BriaCell Therapeutics Corp. 10-Q

Item 1. Financial Statements BRIACELL THERAPEUTICS CORP. INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets as of January 31, 2023 (unaudited) and July 31, 2022 (unaudited) 4 Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months ended January 31, 2023 5 Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months ended January 31, 2023 6 Unaudited Condensed Consolidated Statement of Cash Flows for the Six Months ended January 31, 2023 7 3 BRIACELL THERAPEUTICS CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS January 31, 2023 July 31, 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 33,500,236 $ 41,041,652 Amounts receivable 8,928 24,103 Prepaid expenses 429,397 1,280,945 Total current assets 33,938,561 42,346,700 NON-CURRENT ASSETS: Investments 2 2 Intangible assets, net 222,704 230,339 Total non-current assets 222,706 230,341 Total assets $ 34,161,267 $ 42,577,041 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Trade payables $ 582,451 $ 463,280 Accrued expenses and other payables 87,962 477,807 Total current liabilities 670,413 941,087 NON-CURRENT LIABILITIES: Warrant liability 34,771,440 31,307,022 Total non-current liabilities 34,771,440 31,307,022 SHAREHOLDERS’ EQUITY: Share Capital of no par value - Authorized: unlimited at January 31, 2023 and July 31, 2022, Issued and outstanding: 15,518,018 shares January 31, 2023 and July 31, 2022, respectively 65,589,293 65,589,293 Additional paid in capital 6,606,945 5,228,160 Accumulated other comprehensive loss ( 138,684 ) ( 138,684 ) Accumulated deficit ( 73,338,140 ) ( 60,349,837 ) Total shareholders’ (deficit) equity ( 1,280,586 ) 10,328,932 Total liabilities and shareholders’ equity $ 34,161,267 $ 42,577,041 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE THREE AND SIX MONTHS ENDED JANUARY 21, 2023 (Unaudited) 2023 2022 2023 2022 Three months ended January 31, Six months ended January 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 3,053,357 $ 1,708,179 $ 6,308,572 $ 2,583,815 General and administrative expenses 1,432,966 1,938,630 3,580,902 3,347,803 Total operating expenses 4,486,323 3,646,809 9,889,474 5,931,618 Operating loss ( 4,486,323 ) ( 3,646,809 ) ( 9,889,474 ) ( 5,931,618 ) Financial income (expenses), net ( 7,395,439 ) 14,807,316 ( 3,098,829 ) ( 10,441,360 ) Income (loss) and Comprehensive income (loss) for the period $ ( 11,881,762 ) $ 11,160,507 $ ( 12,988,303 ) ( 16,372,978 ) Net loss per share – basic $ ( 0.77 ) $ 0.71 $ ( 0.84 ) $ ( 1.05 ) Net income (loss) per share – diluted $ ( 0.77 ) $ 0.04 $ ( 0.84 ) $ ( 1.05 ) Weighted average number of shares used in computing net basic earnings per share of common stock 15,518,018 15,788,827 15,518,018 15,547,497 Weighted average number of shares used in computing net diluted earnings per share of common stock 15,518,018 18,405,614 15,518,018 15,547,497 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2023 Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ equity Number Amount capital loss deficit (deficit) Balance, October 31, 2022 15,518,018 $ 65,589,293 $ 6,340,101 $ ( 138,684 ) $ ( 61,456,378 ) $ 10,334,332 Issuance of options - - 266,844 - - 266,844 Loss for the period - - - - ( 11,881,762 ) ( 11,881,762 ) Balance, January 31, 2023 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ equity Number Amount capital loss deficit (deficit) Balance, July 31, 2022 15,518,018 $ 65,589,293 $ 5,228,160 $ ( 138,684 ) $ ( 60,349,837 ) $ 10,328,932 Issuance of options - - 1,378,785 - - 1,378,785 Loss for the period - - - - ( 12,988,303 ) ( 12,988,303 ) Balance, January 31, 2023 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ Number Amount capital loss deficit equity Balance, October 31, 2021 15,370,412 $ 55,701,579 $ 2,696,264 $ ( 138,684 ) $ ( 56,675,382 ) $ 1,583,777 Exercise of representation warrants 107,471 376,832 - - - 376,832 Exercise of private placement warrants 800,000 9,910,089 - - - 9,910,089 Exercise of public offering warrants 33,065 1,677,631 - - - 1,677,631 Issuance of options - - 814,876 - - 814,876 Shares repurchased and cancelled ( 364,306 ) ( 4,704,423 ) - - ( 4,393,591 ) ( 9,098,014 ) Income for the period - - - - 11,160,507 11,160,507 Balance, January 31, 2022 15,946,642 $ 62,961,708 $ 3,511,140 $ ( 138,684 ) $ ( 49,908,466 ) $ 16,425,698 Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ equity Number Amount capital loss deficit (deficit) Balance, July 31, 2021 15,269,583 $ 54,774,172 $ 2,178,130 $ ( 138,684 ) $ ( 29,141,897 ) $ ( 27,671,721 ) Balance 15,269,583 $ 54,774,172 $ 2,178,130 $ ( 138,684 ) $ ( 29,141,897 ) $ ( 27,671,721 ) Exercise of representation warrants 208,300 1,304,239 - - - 1,304,239 Exercise of private placement warrants 800,000 9,910,089 - - - 9,910,089 Exercise of public offering warrants 33,065 1,677,631 - - - 1,677,631 Issuance of options - - 1,333,010 - - 1,333,010 Shares repurchased and canceled ( 364,306 ) ( 4,704,423 ) - - ( 4,393,591 ) ( 9,098,014 ) Loss for the period - - - - ( 16,372,978 ) ( 16,372,978 ) Income (loss) for the period - - - - ( 16,372,978 ) ( 16,372,978 ) Balance, January 31, 2022 15,946,642 $ 62,961,708 $ 3,511,140 $ ( 138,684 ) $ ( 49,908,466 ) $ 16,425,698 Balance 15,946,642 $ 62,961,708 $ 3,511,140 $ ( 138,684 ) $ ( 49,908,466 ) $ 16,425,698 The accompanying notes are an integral part of the condensed consolidated financial statements. 6 BRIACELL THERAPEUTICS CORP. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JANUARY 31, 2023 (Unaudited) Six months ended January 31, 2023 2022 Cash flow from operating activities Net loss $ ( 12,988,303 ) $ ( 16,372,978 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 7,635 7,636 Share-based compensation 1,378,785 1,333,010 Interest expense - 979 Gain from government grant - ( 3,388 ) Change in fair value of warrants 3,511,712 10,456,148 Changes in assets and liabilities: Increase in amounts receivable 15,175 ( 14,592 ) Decrease in prepaid expenses 851,548 210,022 Increase in trade payable 119,171 314,143 Decrease in accrued expenses and other payables ( 389,845 ) ( 265,788 ) Total cash flow from operating activities ( 7,494,122 ) ( 4,334,808 ) Cash flows from financing activities Share and warrant buyback program ( 47,294 ) ( 10,056,273 ) Repayment government grant - ( 23,577 ) Proceeds from exercise of warrants - 5,127,658 Total cash flow from financing activities ( 47,294 ) ( 4,952,192 ) Decrease in cash and cash equivalents ( 7,541,416 ) ( 9,287,000 ) Cash and cash equivalents at beginning of the period 41,041,652 57,268,685 Cash and cash equivalents at end of the period $ 33,500,236 $ 47,981,685 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 BRIACELL THERAPEUTICS CORP. Notes to the Condensed Consolidated Financial Statements (Unaudited) NOTE 1: GENERAL a. BriaCell Therapeutics Corp. (“BriaCell” or the “Company”) was incorporated under the Business Corporations Act (British Columbia) on July 26, 2006 and is listed on the Toronto Stock Exchange (“TSX”) under the symbol “BCT” and on the Nasdaq Capital Market (“NASDAQ”) under the symbols “BCTX” and “BCTXW”. b. BriaCell is an immuno-oncology biotechnology company. BriaCell owns the US patent to Bria-IMT™, a whole-cell cancer vaccine (US Patent No.7674456) (the “Patent”). The Company is currently advancing its immunotherapy program, Bria-IMT™, to complete a 24-subject Phase I/IIa clinical trial and by research activities in the context of BriaDx™, a companion diagnostic test to identify patients likely benefitting from Bria-IMT™. c. Basis of presentation of the financial statements: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report for the year ended July 31, 2022 filed with the SEC on October 28 , 2022. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. Prior to 2021, the Company prepared its financial statements, including its condensed financial statements, in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), as permitted in the United States based on the Company’s qualification as a “foreign private issuer” under the rules and regulations of the SEC. In connection with the loss of the Company’s status as a foreign private issuer effective on August 1, 2022, the Company, as a domestic filer, prepares its consolidated financial statements in accordance with U.S. GAAP, and restated its condensed consolidated financial statements as of January 31, 2022 to be prepared in accordance with U.S. GAAP. d. The Company continues to devote substantially all of its efforts toward research and development activities. In the course of such activities, the Company has sustained operating losses and expects such losses to continue in the foreseeable future. The Company’s accumulated deficit as of January 31, 2023 was $ 73,338,140 and negative cash flows from operating activities during the six-month period ended January 31, 2023 was $ 7,494,122 . The Company is planning to finance its operations from its existing and future working capital resources and to continue to evaluate additional sources of capital and financing. The Company believes that its existing capital resources will be adequate to satisfy its expected liquidity requirements for at least twelve months from the issuance of the condensed consolidated financial statements. 8 e. The Company has a wholly-owned U.S. subsidiary, BriaCell Therapeutics Corp. (“BTC”), which was incorporated in April 3, 2014, under the laws of the state of Delaware. BTC has a wholly-owned subsidiary, Sapientia Pharmaceuticals, Inc. (“Sapientia” and together with BTC the “Subsidiaries”), which was incorporated in September 20, 2012, under the laws of the state of Delaware. The Company has one operating segment and reporting unit. f. Since January 2020, the Coronavirus outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. Many countries around the world, including Canada and the United States have been taking measures designated to limit the continued spread of the Coronavirus, including the closure of workplaces, restricting travel, prohibiting assembling, closing international borders and quarantining populated areas. Such measures present concerns that may dramatically affect the Company’s ability to conduct its business effectively. The Company may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by the virus or are fearful of visiting or traveling to our clinical trial sites because of the outbreak of COVID-19. In the event that clinical trial sites are slowed down or closed to enrolment in our trials, this could have a material adverse impact on our clinical trial plans and timelines. The Company is continuing to assess its business plans and the impact COVID-19 is having on the Company’s clinical trial timelines and the Company’s ability to recruit candidates for clinical trials. The extent to which COVID-19 and global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. The Company currently believes that the execution of our clinical trials and research programs are delayed by at least one quarter due to COVID-19. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES a. Use of estimates : The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates. b. Recently issued and adopted accounting standards : As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflects this election. The pronouncements below relate to standards that impact the Company. 1. In June 2016, the FASB issued ASU No. 2016-13 (Topic 326), Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments, which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for the Company for fiscal years beginning after December 15, 2022. Early adoption is permitted. Effective August 1, 2021, the Company early adopted ASU 2016-13. Adoption of the new standard did not have a material impact on the financial statements. 9 2. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The final guidance issued by the FASB for convertible instruments eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features. Separate accounting is still required in certain cases. Additionally, among other changes, the guidance eliminates some of the conditions for equity classification in ASC 815-40-25 for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. ASU 2020-06 is effective for the company for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2020. Effective August 1, 2021, the Company early adopted ASU 2020-06. Adoption of the new standard did not have a material impact on the financial statements. 3. In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (ASU 2021-10), which improves the transparency of government assistance received by most business entities by requiring the disclosure of: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity’s financial statements. This guidance is effective for financial statements issued for annual periods beginning after 15 December 2021. Early adoption is permitted. Adoption of the new standard did not have a material impact on the financial statements. NOTE 3: CONTINGENT LIABILITIES AND COMMITMENTS a. Legal proceedings: On May 19, 2021, Alpha Capital Anstalt (“Alpha”) filed a lawsuit in the New York State Supreme Court, Commercial Division, New York County against BriaCell Therapeutics Corp. (“BriaCell”), alleging that BriaCell breached a loan contract when it refused to reprice and extend the term of warrants purported held by Alpha in spring 2021, seeking monetary and injunctive relief for delivery of those amended warrants. Counterclaiming and defending against Alpha’s complaint, BriaCell alleges that Alpha’s loan to BriaCell is unenforceable both because the loan is criminally usurious under New York law and because Alpha acted as an unregistered securities dealer in violation of American securities law. BriaCell also has alleged that Canadian securities law, regulation, and rules prohibited it from amending the warrants to comply with Alpha’s spring 2021 demands. On May 11, 2022, Alpha moved to dismiss BriaCell’s operative Amended Counterclaim. At oral argument on January 19, 2023, Justice Cohen granted in part and denied in part Alpha’s partial motion to dismiss BriaCell’s Amended Counterclaim and Affirmative Defenses. In relevant part, Justice Cohen refused to dismiss any of BriaCell’s substantive counterclaims, allowing BriaCell to continue to prosecute its Unjust Enrichment, Money Had and Received, Recovery of Excess, and Implied Covenant of Good Faith and Fair Dealing claims against Alpha. At this time, the parties cannot estimate the value of their respective claims and damages. b. Lease The Company is currently on a month-to-month lease arrangement for office and lab space in Philadelphia, PA, in the amount of approximately $ 16,000 per month. 10 NOTE 4: FAIR VALUE MEASUREMENTS The following table presents information about our financial instruments that are measured at fair value on a recurring basis as of January 31, 2023, and July 31, 2022: SCHEDULE OF FAIR VALUE ON A RECURRING BASIS Fair Value Measurements at January 31, 2023 July 31, 2022 Level 1 Level 2 Total Level 1 Level 2 Total Financial Assets: Cash and cash equivalents 33,500,236 - 33,500,236 41,041,652 - 41,041,652 Total assets measured at fair value $ 33,500,236 - 33,500,236 $ 41,041,652 $ - $ 41,041,652 Financial liabilities: Warrants liability 11,652,356 23,119,084 34,771,440 11,151,608 20,155,414 31,307,022 Total liabilities measured at fair value $ 11,652,356 23,119,084 34,771,440 $ 11,151,608 $ 20,155,414 $ 31,307,022 We classify our cash and cash equivalents and the liability in respect of publicly traded warrants within Level 1 because we use quoted market prices in active markets. The fair value of the warrant liability for non-public warrants is measured using inputs other than quoted prices included in Level 1 that are observable for the liability either directly or indirectly, and thus are classified as Level 2 financial instruments. NOTE 5: SHAREHOLDERS’ EQUITY a. Authorized share capital The authorized share capital consists of an unlimited number of common shares with no par value. b. Issued share capital No shares were issued during the six-month period ended January 31, 2023. c. Share buyback program On September 9, 2021, the Company approved a repurchase program whereby the Company may purchase through the facilities of the TSX Venture or NASDAQ (i) up to 1,341,515 common shares (the “Common Shares”) and (ii) up to 411,962 publicly traded BCTXW warrants (the “Listed Warrants”) in total, representing 10 % of the 13,415,154 Common Shares and 10 % of the 4,119,622 Listed Warrants comprising the “public float” as of September 8, 2021, over the next 12 months (the “Buyback”). Independent Trading Group (ITG) Inc. will act as the Company’s advisor and dealer manager in respect of the Buyback. The Company received final regulatory approval on September 22, 2021. On September 27, 2022, the Company completed the share buyback program, repurchasing a total of 1,031,672 shares with a value of $ 9,098,014 (net of commissions), none of which were repurchased during the six month period ended January 31,2023, and 259,059 publicly traded warrants for $ 1,121,011 (net of commissions) with a fair value of $ 1,130,808 of which 15,736 were repurchased and cancelled during the six-month period ended January 31,2023. All of the warrants and shares repurchased have been cancelled. 11 NOTE 5: SHAREHOLDERS’ EQUITY (Cont.) d. Share Purchase Warrants A summary of changes in share purchase warrants for the six-month period ended January 31, 2023 is presented below: SUMMARY OF CHANGES IN WARRANTS Number of warrants outstanding Weighted average exercise price Balance, July 31, 2022 8,137,686 $ 5.76 Repurchased and cancelled ( 15,736 ) ( 5.31 ) Balance, January 31, 2023 8,121,950 5.76 d. Share Purchase Warrants (continued) As of January 31, 2023, warrants outstanding were as follows: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Exercise Price Exercisable At January 31, 2023 Expiry Date 51,698 $ 4.06 51,698 November 16, 2025 3,897,109 $ 5.31 3,897,109 February 26, 2026 – April 26, 2026 4,173,143 $ 6.19 4,173,143 December 7, 2026 8,121,950 8,121,950 e. Compensation Warrants (i) There were no changes to compensation warrants for the six-month period ended January 31, 2023. (ii) As at January 31, 2023, compensation warrants outstanding were as follows: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Exercise Price Exercisable At January 31, 2023 Expiry Date 4,890 $ 4.06 4,890 November 16, 2025 17,074 $ 5.31 17,074 February 26, 2026 24,688 $ 6.19 24,688 June 7, 2026 46,652 46,652 f. Warrant liability continuity The following table presents the summary of the changes in the fair value of the warrants: SCHEDULE OF CHANGE IN FAIR VALUE OF WARRANTS Warrants liability Balance as of August 1, 2022 $ 31,307,022 Warrant buyback program $ ( 47,294 ) Change in fair value during the period $ 3,511,712 Balance as of January 31, 2023 $ 34,771,440 The key inputs used in the valuation of the non-public warrants as of January 31, 2023 and at July 31, 2022 were as follows: 12 NOTE 5: SHAREHOLDERS’ EQUITY (Cont.) SCHEDULE OF VALUATION OF NON PUBLIC WARRANTS January 31, 2023 July 31, 2022 Share price $ 7.48 $ 6.50 Exercise price $ 3.07 - 6.19 $ 4.23 - 6.19 Expected life (years) 2.79 - 3.85 3.58 - 4.35 Volatility 100 % 100 % Dividend yield 0 % 0 % Risk free rate 3.62 % 2.68 % NOTE 6: SHARE-BASED COMPENSATION a. On August 2, 2022, the Company approved an omnibus equity incentive plan (“Omnibus Plan), which will permit the Company to grant incentive stock options, preferred share units, restricted share units (“RSU’s”), and deferred share units (collectively, the “Awards”) for the benefit of any employee, officer, director, or consultant of the Company or any subsidiary of the Company. The maximum number of Shares available for issuance under the Omnibus Plan shall not exceed 15 % of the issued and outstanding Shares, from time to time, less the number of Shares reserved for issuance under all other security-based compensation arrangements of the Company, including the existing Stock Option Plan. On February 9, 2023, the Omnibus Plan was approved by the shareholders and remains subject to final approval from the Toronto Stock Exchange. b. The following table summarizes the number of options granted to directors, officers, employees and consultants under the option plan for six-month period ended January 31, 2023 and related information: SCHEDULE OF NUMBER OF OPTIONS GRANTED Number of options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Balance as of July 31, 2022 1,490,300 $ 6.20 3.59 $ 447,090 Granted (i) 180,100 6.28 4.51 - Balance as of January 31, 2023 1,670,400 6.21 3.69 $ 2,121,408 Exercisable as of January 31, 2023 1,424,010 $ 6.13 3.58 $ 1,922,414 (i) On August 2, 2022, the Company granted 180,100 options, under the Stock Option Plan, to directors, officers and employees with an exercise price of CAD$ 8.38 . The options vest quarterly in advance over a two -year period and expire on August 2, 2027 . The fair value of the 180,100 stock options issued was $ 887,362 . 142,100 of the options were issued to officers of the Company. The fair value of the stock options issued to the officers was $ 700,134 . The weighted-average grant date per-share fair value of stock options granted during six-month period ended January 31, 2023 was $ 4.93 . As of January 31, 2023, there are $ 1,269,878 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to 1.5 years. 13 NOTE 6: SHARE-BASED COMPENSATION (Cont.) c. The following table lists the inputs to the Black-Scholes option-pricing model used for the fair value measurement of equity-settled share options for the above options plans for the three and six month period ended January 31, 2023 and 2022: SCHEDULE OF FAIR VALUE MEASUREMENT OF EQUITY-SETTLED SHARE OPTIONS Three months ended January 31, Six months ended January 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Dividend yield 0 % 0 % 0 % 0 % Expected volatility of the share prices 100 % 100 % 100 % 100 % Risk-free interest rate 4.23 % 1.47 % 4.23 % 0.80 %- 1.47 % Expected term (in years) 5 5 5 5 d. The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of January 31, 2023. SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS Exercise price Options outstanding as of January 31, 2023 Weighted average remaining contractual term (years) Options exercisable as of January 31, 2023 Weighted average remaining contractual term (years) Expiry Date $ 6.28 180,100 4.51 45,025 4.51 August 02, 2027 $ 4.71 31,000 4.31 11,625 4.31 May 20, 2027 $ 7.51 150,000 4.04 75,000 4.04 February 16, 2027 $ 8.47 524,700 3.95 508,800 3.95 January 13, 2027 $ 7.74 12,600 3.75 11,560 3.75 November 01, 2027 $ 5.74 100,000 3.59 100,000 3.59 September 01, 2026 $ 4.24 60,000 3.22 60,000 3.22 April 19, 2026 $ 4.24 612,000 3.16 612,000 3.16 March 29, 2026 1,670,400 1,424,010 e. Restricted Share Unit Plan The following table summarizes the number of RSU’s granted to directors under the Omnibus plan for six-month period ended January 31, 2023: SCHEDULE OF RESTRICTED STOCK UNITS GRANTED Number of RSU’s outstanding Aggregate intrinsic value Balance, July 31, 2022 - $ - Granted (i) 19,200 123,072 Balance, January 31, 2023 19,200 $ 143,616 (i) On August 2, 2022, the Company issued 19,200 RSU’s to the CEO. The RSU’s vested immediately. 14 f. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and six-month period ended January 31, 2023 and 2022 is comprised as follows: SCHEDULE OF SHARE-BASED COMPENSATION EXPENSES 2023 2022 2023 2022 Three months ended January 31, Six months ended January 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Research and development expenses $ 225,091 109,453 $ 575,347 109,453 General and administrative expenses 41,753 705,423 803,438 1,223,557 Total share-based compensation $ 266,844 814,876 $ 1,378,785 1,333,010 NOTE 7: FINANCIAL INCOME (EXPENSES), NET SCHEDULE OF FINANCIAL INCOME (EXPENSE), NET 2023 2022 2023 2022 Three months ended January 31, Six months ended January 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest income $ 240,595 12,081 $ 428,948 18,386 Interest expense - - - ( 979 ) Change in fair value of warrant liability ( 7,629,502 ) 14,797,888 ( 3,511,712 ) ( 10,456,148 ) Gain on government grant - 3,388 - 3,388 Foreign exchange loss ( 6,532 ) ( 6,041 ) ( 16,065 ) ( 6,007 ) Loss on extinguishment of debt - - - - Financial income (expenses), net $ ( 7,395,439 ) $ 14,807,316 $ ( 3,098,829 ) $ ( 10,441,360 ) NOTE8: BASIC AND DILUTED NET LOSS PER SHARE Basic net income (loss) per ordinary share is computed by dividing net income (loss) for each reporting period by the weighted-average number of ordinary shares outstanding during each year. Diluted net income (loss) per ordinary share is computed by dividing net income (loss) for each reporting period by the weighted average number of ordinary shares outstanding during the period, plus dilutive potential ordinary shares considered outstanding during the period, in accordance with ASC No. 260-10 “Earnings Per Share”. The Company experienced a loss in three and six month ended January 31, 2023 and for the six months ended January 31, 2022; hence all potentially dilutive ordinary shares were excluded during those periods due to their anti-dilutive effect. SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE 2023 2022 2023 2022 Three months ended January 31, Six months ended January 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Basic EPS Numerator: Net income (loss) $ ( 11,881,762 ) $ 11,160,507 $ ( 12,988,303 ) $ ( 16,372,978 ) Denominator: Shares used in computation of basic earnings per share 15,518,018 15,788,827 15,518,018 15,547,497 Basic EPS $ ( 0.77 ) $ 0.71 $ ( 0.84 ) $ ( 1.05 ) Diluted EPS Numerator: Net income (loss) attributable to common stock, basic and diluted $ ( 11,881,762 ) $ 704,359 $ ( 12,988,303 ) $ ( 16,372,978 ) Denominator: Shares used in computing net EPS of common stock, basic 15,518,018 15,788,827 15,518,018 15,547,497 Stock Options - 337,644 - - Warrants - 2,279,143 - - Shares used in computation of diluted earnings per share 15,518,018 18,405,614 15,518,018 15,547,497 Diluted EPS $ ( 0.77 ) $ 0.04 $ ( 0.84 ) $ ( 1.05 ) 15