-Balance Sheet Arrangements Not applicable. F. Tabular Disclosure of Contractual Obligations Not applicable. G. Safe Harbor This annual report contains forward-looking statements about us, our markets and our industry. These statements involve known and unknown substantial risks, uncertainties and other factors as described in detail under "Item 3. Key Information-D. Risk factors" in this annual report that may cause our actual results, levels of activity, performance or achievement to be materially different from those expressed or implied by the forward-looking statements. All statements, other than statements of historical fact, included in this annual report regarding our strategy, future operations, future financial position, future net sales, projected expenses, prospects and plans and objectives of management are forward-looking statements. In some cases, you can also identify forward-looking statements by terms such as "anticipate," "believe," "estimate," "expect," "intend," "may," "might," "plan," "project," "will," "would," "should," "could," "can," "predict," "potential," "continue," "objective," or the negatives of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. -21- All forward-looking statements reflect our current views about future events and are based on assumptions and subject to risks and uncertainties. Forward-looking statements in this annual report include, but are not limited to, statements about: · our business strategies; · our future prospects, business development, results of operations and financial condition; · competition from local and international companies, new entrants in the market and changes to the competitive landscape; · the adoption of new, or changes to existing, laws and regulations; · the termination of or changes to our relationships with our partners and other third parties; · our plans to launch and monetize new products; · our ability to retain key personnel and attract new talent; · our ability to adequately protect our intellectual property; · the anticipated costs and benefits of our acquisitions; · the outcome of ongoing or any future litigation or arbitration, including litigation or arbitration relating to intellectual property rights; · our legal and regulatory compliance efforts; and · worldwide economic conditions and their impact on demand of our products and services. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this annual report. You should read this annual report and the documents that we have filed as exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

View stock analysis, news, and events for Betterlife Pharma Inc.