EX-4.6



 Exhibit 4.6 

CYNAPSUS THERAPEUTICS INC. 
 Condensed Interim
Consolidated Financial Statements 
 For the Three Months Ended March 31, 2015 

(Expressed in Canadian Dollars) 
 Unaudited 







 CYNAPSUS THERAPEUTICS INC. 

Interim Consolidated Statements of Financial Position 
  

 
 UNAUDITED 

(in Canadian dollars) 
  

											
	 	  	NOTES	  	March 31,
2015	 	 	December 31,
2014	 
	 	  	 	  	$	 	 	$	 
	 ASSETS
	  		  				 			
	 Current assets
	  		  				 			
	 Cash
	  		  	 	36,661,012	  	 	 	17,448,497	  
	 Prepaid expenses and other current assets
	  		  	 	828,186	  	 	 	269,779	  
		  		  	  
	  
	 	 	  
	  
	 
	 Total current assets
				 	37,489,198	  		 	17,718,276	  
	 Non-current assets
										
	 Property, plant and equipment
		6		 	382,689	  		 	257,830	  
	 Intangible assets
		7		 	562,553	  		 	574,522	  
		  		  	  
	  
	 	 	  
	  
	 
	 Total assets
				 	38,434,440	  		 	18,550,628	  
		  		  	  
	  
	 	 	  
	  
	 
	 LIABILITIES
										
	 Current liabilities
										
	 Accounts payable and accrued liabilities
		8, 14		 	2,431,677	  		 	3,080,631	  
		  		  	  
	  
	 	 	  
	  
	 
	 Total current liabilities
				 	2,431,677	  		 	3,080,631	  
				
	 SHAREHOLDERS’ EQUITY
										
	 Share capital
		9		 	58,407,376	  		 	31,740,941	  
	 Equity reserves
										
	 Warrants
		9		 	12,188,765	  		 	13,452,183	  
	 Share-based payments
		9		 	3,011,706	  		 	2,787,525	  
	 Deficit
				 	(37,605,084	) 		 	(32,510,652	) 
		  		  	  
	  
	 	 	  
	  
	 
	 Total shareholders’ equity
				 	36,002,763	  		 	15,469,997	  
		  		  	  
	  
	 	 	  
	  
	 
	 Total liabilities and shareholders’ equity
				 	38,434,440	  		 	18,550,628	  
		  		  	  
	  
	 	 	  
	  
	 

 COMMITMENTS AND CONTINGENT LIABILITIES (Note 15) 

SUBSEQUENT EVENTS (Note 16) 
 APPROVED ON BEHALF OF THE BOARD:

  

			
	         “Ronald Hosking”        ,
Director
		        “Rochelle Stenzler”        , Director

 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 

  
 2 








 CYNAPSUS THERAPEUTICS INC. 

Interim Consolidated Statements of Loss and Comprehensive Loss 
  

 
 UNAUDITED 

(in Canadian dollars) 
  

											
	 	  	 	  	For the three months ended	 
	 	  	NOTES	  	March 31,
2015	 	 	March 31,
2014	 
	 	  	 	  	$	 	 	$	 
	 EXPENSES
	  		  				 			
	 Research and development
	  	10	  	 	2,871,101	  	 	 	448,692	  
	 Operating, general and administrative
	  	11	  	 	1,778,150	  	 	 	958,363	  
	 Share-based payments
	  	9	  	 	274,068	  	 	 	17,076	  
	 Amortization of intangible assets
	  	7	  	 	11,969	  	 	 	14,746	  
	 Depreciation of property, plant and equipment
	  	6	  	 	8,287	  	 	 	659	  
	 Acquisition milestone share-based payment
	  	13, 14	  	 	1,500,000	  	 	 	—  	  
	 Unrealized foreign exchange (gain) loss
	  		  	 	(1,182,432	) 	 	 	22,898	  
	 Recovery on scientific research
	  		  	 	(30,000	) 	 	 	(10,000	) 
	 Research grant
	  	12	  	 	(127,710	) 	 	 	(239,969	) 
	 Interest income net of interest expense and related charges
	  		  	 	(9,001	) 	 	 	(2,193	) 
		  		  	  
	  
	 	 	  
	  
	 
	 Loss and comprehensive loss for the period
				 	5,094,432	  		 	1,210,272	  
		  		  	  
	  
	 	 	  
	  
	 
	 Loss per share – basic and diluted 
				 	0.06	  		 	0.03	  
	 Weighted average number of shares outstanding – basic and diluted
				 	83,740,263	  		 	39,459,170	  

 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 

  
 3 








 CYNAPSUS THERAPEUTICS INC. 

Interim Consolidated Statements of Changes in Equity 
  

 
 UNAUDITED 

(in Canadian dollars) 
  

																					
	 	  	Share
Capital	 	  	Equity
Reserves –
Warrants	 	 	Equity
Reserves –
Share-based
Payments	 	 	Deficit	 	 	Total	 
	 	  	$	 	  	$	 	 	$	 	 	$	 	 	$	 
	 Balance as at December 31, 2014
	  	 	31,740,941	  	  	 	13,452,183	  	 	 	2,787,525	  	 	 	(32,510,652	) 	 	 	15,469,997	  
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Private placement, net of transaction costs
		 	19,513,550	  		 	—  	  		 	—  	  		 	—  	  		 	19,513,550	  
	 Exercise of warrants
		 	5,517,292	  		 	(1,263,418	) 		 	—  	  		 	—  	  		 	4,253,874	  
	 Acquisition milestone share-based payment
		 	1,500,000	  		 	—  	  		 	—  	  		 	—  	  		 	1,500,000	  
	 Exercise of share-based payments
		 	135,593	  		 	—  	  		 	(49,887	) 		 	—  	  		 	85,706	  
	 Share-based payments
		 	—  	  		 	—  	  		 	274,068	  		 	—  	  		 	274,068	  
	 Loss for the period
		 	—  	  		 	—  	  		 	—  	  		 	(5,094,432	) 		 	(5,094,432	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Activity for the period
		 	26,666,435	  		 	(1,263,418	) 		 	224,181	  		 	(5,094,432	) 		 	20,532,766	  
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance as at March 31, 2015
		 	58,407,376	  		 	12,188,765	  		 	3,011,706	  		 	(37,605,084	) 		 	36,002,763	  
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance as at December 31, 2013
		 	16,156,398	  		 	4,211,014	  		 	1,918,672	  		 	(21,692,065	) 		 	594,019	  
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Exercise of warrants
		 	971,295	  		 	(246,800	) 		 	—  	  		 	—  	  		 	724,495	  
	 Share-based payments
		 	—  	  		 	—  	  		 	17,076	  		 	—  	  		 	17,076	  
	 Loss for the period
		 	—  	  		 	—  	  		 	—  	  		 	(1,210,272	) 		 	(1,210,272	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Activity for the period
		 	971,295	  		 	(246,800	) 		 	17,076	  		 	(1,210,272	) 		 	(468,701	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance as at March 31, 2014
		 	17,127,693	  		 	3,964,214	  		 	1,935,748	  		 	(22,902,337	) 		 	125,318	  
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 

  
 4 








 CYNAPSUS THERAPEUTICS INC. 

Interim Consolidated Statements of Cash Flows 
  

 
 UNAUDITED 

(in Canadian dollars) 
  

													
	 	  	 	 	  	For the three months ended	 
	 	  	NOTES	 	  	March 31,
2015	 	 	March 31,
2014	 
	 	  	 	 	  	$	 	 	$	 
	 Operating activities
	  				  				 			
	 Loss for the period
	  				  	 	(5,094,432	) 	 	 	(1,210,272	) 
	 Items not affecting cash:
	  				  				 			
	 Share-based payments
	  	 	9	  	  	 	274,068	  	 	 	17,076	  
	 Amortization of intangible assets
	  	 	7	  	  	 	11,969	  	 	 	14,746	  
	 Depreciation of property, plant and equipment
	  	 	6	  	  	 	8,287	  	 	 	659	  
	 Acquisition milestone share-based payment
	  	 	13	  	  	 	1,500,000	  	 	 	—  	  
	 Unrealized (gain) loss on foreign exchange
	  				  	 	(1,182,432	) 	 	 	22,898	  
		  				  	  
	  
	 	 	  
	  
	 
							 	(4,482,540	) 		 	(1,154,893	) 
	 Changes in non-cash working capital:
												
	 Change in prepaid expenses and other current assets
						 	(558,407	) 		 	(40,952	) 
	 Change in accounts payables and accrued liabilities
						 	(648,954	) 		 	(240,573	) 
	 Deferred grant proceeds
						 	—  	  		 	(239,968	) 
		  				  	  
	  
	 	 	  
	  
	 
	 Net cash used in operating activities
						 	(5,689,901	) 		 	(1,676,386	) 
		  				  	  
	  
	 	 	  
	  
	 
	 Investing activities
												
	 Purchase of property, plant and equipment
		 	6	  		 	(133,146	) 		 	—  	  
		  				  	  
	  
	 	 	  
	  
	 
	 Net cash used in investing activities
						 	(133,146	) 		 	—  	  
		  				  	  
	  
	 	 	  
	  
	 
	 Financing activities
												
	 Gross proceeds from issuance of shares
		 	9	  		 	20,981,579	  		 	—  	  
	 Commissions and share issuance costs
		 	9	  		 	(1,468,029	) 		 	—  	  
	 Gross proceeds from exercise of warrants
		 	9	  		 	4,253,874	  		 	724,495	  
	 Gross proceeds from exercise of share-based payments
		 	9	  		 	85,706	  		 	—  	  
	 Deferred financing costs
						 	—  	  		 	(55,229	) 
		  				  	  
	  
	 	 	  
	  
	 
	 Net cash provided by financing activities
						 	23,853,130	  		 	669,266	  
		  				  	  
	  
	 	 	  
	  
	 
	 Effect of exchange rate changes on cash and cash equivalents
						 	1,182,432	  		 	(22,898	) 
		  				  	  
	  
	 	 	  
	  
	 
	 Increase (decrease) in cash and cash equivalents
						 	19,212,515	  		 	(1,030,018	) 
	 Cash and cash equivalents, beginning of period
						 	17,448,497	  		 	2,289,046	  
		  				  	  
	  
	 	 	  
	  
	 
	 Cash and cash equivalents, end of period
						 	36,661,012	  		 	1,259,028	  
		  				  	  
	  
	 	 	  
	  
	 

 The accompanying notes are an integral part of these condensed interim consolidated financial statements. 

  
 5 








 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in
Canadian dollars) 
  
  

	1.	NATURE OF OPERATIONS 

 Cynapsus Therapeutics Inc. (“Cynapsus” or the
“Company”) is a specialty pharmaceutical company currently focused on developing and preparing to commercialize a fast-acting, easy-to-use, sublingual thin film for the on-demand management of debilitating OFF episodes associated with
Parkinson’s disease. The Company’s shares are listed (CTH: TSX) on the TMX Group Inc.’s Toronto Stock Exchange (“Exchange”) and traded in the United States on OTCQX International (CYNAF: OTCQX). Cynapsus was incorporated
under the federal laws of Canada. The head office, principal address, registered address and records office of the Company are located at 828 Richmond Street West, Toronto, Ontario, Canada, M6J 1C9. 

 

	2.	BASIS OF PREPARATION 

 The condensed interim consolidated financial statements
consolidate the financial statements of Cynapsus and its wholly-owned subsidiary, Adagio Pharmaceuticals Ltd. (“Adagio”). All significant intercompany transactions and balances have been eliminated. 

These unaudited interim condensed consolidated financial statements have been prepared in compliance with International Accounting Standard 34
Interim Financial Reporting (“IAS 34”). The notes presented in these unaudited interim condensed consolidated financial statements include only significant events and transactions occurring since our last fiscal year end and are not
fully inclusive of all matters required to be disclosed in our annual audited consolidated financial statements. The policies applied in these unaudited interim condensed consolidated financial statements are based on International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Any subsequent changes to IFRS or their interpretation, that are given effect in the Company’s annual consolidated financial
statements for the year ending December 31, 2015 could result in a restatement of these unaudited interim condensed consolidated financial statements. 

On May 7, 2015, the Board of Directors approved and authorized these condensed interim consolidated financial statements for the three
months ended March 31, 2015. 
 Certain comparative figures have been reclassified to conform with the financial statement presentation
adopted for the current period. 
 In the opinion of management, all adjustments considered necessary for fair presentation of the
Company’s financial position, results of operations and cash flows have been included. Operating results for the three month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2015. 
  

	3.	FUTURE ACCOUNTING CHANGES 

 Certain pronouncements that were issued by the IASB or the
International Financial Reporting Interpretations Committee are mandatory for accounting periods beginning on or after January 1, 2016. Many are not applicable or do not have a significant impact to the Company and have been excluded. The
following pronouncement has not yet been adopted and is being evaluated to determine its impact on the Company. 
 IFRS 9 Financial
Instruments (“IFRS 9”) was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”) and all previous versions of IFRS 9. IFRS 9 uses a single approach
to determine whether a financial asset is measured at amortized cost, fair 

  
 6 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	3.	FUTURE ACCOUNTING CHANGES (continued) 

  

value through profit or loss, or fair value through other comprehensive income. The approach in IFRS 9 is based on how an entity manages its
financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward
unchanged to IFRS 9, except that an entity choosing to measure a financial liability at fair value will present the portion of any change in fair value due to changes in the entity’s own credit risk in other comprehensive income, rather than
within profit or loss. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. Earlier adoption is
permitted. 
  

	4.	SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS 

 The preparation of these
condensed interim consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities at the
date of the condensed interim consolidated financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from these estimates. The condensed interim consolidated financial statements
include estimates, which, by their nature, are uncertain. The impact of such estimates are pervasive throughout the condensed interim consolidated financial statements, and may require accounting adjustments based on future occurrences. 

The estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognized in the period in
which the estimate is revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where the assumptions and estimates are significant to the financial statements were the same as those applied
to the Company’s consolidated financial statements as at and for the year ended December 31, 2014. 
  

	5.	RISK MANAGEMENT 

 Financial risk management 

In the normal course of business, the Company is exposed to a number of financial risks that can affect its operating performance. These risks
are credit risk, liquidity risk and market risk. The Company’s overall risk management program and prudent business practices seek to minimize any potential adverse effects on the Company’s financial performance. There were no changes in
the Company’s approach to risk management during the three months ended March 31, 2015. 
  

	 	(i)	Credit risk 

 The Company’s cash balance is on deposit with a Canadian chartered
bank. The Company has no significant concentration of credit risk arising from operations. Management believes that the credit risk concentration with respect to these financial instruments is remote. 

 

	 	(ii)	Liquidity risk 

 The Company’s approach to managing liquidity risk is to ensure that
it will have sufficient liquidity to meet liabilities when due. As at March 31, 2015, the Company had cash of $36,661,012 and prepaid 

  
 7 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	5.	RISK MANAGEMENT (continued) 

  

expenses and other current assets of $828,186 (December 31, 2014 - $17,448,479 and $269,779, respectively) to settle current liabilities of
$2,431,677 (December 31, 2014 - $3,080,631). The Company’s accounts payable and accrued liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. 

Market risk 
  

	 	(i)	Interest rate risk 

 The Company had a cash balance of $36,661,012 as at March 31,
2015. The Company’s current policy is to invest excess cash in a business savings account and investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is
satisfied with the credit ratings of its banks. The Company considers interest rate risk to be minimal as investments are short-term. 
  

	 	(ii)	Foreign currency risk 

 The Company’s functional and presentation currency is the
Canadian dollar and all amounts in the condensed interim consolidated financial statements are expressed in Canadian dollars, unless otherwise noted. Most purchases are transacted in Canadian dollars. The Company funds the majority of research and
development expenses in the United States from its US dollar bank account held in Canada and certain expenses in Europe on a cash call basis using the euro converted from its Canadian dollar bank accounts held in Canada. Management believes the
foreign exchange risk derived from currency conversions is not significant and therefore does not hedge its foreign exchange risk. As at March 31, 2015, the Company had cash of $30,635,493 and accounts payable of $878,796 denominated in US
dollars (December 31, 2014 - $12,370,423 and $1,539,496). A plus or minus 10% change in foreign exchange rates could affect the Company’s net loss by approximately $3,000,000. 

 

	 	(iii)	Price risk 

 The Company is exposed to price risk with respect to Active Pharmaceutical
Ingredient (“API”) prices used in research and development activities. The Company monitors API prices in the United States, Europe and Asia to determine the appropriate course of action to be taken by the Company. Management believes that
the price risk concentration with respect to API is minimal. 
  

	 	(iv)	Fair value 

 IFRS require that the Company disclose information about the fair value of
its financial assets and liabilities. Fair value estimates are made at the consolidated statement of financial position date based on relevant market information and information about the financial instrument. These estimates are subjective in
nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. 

Cash is classified as loans and receivables, measured at amortized cost. Accounts payable and accrued liabilities are classified as other
financial liabilities, which are measured at amortized cost. 
 The carrying amounts for cash, accounts payable and accrued liabilities on
the consolidated statement of financial position approximate fair value because of the short term of these instruments. 

  
 8 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	5.	RISK MANAGEMENT (continued) 

  

Capital risk management 

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support its
research and development activities. The Company’s capital structure consists of share capital and equity reserves. The Board of Directors does not establish quantitative return on capital criteria for management but rather relies on the
expertise of the Company’s management to sustain future development of the business. 
 The product candidates which the Company
currently has in its pipeline are in the research stage; as such, the Company is dependent on external financing to fund its activities. In order to carry out the planned research and development and pay for administration costs, the Company will
spend its existing working capital and raise additional amounts as needed. 
 Management reviews its capital management approach on an
ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. 
 There were no changes in the
Company’s approach to capital management during the three months ended March 31, 2015. The Company and its subsidiary are not subject to externally imposed capital requirements. 

 

	6.	PROPERTY, PLANT AND EQUIPMENT 

 The following is a summary of property, plant and
equipment as at December 31, 2014 and March 31, 2015: 
  

																	
	 	  	Computer
Equipment	 	  	Furniture
and Fixtures	 	  	Leasehold
Improvements	 	  	Total	 
	 	  	$	 	  	$	 	  	$	 	  	$	 
	 Cost
	  				  				  				  			
	 Balance as at December 31, 2014
	  	 	199,773	  	  	 	54,093	  	  	 	32,880	  	  	 	286,746	  
	 Additions
	  	 	124,485	  	  	 	—  	  	  	 	8,661	  	  	 	133,146	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance as at March 31, 2015
		 	324,258	  		 	54,093	  		 	41,541	  		 	419,892	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
					
	 Accumulated Depreciation
																
	 Balance as at December 31, 2014
		 	10,934	  		 	10,982	  		 	7,000	  		 	28,916	  
	 Depreciation
		 	1,964	  		 	2,155	  		 	4,168	  		 	8,287	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance as at March 31, 2015
		 	12,898	  		 	13,137	  		 	11,168	  		 	37,203	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
					
	 Net book value
																
	 Net book value as at December 31, 2014
		 	188,839	  		 	43,111	  		 	25,880	  		 	257,830	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net book value as at March 31, 2015
		 	311,360	  		 	40,956	  		 	30,373	  		 	382,689	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 


  
 9 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

 

	7.	INTANGIBLE ASSETS 

 The following is a summary of intangible assets as December 31,
2014 and at March 31, 2015: 
  

													
	 	  	APL-130277
Patents	 	  	License
Agreement	 	  	Total	 
	 	  	$	 	  	$	 	  	$	 
	 Cost
	  				  				  			
	 Balance as at December 31, 2014 and March 31, 2015
	  	 	718,150	  	  	 	200,000	  	  	 	918,150	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
				
	 Accumulated Amortization
												
	 Balance as at December 31, 2014
		 	143,628	  		 	200,000	  		 	343,628	  
	 Amortization
		 	11,969	  		 	—  	  		 	11,969	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance as at March 31, 2015
		 	155,597	  		 	200,000	  		 	355,597	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
				
	 Net book value
												
	 Net book value as at December 31, 2014
		 	574,522	  		 	—  	  		 	574,522	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Net book value as at March 31, 2015
		 	562,553	  		 	—  	  		 	562,553	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 On December 22, 2011, the Company completed the acquisition of 100% of the outstanding common shares of
Adagio and certain indebtedness of Adagio. The acquisition was accounted for as a purchase of assets by the Company, as Adagio did not meet the definition of a business. 

On June 10, 2005, the Company entered into a license agreement with a research and development company relating to technologies associated
with the Company’s previous drug development candidate. The license is for patents that have been issued in certain jurisdictions, which will expire in February 2023, and are currently pending in other jurisdictions. On December 31, 2014,
due to the emphasis by the licensee on a different product line in their development pipeline, and the lack of any progress on the licensed project, the Company reviewed the carrying value of the intangible asset for potential impairment. The
Company determined that there are no expected future cash flows attributable to this asset and recorded an impairment charge of $94,449 to write down the carrying value of the intangible asset to zero. 

 

	8.	ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 

 The following is a summary of accounts payable
and accrued liabilities as at December 31, 2014 and March 31, 2015: 
  

									
	 	  	March 31,
2015	 	  	December 31,
2014	 
	 	  	$	 	  	$	 
	 Trade payables
	  	 	1,807,531	  	  	 	2,240,026	  
	 Due to related parties (Note 14)
	  	 	201,299	  	  	 	128,713	  
	 Bonus accruals to related parties (Note 14)
	  	 	100,000	  	  	 	508,710	  
	 Other accrued liabilities
	  	 	322,847	  	  	 	203,182	  
		  	  
	  
	 	  	  
	  
	 
			 	2,431,677	  		 	3,080,631	  
		  	  
	  
	 	  	  
	  
	 


  
 10 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

 

	9.	SHARE CAPITAL 

  

	 	i)	Authorized common shares 

 Unlimited number of common shares with no par value 

 

	 	ii)	Issued and outstanding common shares 

  

					
	 	  	Number of
Common Shares	 
	 	  	#	 
	 Balance as at December 31, 2014
	  	 	80,334,449	  
	 Shares issued for cash
	  	 	22,039,472	  
	 Shares issued as acquisition milestone share-based payment
	  	 	1,119,403	  
	 Shares issued for cash from exercise of warrants
	  	 	6,691,771	  
	 Shares issued for cash from exercise of share-based payments
	  	 	126,333	  
		  	  
	  
	 
	 Balance as at March 31, 2015
		 	110,311,428	  
		  	  
	  
	 

 On March 31, 2015, the Company announced the completion of a private placement of 22,039,472 common
shares of the Company for gross proceeds of $20,981,579. The issue price of $0.952 per share represents a 20% discount to the 5-day volume-weighted average price per common share on the TSX as of the close of business on March 27, 2015. The
common shares issued are subject to a hold period, which will expire four months plus one day from the date of issue. 
 As part of the
March 31, 2015 private placement, the Dexcel Pharma group, a strategic pharmaceutical investor and significant shareholder of Cynapsus, and which also has two directors on the Board of Directors of the Company, subscribed for 4,342,105 common
shares having an aggregate subscription price of $4,133,684 (see Note 14, Related Party Transactions). 
 On March 11, 2015, pursuant to
an amended agreement, the Company issued 1,119,403 common shares to former Adagio shareholders as acquisition milestone share-based payment (see Note 13, Acquisition Milestone Share-based Payment). 

 

	 	iii)	Equity Reserve – Warrants 

 The number of warrants outstanding as at
December 31, 2014 and March 31, 2015 and changes during the three months ended March 31, 2015 are presented below: 
  

													
	 	  	Number of
Warrants	 	  	Equity
Reserve	 	  	Weighted
Average
Exercise
Price/Share	 
	 	  	#	 	  	$	 	  	$	 
	 Balance as at December 31, 2014
	  	 	60,034,989	  	  	 	13,452,183	  	  	 	0.734	  
	 Exercised
	  	 	(6,691,771	) 	  	 	(1,263,418	) 	  	 	0.636	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance as at March 31, 2015
		 	53,343,218	  		 	12,188,765	  		 	0.746	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 


  
 11 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	9.	SHARE CAPITAL (continued) 

  

	 	iii)	Equity Reserve – Warrants (continued) 

  

A summary of warrants exercised during the three months ended March 31, 2015 is as follows: 

 

											
	Number of
Warrants	 	 	Cash
Proceeds	 	 	Exercise
Price	 
	#	 	 	$	 	 	$	 
	 	4,963,662	  	 	 	2,854,106	  	 	 	0.575	  
	 	1,728,109	  	 	 	1,399,768	  	 	 	0.810	  
	  
	  
	 	 	  
	  
	 	 			
	 	6,691,771	  		 	4,253,874	  				
	  
	  
	 	 	  
	  
	 	 			

 Warrants issued and outstanding as at March 31, 2015 were as follows: 

 

															
	 Number of
Warrants
	 	  	Exercise
Price	 	  	Exercise
Trigger*	 	  	Expiry Date	  	 Description

	#	 	  	$/ Share	 	  	$/ Share	 	  	 	  	 
	 	190,000	  	  	 	1.000	  	  	 	1.50	  	  	July 18, 2017	  	2012 Private placement
	 	330,400	  	  	 	0.625	  	  	 	—  	  	  	October 24, 2017	  	2012 Private placement
	 	127,496	  	  	 	0.625	  	  	 	—  	  	  	November 23, 2017	  	2012 Private placement
	 	11,323,423	  	  	 	0.575	  	  	 	1.38	  	  	March 1, 2018	  	2013 Prospectus offering, first closing
	 	2,934,200	  	  	 	0.575	  	  	 	1.38	  	  	March 1, 2018	  	2013 Prospectus offering, second closing
	 	38,437,699	  	  	 	0.810	  	  	 	1.95	  	  	April 15, 2019	  	2014 Prospectus offering
	  
	  
	 	  				  				  		  	
	 	53,343,218	  												
	  
	  
	 	  				  				  		  	

 *Note: Included in some of the warrant agreements are provisions such that each warrant entitles the
holder to purchase one common share at a price equal to the exercise price per share for a period up to the expiry date, except that, subject to certain exceptions, the warrants will be cancelled if they are not exercised within 30 days after
written notice from the Company that the closing price of its common shares on the principal stock exchange of the Company has been three times the unit price of the offering or more for 20 consecutive trading days. 

There were no warrants issued during the three months ended March 31, 2015. The weighted average grant date fair value of the warrants
issued during the year ended December 31, 2014 was $0.24. The weighted average contractual life remaining for the warrants as at March 31, 2015 is 3.72 years (December 31, 2014 - 3.71 years). 

 

	 	iv)	Reserve – Share-based payments 

 The Company has in place a stock option plan for
the purchase of common shares by its directors, officers, employees and other service providers. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may
be exercised at any time from the date of vesting to the date of their expiry. The number of options granted is approved by the Board of Directors. All options expire up to 365 days after the resignation of an employee or director and expire 90 days
after the resignation of a consultant. 
 The aggregate number of common shares reserved for issuance under the stock option plan is a
maximum of 10% of the issued and outstanding common shares of the Company. As at March 31, 2015, there were a total of 5,324,316 options outstanding, representing 4.8% of the issued and 

  
 12 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	9.	SHARE CAPITAL (continued) 

  

	 	iv)	Reserve – Share-based payments (continued) 

  

outstanding common shares of the Company. No one person shall be granted options representing more than 5% of the issued and outstanding common
shares of the Company in a 12-month period. Option grants to persons providing consulting and investor services may not exceed 2% of the issued and outstanding common shares of the Company in any 12-month period. The options are non-assignable and
non-transferable and may be granted for a term not exceeding five years. The exercise price of the options is fixed by the Board of Directors of the Company and shall not be lower than the discounted market price (as defined by the TSX) of the
shares at the time of grant, subject to all applicable regulatory requirements. 
 The number of stock options outstanding as at
December 31, 2014 and March 31, 2015, and changes during the three months ended March 31, 2015 are as follows: 
  

									
	 	  	Number of
Options	 	  	Weighted
Average
Exercise
Price/Share	 
	 	  	#	 	  	$	 
	 Options outstanding as at December 31, 2014
	  	 	5,450,649	  	  	 	0.76	  
	 Exercised
	  	 	(126,333	) 	  	 	0.68	  
		  	  
	  
	 	  	  
	  
	 
	 Options outstanding as at March 31, 2015
		 	5,324,316	  		 	0.76	  
		  	  
	  
	 	  	  
	  
	 

 For the three months ended March 31, 2015, share-based compensation expense attributable to the operating,
general and administrative function was $80,334 (March 31, 2014 - $34,661) and to the research and development function was $193,735 (March 31, 2014 - recovery of $17,585). 

Stock options issued and outstanding as at March 31, 2015 were as follows: 

 

													
	 Number of Options
Outstanding
	 	  	Number of Options
Vested and
Exercisable	 	  	Effective
Exercise Price/
Share	 	  	 Expiry Date

	#	 	  	#	 	  	$	 	  	 
	 	90,000	  	  	 	90,000	  	  	 	1.00	  	  	August 12, 2015
	 	5,000	  	  	 	5,000	  	  	 	1.00	  	  	November 10, 2015
	 	50,000	  	  	 	50,000	  	  	 	1.00	  	  	March 4, 2016
	 	40,000	  	  	 	40,000	  	  	 	1.00	  	  	August 19, 2016
	 	275,000	  	  	 	275,000	  	  	 	1.00	  	  	March 23, 2017
	 	26,000	  	  	 	26,000	  	  	 	1.00	  	  	May 30, 2017
	 	15,000	  	  	 	15,000	  	  	 	1.00	  	  	August 29, 2017
	 	373,316	  	  	 	373,316	  	  	 	0.46	  	  	March 1, 2018
	 	896,000	  	  	 	896,000	  	  	 	0.36	  	  	May 1, 2018
	 	25,000	  	  	 	25,000	  	  	 	0.31	  	  	May 28, 2018
	 	2,204,000	  	  	 	1,469,334	  	  	 	0.65	  	  	May 20, 2019
	 	1,325,000	  	  	 	166,250	  	  	 	1.24	  	  	December 5, 2019
	  
	  
	 	  	  
	  
	 	  				  	
	 	5,324,316	  		 	3,430,900	  						
	  
	  
	 	  	  
	  
	 	  				  	


  
 13 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	9.	SHARE CAPITAL (continued) 

  

	 	iv)	Reserve – Share-based payments (continued) 

  

The total number of common shares that were issuable pursuant to stock options that were exercisable as at March 31, 2015 is 3,430,900
(December 31, 2014 - 3,557,233). The weighted average exercise price of these options as at March 31, 2015 is $0.63 (December 31, 2014 - $0.76). 

The weighted average contractual life remaining for the exercisable and outstanding shares issuable on exercise of stock options as at
March 31, 2015 is 3.37 years and 3.76 years, respectively (December 31, 2014 - 3.59 years and 3.98 years). 
  

	10.	RESEARCH AND DEVELOPMENT 

 Components of research and development expenses for the three
months ended March 31, 2015 and March 31, 2014 were as follows: 
  

									
	 	  	March 31,
2015	 	  	March 31,
2014	 
	 	  	$	 	  	$	 
	 Salaries, benefits and bonuses
	  	 	374,527	  	  	 	27,250	  
	 Other research and development
	  	 	2,496,574	  	  	 	421,442	  
		  	  
	  
	 	  	  
	  
	 
			 	2,871,101	  		 	448,692	  
		  	  
	  
	 	  	  
	  
	 

  

	11.	OPERATING, GENERAL AND ADMINISTRATIVE 

 Components of operating, general and
administrative expenses for the three months ended March 31 2015 and March 31, 2014 were as follows: 
  

									
	 	  	March 31,
2015	 	  	March 31,
2014	 
	 	  	$	 	  	$	 
	 Salaries, benefits, bonuses and board fees
	  	 	451,504	  	  	 	345,516	  
	 Other operating general, and administrative
	  	 	1,326,646	  	  	 	612,847	  
		  	  
	  
	 	  	  
	  
	 
			 	1,778,150	  		 	958,363	  
		  	  
	  
	 	  	  
	  
	 

  

	12.	RESEARCH GRANT 

 On August 8, 2012, the Company was awarded a grant of US$947,925
($942,977) from The Michael J. Fox Foundation (“MJFF”) for Parkinson’s Research to support clinical studies to develop the Company’s product candidate APL-130277, a sublingual thin film strip reformulation of apomorphine. The
grant was awarded under the Foundation’s The Edmond J. Safra Core Programs for Parkinson’s Research, Clinical Intervention Awards aimed at supporting human clinical trials testing promising Parkinson’s therapies that may significantly
and fundamentally improve treatment for people with Parkinson’s. Funds awarded by MJFF are to be used solely for the specified project and are conditioned on meeting certain milestones and deliverables. The first milestone payment of US$297,825
($289,516) was received on September 20, 2012 and was fully used by December 31, 2012. The second milestone payment of US$412,087 ($410,053) was received on January 30, 2013 and was fully used by December 31, 2013. On
December 16, 2013, the 

  
 14 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	12.	RESEARCH GRANT (continued) 

  

Company received the final milestone payment of US$238,012 ($254,102). As at December 31, 2013, $239,969 was recorded as deferred grant
proceeds, and was fully used and recognized into income in the three months ended March 31, 2014. 
 On July 3, 2014, the Company
was awarded a second grant of US$500,000 from MJFF to support clinical studies to develop APL-130277. This MJFF grant was used to fund the Company’s CTH-105 clinical study. Funds awarded by MJFF are to be used solely for the specified project
and are conditioned on meeting certain milestones and deliverables. The first milestone payment of US$100,000 ($112,000) was received on September 4, 2014 and was recognized as research grant income in the third quarter of 2014. The second
milestone payment of US$300,000 ($342,660) was received on December 9, 2014 and was recognized as research grant income in the fourth quarter of 2014. The final milestone payment of US$100,000 ($127,710) was received on March 13, 2015 and
was recognized as research grant income in the first quarter of 2015. 
 As part of the MJFF grant agreement, Cynapsus is required to support
further Parkinson’s research by making up to US$1,000,000 in contributions to MJFF based on future sales of APL-130277 beginning the year that the Company posts net sales of APL-130277 in excess of US$5,000,000. 

 

	13.	ACQUISITION MILESTONE SHARE-BASED PAYMENT 

 On December 22, 2011, the Company
completed the acquisition of 100% of the outstanding common shares of Adagio and certain indebtedness of Adagio (the “Transaction”). The Transaction was structured as a share exchange with Adagio shareholders receiving newly issued common
shares of the Company in exchange for all of the issued and outstanding shares of Adagio. The Transaction also arranged for contingent payments upon the completion of operational milestones. On January 28, 2015, the Company and the former
Adagio shareholders, whom are substantially represented by key management and therefore are related parties, signed an amendment to the Adagio Share Purchase Agreement to better reflect the contemplated agreement between the parties resulting in an
amended condition as described in milestone payment (a) below. Adagio shareholders were entitled to the following additional payments pursuant to the Transaction: 
  

	 	a)	a payment of $1,500,000 conditional upon the successful completion of the Company’s Phase 2 CTH-105 study in Parkinson’s patients, and written confirmation from the FDA,
that one Phase 3 efficacy study, one Phase 3 safety study, a bridging study and an ease-of-use study will be sufficient to allow the Company to pursue approval for a new drug application pursuant to Section 505(b)(2) of the United States
Federal Food, Drug and Cosmetic Act, as amended, to be satisfied by the issuance of common shares at a deemed value equal to the 30-day volume weighted average trading price (“VWAP”) immediately prior to the first public announcement of
the receipt of written minutes from the FDA confirming the above; and 

  

	 	b)	a payment of $2,500,000 conditional upon the successful completion of the APL-130277 final safety study, to be satisfied by the issuance of common shares at a deemed value equal to the 30 day VWAP immediately prior to
the first public announcement of the results of such study. This study had not been started as of March 31, 2015. 

 With
respect to the payments described in (a) and (b) above, the VWAP of the common shares may not be less than the “discounted market price” as defined in the policies of the Exchange. 

  
 15 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	13.	ACQUISITION MILESTONE SHARE-BASED PAYMENT (continued) 

  

On March 11, 2015, the Company announced the results of the end of Phase 2 meeting with the FDA, which triggered the milestone payment
described in (a) above to former Adagio shareholders of 1,119,403 common shares at a deemed value of $1.34 per common share. The fair value of these shares, in the amount of $1,500,000, was recorded as an expense. See Note 14, Related
Party Transactions. 
  

	14.	RELATED PARTY TRANSACTIONS 

 Key management personnel are those persons having authority
and responsibility for planning, directing and controlling the activities of the Company, including directors and senior executives. Compensation paid or payable to key management was composed of the following during the three months ended
March 31, 2015 and March 31, 2014: 
  

									
	 	  	2015	 	  	2014	 
	 	  	$	 	  	$	 
	 Short-term salaries, benefits and bonuses to executives
	  	 	297,122	  	  	 	207,655	  
	 Director fees
	  	 	126,130	  	  	 	70,428	  
		  	  
	  
	 	  	  
	  
	 
			 	423,252	  		 	278,083	  
		  	  
	  
	 	  	  
	  
	 

 As at March 31, 2015, included in accounts payable and accrued liabilities was $201,299 (December 31,
2014 - $128,713) due to officers and directors of the Company (See Note 8, Accounts Payable and Accrued Liabilities). These amounts are unsecured and non-interest bearing with no fixed terms of repayment. As at March 31, 2015, $100,000 was
accrued as bonuses to related parties (December 31, 2014 - $508,710). 
 The Company’s executive agreements provide for additional
payments in the event of termination without cause (see Note 15, Commitments and Contingent Liabilities). 
 On March 11, 2015, the
Company announced the results of the end of Phase 2 meeting with the U.S. Food and Drug Administration (“FDA”), which triggered a milestone payment to former Adagio shareholders of 1,119,403 common shares. Of the total, 602,442 shares were
issued to the Company’s President and Chief Executive Officer (see Note 13, Acquisition Milestone Share-based Payment). 
 As part of
the March 31, 2015 private placement, the Dexcel Pharma Group, a strategic pharmaceutical investor and significant shareholder of Cynapsus, and which also has two directors on the Board of Directors of the Company, subscribed for 4,342,105
common shares having an aggregate subscription price of $4,133,684 (see Note 9, Share Capital). 
  

	15.	COMMITMENTS AND CONTINGENT LIABILITIES 

 As at March 31, 2015, the Company had
research and development and other service contract commitments, as well as minimum future payments under operating leases for the periods presented as follows: 
  

													
	 	  	Less than
1 year	 	  	1 - 2
years	 	  	Total	 
	 	  	$	 	  	$	 	  	$	 
	 Purchase Obligations
	  	 	2,150,000	  	  	 	137,000	  	  	 	2,287,000	  
	 Operating Leases
	  	 	110,000	  	  	 	18,000	  	  	 	128,000	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total Contractual Obligations
		 	2,260,000	  		 	155,000	  		 	2,415,000	  
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 


  
 16 









 CYNAPSUS THERAPEUTICS INC. 

Notes to the Unaudited Condensed Interim Consolidated Financial Statements 

March 31, 2015 
 (in Canadian dollars) 

  
  

	15.	COMMITMENTS AND CONTINGENT LIABILITIES (continued) 

  

Subsequent to March 31, 2015, the Company entered into additional research and development contracts, resulting in additional purchase
obligations of $1,422,000 within one year. As a result, the total current purchase obligations as at May 7, 2015 are $3,709,000. 
 Of
the total purchase obligations, one consulting contract contains a change of control clause in which, subject to certain conditions, the Company agrees to pay the vendor an amount equal to fees based on the minimum billable hours for the remainder
of the agreement term. As a triggering event has not taken place, these contingent payments have not been recognized in these financial statements. The Company does not have a practicable estimate for the expected value of this contingent liability
due to the nature of the triggering event. As at March 31, 2015, the maximum amount of any contingent liability, based on a remaining term of 15 months, was $535,000, which was included in the amount of unrecognized purchase obligations. 

The Company is a party to certain management contracts for its executive officers. Minimum management contract termination commitments
remaining under the agreements, for termination without cause, are approximately $1,252,325 and are all payable within one year. 
 See also
Note 12, Research Grant and Note 13, Acquisition Milestone Share-Based Payment. 
  

	16.	SUBSEQUENT EVENTS 

 On April 2, 2015, the Company granted stock options to acquire
3,980,000 common shares. The stock options were granted to officers, directors and employees of the Company at an exercise price equal to $1.36 per share and expire 5 years from the date of grant. The closing price of the shares of the Company
on the Toronto Stock Exchange (CTH: TSX) on the day prior to the grant was $1.36. Following the grant of these options, there were a total of 9,304,316 options outstanding, representing 8.4% of the issued and outstanding common shares of the
Corporation as of March 31, 2015. 

  
 17