BriaCell Therapeutics Corp. 10-Q

Item 1. Financial Statements BRIACELL THERAPEUTICS CORP. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS April 30, 2023 July 31, 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 28,170,099 $ 41,041,652 Amounts receivable 14,896 24,103 Prepaid expenses 1,317,985 1,280,945 Total current assets 29,502,980 42,346,700 NON-CURRENT ASSETS: Investments 2 2 Intangible assets, net 218,886 230,339 Total non-current assets 218,888 230,341 Total assets $ 29,721,868 $ 42,577,041 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Trade payables $ 995,252 $ 463,280 Accrued expenses and other payables (Note 7) 387,842 477,807 Total current liabilities 1,383,094 941,087 NON-CURRENT LIABILITIES: Warrant liability 34,231,116 31,307,022 Total non-current liabilities 34,231,116 31,307,022 SHAREHOLDERS’ EQUITY: Share Capital of no par value - Authorized: unlimited at April 30, 2023 and July 31, 2022 ; Issued and outstanding: 15,518,318 and 15,269,853 shares April 30, 2023 and July 31, 2022, respectively 65,591,784 65,589,293 Additional paid in capital 6,888,134 5,228,160 Accumulated other comprehensive loss ( 138,684 ) ( 138,684 ) Accumulated deficit ( 78,233,576 ) ( 60,349,837 ) Total shareholders’ equity (deficit) ( 5,892,342 ) 10,328,932 Total liabilities and shareholders’ equity (deficit) $ 29,721,868 $ 42,577,041 The accompanying notes are an integral part of the condensed consolidated financial statements. 3 BriaCell Therapeutics Corp. Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss 2023 2022 2023 2022 Three months ended April 30, Nine months ended April 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating Expenses: Research and development expenses $ 3,860,568 $ 2,268,805 $ 10,169,140 4,852,620 General and administrative expenses (Note 7) 1,816,461 1,854,455 5,397,363 5,202,258 Total operating expenses 5,677,029 4,123,260 15,566,503 10,054,878 Operating loss ( 5,677,029 ) ( 4,123,260 ) ( 15,566,503 ) ( 10,054,878 ) Financial income (expenses), net 781,593 ( 5,892,313 ) ( 2,317,236 ) ( 16,333,673 ) Net loss for the period ( 4,895,436 ) ( 10,015,573 ) ( 17,883,739 ) ( 26,388,551 ) Comprehensive loss for the period $ ( 4,895,436 ) $ ( 10,015,573 ) $ ( 17,883,739 ) ( 26,388,551 ) Loss per share – basic and diluted $ ( 0.32 ) $ ( 0.65 ) $ ( 1.15 ) $ ( 1.70 ) Weighted average number of shares used in computing net basic earnings per share of common stock 15,518,072 15,358,947 15,518,036 15,486,028 Weighted average number of shares used in computing net diluted earnings per share of common stock 15,518,072 15,358,947 15,518,036 15,486,028 The accompanying notes are an integral part of the condensed consolidated financial statements. 4 BRIACELL THERAPEUTICS CORP. Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity Number Amount capital loss deficit Equity Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ Number Amount capital loss deficit Equity Balance, January 31, 2023 15,518,018 $ 65,589,293 $ 6,606,945 $ ( 138,684 ) $ ( 73,338,140 ) $ ( 1,280,586 ) Exercise of public offering warrants 300 2,491 - - - 2,491 Issuance of options - - 281,189 - - 281,189 Net loss for the period - - - - ( 4,895,436 ) ( 4,895,436 ) Balance, April 30, 2023 15,518,318 $ 65,591,784 $ 6,888,134 $ ( 138,684 ) $ ( 78,233,576 ) $ ( 5,892,342 ) 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 Exercise of public offering warrants 300 2,491 - - - 2,491 Issuance of options - - 1,659,974 - - 1,659,974 Net loss for the period - - ( 17,883,739 ) ( 17,883,739 ) Balance, April 30, 2023 15,518,318 $ 65,591,784 $ 6,888,134 $ ( 138,684 ) $ ( 78,233,576 ) $ ( 5,892,342 ) 5 Share capital Additional paid in Accumulated other comprehensive Accumulated Total shareholders’ Number Amount capital loss deficit equity Balance, January 31, 2022 15,946,642 $ 62,961,708 $ 3,511,140 $ ( 138,684 ) $ ( 49,908,466 ) $ 16,425,698 Exercise of representation warrants 11,153 125,713 - - - 125,713 Exercise of private placement warrants 197,200 2,251,913 - - - 2,251,913 Exercise of public offering warrants 30,389 307,075 - - - 307,075 Issuance of options - - 863,626 - - 863,626 Shares cancelled ( 667,366 ) - - - - - Expiration of options - - ( 24,554 ) - 24,554 - Net loss for the period - - - - ( 10,015,573 ) ( 10,015,573 ) Balance, April 30, 2022 15,518,018 $ 65,646,409 $ 4,350,212 $ ( 138,684 ) $ ( 59,899,485 ) $ 9,958,452 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 Beginning balance 15,269,583 $ 54,774,172 $ 2,178,130 $ ( 138,684 ) $ ( 29,141,897 ) $ 27,671,721 Exercise of representation warrants 219,453 1,429,953 - - - 1,429,953 Exercise of private placement warrants 997,200 12,162,001 - - - 12,162,001 Exercise of public offering warrants 63,454 1,984,706 - - - 1,984,706 Issuance of options - - 2,196,636 - - 2,196,636 Shares repurchased and canceled ( 1,031,672 ) ( 4,704,423 ) - - ( 4,393,591 ) ( 9,098,014 ) Expiration of options - - ( 24,554 ) - 24,554 - Net loss for the period - - ( 26,388,551 ) ( 26,388,551 ) Balance, April 30, 2022 15,518,018 $ 65,646,409 $ 4,350,212 $ ( 138,684 ) $ ( 59,899,485 ) $ 9,958,452 Ending balance 15,518,018 $ 65,646,409 $ 4,350,212 $ ( 138,684 ) $ ( 59,899,485 ) $ 9,958,452 The accompanying notes are an integral part of the condensed consolidated financial statements. 6 BriaCell Therapeutics Corp. Unaudited Condensed Consolidated Statement of Cash Flows 2023 2022 Nine months ended April 30, 2023 2022 (Unaudited) (Unaudited) Cash flow from operating activities Net loss $ ( 17,883,739 ) $ ( 26,388,551 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 11,453 11,453 Share-based compensation 1,659,974 2,196,637 Interest expense - 979 Gain from government grant - ( 3,388 ) Change in fair value of warrants 2,972,285 16,384,676 Changes in assets and liabilities: Decrease in amounts receivable 9,207 ( 1,958 ) Increase in prepaid expenses ( 37,040 ) ( 1,167,991 ) Increase in accounts payable 531,972 6,945 Decrease in accrued expenses and other payables ( 89,965 ) ( 197,449 ) Total cash flow from operating activities ( 12,825,853 ) ( 9,158,647 ) Cash flows from financing activities Proceeds from exercise of warrants 1,594 6,509,768 Share and warrant buyback program ( 47,294 ) ( 10,069,065 ) Repayment government grant - ( 23,577 ) Total cash flow from financing activities ( 45,700 ) ( 3,582,874 ) Decrease in cash and cash equivalents ( 12,871,553 ) ( 12,741,521 ) Cash and cash equivalents at beginning of the period 41,041,652 57,268,685 Cash and cash equivalents at end of the period $ 28,170,099 $ 44,527,164 The accompanying notes are an integral part of the condensed consolidated financial statements. 7 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 owns the U.S. and Japanese patents to SV-BR-1-GM (“Bria-IMT™”), a whole-cell targeted immunotherapy for cancer (U.S. Patent No. 7,674,456, U.S. Patent No. 11,559,574 B2, Japanese Patent No. 6901505), as well as patents related to PKCδ inhibitors (U.S. Patent Nos. 9,364,460 and 9,572,793). The Company is currently advancing its targeted immunotherapy program by prioritizing a Phase II clinical trial with Bria-IMT™ in combination with an immune checkpoint inhibitor. 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 8 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 U.S. 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 April 30, 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 April 30, 2023, was $ 78,233,576 and negative cash flows from operating activities during the nine-month period ended April 30, 2023, was $ 12,825,853 . The Company is planning to finance its operations with 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. 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. Subsequent to the reporting period, on May 24, 2023, the Company entered into an Arrangement Agreement to spin out certain pre-clinical pipeline assets to a newly incorporated entity, BriaPro Therapeutics Corp. (“SpinCo”), with the Company initially retaining a 66.67 % ownership interest in SpinCo, subject to shareholder, TSX, NASDAQ, and court approvals, with the anticipated completion of the Arrangement by August 2023. 8 f. The Company may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by COVID-19 or are fearful of visiting or traveling to our clinical trial sites because of a new outbreak of COVID-19, or of a new variant thereof, or of another pandemic. 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 currently believes that the execution of our clinical trials and research programs were delayed by at least one quarter due to COVID-19. Although future delays appear unlikely, they cannot be ruled out. 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, judgments, 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 : The Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company as an “emerging growth company” to delay the 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 reflect this election. 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. 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. 9 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 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 December 15, 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 24, 2023, the Company reached a settlement agreement with an investor who made certain claims against the Company and was seeking monetary and injunctive relief, and against which the Company had filed counterclaims. Pursuant to the settlement agreement, the Company paid $ 230,000 for the full and final settlement of all of the investor’s claims, in full and final settlement of any and all existing claims that the Company and investor had or may have had against each other. 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. 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 April 30, 2023, and July 31, 2022: SCHEDULE OF FAIR VALUE ON A RECURRING BASIS Fair Value Measurements at April 30, 2023 July 31, 2022 Level 1 Level 2 Total Level 1 Level 2 Total Financial Assets: Cash and cash equivalents 28,170,099 - 28,170,999 41,041,652 - 41,041,652 Total assets measured at fair value $ 28,170,099 $ - $ 28,170,999 $ 41,041,652 $ - $ 41,041,652 Financial liabilities: Warrants liability 11,748,879 22,482,237 34,231,116 11,151,608 20,155,414 31,307,022 Total liabilities measured at fair value $ 11,748,879 $ 22,482,237 $ 34,231,116 $ 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 (DEFICIT) a. Authorized share capital The authorized share capital consists of an unlimited number of common shares with no par value. 10 b. Issued share capital During the nine-month period ended April 30, 2023, 300 warrants with an exercise price of $ 5.31 were exercised for gross proceeds of $ 1,594 . The Company issued 300 shares in respect of the exercise of these warrants. 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 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. acted as the Company’s advisor and dealer manager in connection with 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 nine month period ended April 30, 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 nine-month period ended April 30, 2023. All of the warrants and shares repurchased have been cancelled. During the three month period ending April 30, 2022 a total of 667,366 shares were canceled with a value of $ 5,589,945 (net of commissions). All of these shares were recognized upon their repurchase within the three-month period ending January 31, 2022. d. Share Purchase Warrants A summary of changes in share purchase warrants for the nine months ended April 30, 2023, is presented below: SUMMARY OF CHANGES IN WARRANTS Number of warrants outstanding Weighted average exercise price (Unaudited) (Unaudited) Balance, July 31, 2022 8,137,686 $ 5.76 Exercised during the period ( 300 ) ( 5.31 ) Repurchased and cancelled during the period ( 15,736 ) ( 5.31 ) Balance, April 30, 2023 8,121,650 5.76 As of April 30, 2023, warrants outstanding were as follows: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Exercise Price Exercisable At April 30, 2023 Expiry Date 51,698 $ 4.41 51,698 November 16, 2025 3,896,809 $ 5.31 3,896,809 February 26, 2026 – April 26, 2026 4,173,143 $ 6.19 4,173,143 December 7, 2026 8,121,650 8,121,650 e) Compensation Warrants (i) There were no changes to compensation warrants for the nine-month period ended April 30, 2023. (ii) As at April 30, 2023, compensation warrants outstanding were as follows: SCHEDULE OF WARRANTS OUTSTANDING Number of Warrants Exercise Price Exercisable At April 30, 2023 Expiry Date 4,890 $ 4.41 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 11 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 Exercise of warrants $ ( 897 ) Warrant buyback program ( 47,294 ) Change in fair value $ 2,972,285 Balance as of April 30, 2023 $ 34,231,116 The key inputs used in the valuation of the warrants as of April 30, 2023 and at July 31, 2022 were as follows: SCHEDULE OF VALUATION OF NON PUBLIC WARRANTS April 30, 2023 July 31, 2022 Share price $ 7.44 $ 6.50 Exercise price $ 3.99 - 6.19 $ 4.23 - 6.19 Expected life (years) 2.55 - 3.60 3.58 - 4.35 Volatility 100 % 100 % Dividend yield 0 % 0 % Risk free rate 3.49 % 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. b. The following table summarizes the number of options granted to directors, officers, employees and consultants under the option plan for nine-month period ended April 30, 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 & ii) 201,100 6.27 4.32 - Balance as of April 30, 2023 1,691,400 6.22 3.46 $ 2,063,508 Exercisable as of April 30, 2023 1,477,073 $ 6.15 3.36 $ 1,905,424 (i) On August 2, 2022, the Company granted 180,100 options 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 . (ii) On February 27, 2023, the Company granted 21,000 options to consultants and employees with an exercise price of $ 7.16 . The options vest quarterly in advance over a two -year period and expire on February 27, 2028 . The fair value of the 21,000 stock options issued was $ 114,762 . 12 The weighted-average grant date per-share fair value of stock options granted during nine-month period ended April 30, 2023, was $ 5.03 . As of April 30, 2023, there are $ 1,103,450 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to 1.75 years. 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 Company’s equity incentive plans for the three and nine months ended April 30, 2023, and 2022: SCHEDULE OF FAIR VALUE MEASUREMENT OF EQUITY-SETTLED SHARE OPTIONS Three months ended April 30, Nine months ended April 30, 2023 2022 2023 2022 Dividend yield 0 % 0 % 0 % 0 % Expected volatility of the share prices 100 % 100 % 100 % 100 % Risk-free interest rate 4.21 % 1.19 %- 1.92 % 4.21 - 4.23 % 0.80 %- 1.92 % 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 April 30, 2023: SCHEDULE OF OUTSTANDING AND EXERCISABLE OPTIONS Exercise price Options outstanding as of April 30, 2023 Weighted average remaining contractual term (years) Options exercisable as of April 30, 2023 Weighted average remaining contractual term (years) Expiry Date $ 7.16 21,000 4.83 2,625 4.83 February 27, 2028 $ 6.28 180,100 4.26 67,538 4.26 August 02, 2027 $ 4.71 31,000 4.06 15,500 4.06 May 20, 2027 $ 7.51 150,000 3.79 93,750 3.79 February 16, 2027 $ 8.47 524,700 3.70 514,100 3.70 January 13, 2027 $ 7.74 12,600 3.50 11,560 3.50 November 01, 2026 $ 5.74 100,000 3.34 100,000 3.34 September 01, 2026 $ 4.24 60,000 2.97 60,000 2.97 April 19, 2026 $ 4.24 612,000 2.91 612,000 2.97 March 29, 2026 1,691,400 1,477,073 13 e. Restricted Share Unit Plan The following table summarizes the number of RSU’s granted to directors under the Omnibus Plan for nine-month period ended April 30, 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, April 30, 2023 19,200 $ 142,848 (i) On August 2, 2022, the Company issued 19,200 RSU’s to the CEO. The RSU’s vested immediately and have an aggregate intrinsic value of $ 123,072 . f. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and nine months ended April 30, 2023 and 2022 is comprised as follows: SCHEDULE OF SHARE-BASED COMPENSATION EXPENSES 2023 2022 2023 2022 Three months ended April 30, Nine months ended April 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Research and development expenses $ 239,435 $ 158,204 $ 814,782 $ 267,657 General and administrative expenses 41,754 705,423 845,192 1,928,980 Total share-based compensation $ 281,189 $ 863,627 $ 1,659,974 $ 2,196,637 NOTE 7: LOSS ON SETTLEMENT On May 24, 2023, the Company reached a settlement agreement with an investor who made certain claims against the Company and was seeking monetary and injunctive relief, and against which the Company had filed counterclaims. Pursuant to the settlement agreement, the Company paid $ 230,000 for the full and final settlement of all of the investor’s claims, in full and final settlement of any and all existing claims that the Company and investor had or may have had against each other. NOTE 8: FINANCIAL INCOME (EXPENSES), NET SCHEDULE OF FINANCIAL INCOME (EXPENSE), NET 2023 2022 2023 2022 Three months ended April 30, Nine months ended April 30, 2023 2022 2023 2022 Interest income $ 253,489 $ 35,987 $ 682,437 $ 54,373 Interest expense - - - ( 979 ) Change in fair value of warrant liability 539,427 ( 5,928,528 ) ( 2,972,285 ) ( 16,384,676 ) Gain on government grant - - - 3,388 Foreign exchange gain (loss) ( 11,323 ) 228 ( 27,388 ) ( 5,779 ) Financial income (expenses), net $ 781,593 $ ( 5,892,313 ) $ ( 2,317,236 ) $ ( 16,333,673 ) NOTE 9: SUBSEQUENT EVENTS a. On May 12, 2023, subsequent to the reporting period, the Company successfully completed a strategic investment by Prevail Partners, LLC (“Prevail Partners”), in accordance with a stock purchase agreement (“Agreement”) entered into between BriaCell and Prevail Partners. Pursuant to the Agreement, BriaCell issued 463,408 common shares (“Shares”) to Prevail Partners at a price per share of $ 8.63 , resulting in aggregate gross proceeds of $ 4,000,000 . 14 b. On May 24, 2023, the Company entered into an Arrangement Agreement (the “Arrangement Agreement”) with BriaPro Therapeutics Corp., a British Columbia corporation and wholly-owned subsidiary of the Company, which was incorporated on May 15, 2023 (“SpinCo”), pursuant to which the Company will spin out certain of its pre-clinical pipeline assets, including Bria-TILsRx™ and protein kinase C delta (PKCδ) inhibitors for multiple indications including cancer (collectively, the “SpinCo Assets”), to SpinCo by way of a court-approved statutory plan of arrangement under Section 288 of the Business Corporations Act (British Columbia) (the “Arrangement”). Pursuant to the Arrangement Agreement, SpinCo will acquire the entire right and interest in and to the SpinCo Assets in consideration for the issuance by SpinCo to the Company of SpinCo common shares (the “ SpinCo Shares ”). Under the terms of the Arrangement, for each common share of the Company held immediately prior to closing, shareholders shall receive one (1) common share of SpinCo, and one (1) new common share of the Company having the same terms and characteristics as the existing Company common shares. SpinCo Shares issued to Company shareholders shall, in the aggregate, represent 33.33 % ownership of SpinCo Shares upon closing of the Arrangement, with the Company initially retaining a 66.67 % ownership interest in SpinCo. Company shareholders who receive SpinCo Shares will ultimately own shares in both the Company and SpinCo. Holders of existing Company warrants shall receive upon exercise of each warrant, for the original exercise price: one (1) Company common share and one (1) SpinCo Share for each Company common share that was issuable upon exercise of the warrant. Following the Arrangement, the Company’s common shares shall remain listed on NASDAQ and the TSX, and the Company’s public warrants shall remain listed on NASDAQ. SpinCo shall be an unlisted reporting issuer in Canada. The board of directors of the Company unanimously (a) determined that the Arrangement is in the best interests of the Company and fair, from a financial point of view, to shareholders, (b) approved the Arrangement and the Arrangement Agreement, and (c) recommended that shareholders vote in favor of the Arrangement at the special shareholder meeting described below. In determining to support the Arrangement, the Company’s board relied in part on the opinion of BDO Canada LLP that the consideration to be received by BriaCell shareholders under the Arrangement is fair, from a financial point of view, to shareholders. The Arrangement requires approval by the Company’s shareholders at a special meeting of shareholders expected to be held in July 2023. Approval of the Arrangement must be obtained by a special resolution passed by a majority of not less than two-thirds of the votes cast by shareholders who vote in respect of the resolution. The Arrangement must also be approved by the TSX as well as the Supreme Court of British Columbia (the “Court”). An interim order of the Court will be applied for to prescribe certain procedural matters relating to the special meeting of shareholders, followed by an application for a final order to approve the Arrangement after the special meeting of shareholders. Subject to the satisfaction of all conditions to closing set out in the Arrangement Agreement, it is anticipated that the Arrangement will be completed by August 2023. Conditions to closing include, inter alia, shareholder approval, required court orders and TSX and NASDAQ approvals. 15