TC BioPharm Limited Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

CONVERSION FROM IFRS TO GAAP

CONVERSION FROM IFRS TO GAAP

12 Months Ended

Dec. 31, 2023

NOTE 3. CONVERSION FROM IFRS TO GAAP

The Company has retrospectively converted its consolidated financial statements from IFRS to GAAP. Refer to Note 1 for additional details.

The significant differences between IFRS and GAAP as they relate to these financial statements are as follows:

(a) Leases

Under IFRS 16, the Company, as lessee, applied the single lease model that is similar to the accounting for a finance lease under GAAP. The expense recognition presented a higher portion of the total expense earlier in the term as a combination of straight-line depreciation of the right-of-use asset and the effective interest rate method applied to the lease liability which resulted in a decreasing rate of interest expense recognition throughout the lease term.

Under GAAP, there is dual classification lease accounting model for lessees: finance leases and operating leases. Specifically, in accordance with ASC 842, the Company, as lessee, must determine whether a lease is a finance or operating lease at the inception of the contract. Further, operating leases are recognized utilizing a single lease expense model, which takes the expected payments to be made over the life of the lease and recognizes those payments on a straight-line basis throughout the lease term.

As a result of the cutover from IFRS to GAAP, the Company began accounting for its office lease space as an operating lease (in lieu of the “finance lease” model under IFRS 16). This resulted in the corresponding lease expense being reclassified from interest expense and ROU amortization into operating lease expense, which decreased interest expense by £238,985 for the year ended December 31, 2022. Additionally due to the change in the expense recognition method, the total resulting decrease in lease related expense from the transition from IFRS to GAAP was £76,105 for the year ended December 31, 2022. The expense for 2023 was recognized under GAAP and did not require any adjustments.

The following table summarizes the changes for the year ended December 31, 2022:

	IFRS			Adjustments			GAAP
Research and development expenses	£	7,447,506		£	144,964		£	7,592,470
Administrative expenses		7,013,056			17,916			7,030,972
Interest expense		(6,994,423	)		(238,985	)		(6,755,438	)
Total Conversion Adjustments					(76,105	)

Net loss	£	(1,389,706	)	£	(76,105	)	£	(1,313,601	)
Weighted-average common shares outstanding, basic and diluted		687,199			-			687,199
Basic and diluted net loss per share	£	(2.02	)	£	0.08		£	(1.91	)

The following table summarizes the changes as of December 31, 2022:

	IFRS			Adjustments			GAAP
ASSETS
Current assets:
Operating lease right of use assets	£	1,188,947		£	341,327		£	1,530,274
Total Conversion Adjustments				£	341,327

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Non-current operating lease liability	£	1,812,450		£	(15,615	)	£	1,796,835
Accumulated deficit		(33,731,738	)		356,942			(33,374,796	)
Total Conversion Adjustments				£	341,327