What changed in this filing

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Item 9A. Controls and Procedures

2023-12-15 compared with 2022-12-16 · 680 added, 492 removed, 821 unchanged (59% of the section changed)

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Our management is responsible for establishing and maintaining disclosure controls and procedures to provide reasonable assurance that material information related to our Company, including our consolidated subsidiaries, is made known to senior management, including our Chief Executive Officer and the Chief Financial Officer, by others within those entities on a timely basis so that appropriate decisions can be made regarding public disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities and Exchange Act of 1934, as amended) as of September 30, 2022.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of September 30, 2023, were effective.

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Our management is responsible for designing, establishing and maintaining a system of internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(f)) to provide reasonable assurance that the financial information prepared by us for external purposes is reliable and has been recorded, processed and reported in an accurate and timely manner in accordance with accounting principles generally accepted in the United States.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities.

The Audit Committee fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements.

Our board of directors is responsible for ensuring that management fulfills its responsibilities.

The audit committee of our board of directors fulfills its role of ensuring the integrity of the reported information through its review of the interim and annual financial statements.

Management reviewed the results of their assessment with our audit committee.

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Management has assessed the effectiveness of our internal control over financial reporting and concluded that such internal control over financial reporting was effective as of September 30, 2023.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Attestation Report of Our Registered Public Accounting Firm

This Annual Report does not include an attestation report from our independent registered public accounting firm.

We are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, and are subject to reduced public company reporting requirements.

We are not required to have the effectiveness of our internal control over financial reporting audited by our external auditors.

Limitations on the Effectiveness of Controls

Our management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls is also based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions;

over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Because we are a non-accelerated filer, this Annual Report does not include an attestation report from our independent registered public accounting firm.

We are not required to provide an attestation report on our internal control over financial reporting until such time as we are an accelerated filer or large accelerated filer.

Changes in Internal Control over Financial Reporting

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Our directors and their ages as of the date of this filing are set forth below.

Position(s) Held Director Since

Jennifer Chao (1)(2)(3) 52

Director March 28, 2022

Lorin Johnson, PhD (2) 70

Director June 7, 2019

Each director is elected annually to serve until the next annual meeting of shareholders, or until his or her successor is duly elected.

Position(s) Held

Director Since

Joan Chypyha (1) (2)

Sean MacDonald

Chairman of the Board of Directors June 7, 2019

Patrick Marshall (1) (3)

Pardeep Nijhawan, MD

Director, Chief Executive Officer and Corporate Secretary June 7, 2019

Director, Chief Executive Officer and Corporate Secretary

Frank Oakes (2) (3)

Director April 9, 2010

Paul Pay (2) 68

Director June 7, 2019

April 9, 2010

Charles Olson, DSc (2) (3)

Carlo Sistilli, CPA, CMA (1)

Director June 7, 2019

(1) Member of Audit Committee.

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The biographies of our directors and certain information regarding each director’s experience, attributes, skills and/or qualifications that led to the conclusion that the director should be serving as a director of our Company are as follows:

Chao has over 25 years of experience in the biotech and life sciences industries focused primarily on finance and corporate strategy.

She is Managing Partner of CoreStrategies Management, LLC, a company she founded in 2008.

She currently serves on the Board of Directors of Endo International plc.

ENDP) and is a member of Endo’s Audit Committee and Compliance Committee.

Prior to joining Endo, Ms.

Chao served as a Director (since 2015) and as Board Chair (since October 2019) of BioSpecifics Technologies Corp.

until its acquisition by Endo in December 2020.

She also served as Chair of BioSpecifics’ Compensation Committee and as a member of its Audit Committee, Strategy Committee, Intellectual Property Committee, and Nominating and Corporate Governance Committee.

In addition, since March 2022, she has been a Board Director of Cardiol Therapeutics Inc.

CRDL) and serves as Chair of Cardiol’s Corporate Governance and Compensation Committee.

Additionally, from 2004 to 2008, Ms.

Chao was Managing Director and Senior Lead Biotechnology Securities Analyst at Deutsche Bank.

Prior to that, Ms.

Chao served as Managing Director and Senior Lead Biotechnology Analyst at RBC Capital Markets and Vice President, Senior Biotechnology Analyst at Leerink Swann & Co.

Chao was a research fellow at Massachusetts General Hospital/Harvard Medical School, as a recipient of the BioMedical Research Career Award, and received her B.A.

in Politics and Greek Classics from New York University.

Chao’s qualifications to serve on the board of directors include her extensive experience in the life science industry, corporate strategy and U.S.

capital markets.

Lorin Johnson, PhD is a seasoned pharmaceutical entrepreneur and innovator with more than 30 years of experience in building companies.

He has been a member of our board of directors since June 2019, having previously served as a director of the company’s principal operating subsidiary, Edesa Biotech Research, Inc., from its founding in January 2015 to January 2016.

Johnson is currently the Chief Scientist of Glycyx Pharma Ventures Ltd., a biopharma investment and development company he founded in March 2016.

Prior to Glycyx, Dr.

Johnson cofounded Salix Pharmaceuticals, Inc., a specialty pharmaceutical company, and held senior leadership positions prior to its acquisition by Valeant Pharmaceuticals International, Inc.

in April 2015.

Earlier in his career, Dr.

Johnson served as Director of Scientific Operations and Chief Scientist at Scios, Inc.

(formerly California Biotechnology, Inc).

In addition to Edesa, he currently serves on the board of 9Meters Biopharma, Inc.

NMTR), and is a member of 9Meters’ Audit Committee, Compensation Committee (chair) and Nominating and Governance Committee.

He also serves on the boards of Glycyx MOR, Inc., Intact Therapeutics, Inc., Kinisi Therapeutics, Ltd.

and NeVAP, Inc.

Johnson has also held academic positions at Stanford University School of Medicine where he served as an Assistant Professor of Pathology and at the University of California, San Francisco.

He is the coauthor of 76 journal articles and book chapters and is the coinventor on 23 issued patents.

Johnson holds a PhD from the University of Southern California and was a Postdoctoral Fellow at the University of California, San Francisco.

Johnson’s qualifications to serve on the board of directors include his knowledge of our business and his significant experience in the pharmaceutical industry.

Sean MacDonald has chaired our Board since June 2019, having previously served as a director of the company’s principal operating subsidiary, Edesa Biotech Research Inc., since September 2017.

In his career, he has led and closed multiple licensing transactions, financings, acquisitions and divestments, and corporate strategy for several pharmaceutical and biotechnology companies.

MacDonald is currently an advisor to venture capital groups and biotechnology companies, including Finchley Healthcare Ventures and Dark Canyon Laboratories, a position he has held since April 2022.

Joan Chypyha has more than 30 years of experience in the pharmaceutical industry including executive and operational positions in business development, sales and marketing, and general management.

She is the President of Alto Pharmaceuticals, Ltd., a specialty pharmaceutical company focused on dermatology, women's health and elder care, which she founded in 2009.

Alto is also a major shareholder in Pepper and Pink Inc., a manufacturer of brand and private label personal care products for major retailers in Canada.

From July 2015 to June 2017, she was the President of Cipher Pharmaceuticals, Inc., having previously served as Vice President of Marketing and Sales.

Chypyha’s professional career also includes executive positions at Rhei Pharmaceuticals Ltd.

and Barrier Therapeutics Canada, Inc., following sixteen years at Hoffman-La Roche, where she held progressively senior positions.

Since February 2018, she has served as a director and a member of the audit committee of Ovation Science Inc., a research and development company that develops topical and transdermal consumer products.

She is a past advisory board member of Up Cannabis Inc (from August 2017 to January 2019).

Chypyha currently served as the President of the Canadian Dermatology Industry Association, from 2015 to 2023, and is a Co-Chair of DiTiDE (Dermatology Industry Taskforce on Inclusiveness, Diversity & Equity), a group she co-founded in 2020.

She has also previously served on boards of other non-profits and business organizations, including the Canadian Healthcare Licensing Association.

Chypyha earned her Bachelor’s Degree from the University of Toronto and a Master’s Degree in Business Administration from Queen's University.

Chypyha’s qualifications to serve on our board of directors include her extensive operational experience in founding, managing and building companies, previous board experience and her extensive experience in the dermatology industry.

Sean MacDonald has been a member of our Board since June 2019, and served as Chairman of the Board from June 2019 until May 2023.

He previously served on the board of our principal operating subsidiary, Edesa Biotech Research, from September 2017 to June 2019.

In his career, he has led and closed multiple licensing transactions, financings, acquisitions and divestments, and led corporate strategy for several pharmaceutical and biotechnology companies.

MacDonald is currently an advisor to investors and biotechnology companies, including Domain Therapeutics Inc.

and Raya Therapeutic Inc., a role he has held since April 2022.

From August 2021 to April 2022, he was the Chief Business Officer of iOnctura SA, a Swiss clinical-stage oncology company.

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He received his BSc in Molecular Biology and MBA from the University of Ottawa.

MacDonald’s qualifications to serve on the board of directors include his extensive operational experience and background in the pharmaceutical/biotechnology industry.

Pardeep Nijhawan, MD, FRCPC, AGAF has served as our Chief Executive Officer, Corporate Secretary and a member of our board of directors since June 2019, having previously founded and led the company’s principal operating subsidiary, Edesa Biotech Research, Inc., since January 2015.

MacDonald's qualifications to serve on our board of directors include his extensive operational experience and background in the pharmaceutical/biotechnology industry.

Patrick Marshall has more than 20 years of experience raising capital, building and launching new products and services, developing strategy and completing mergers and acquisitions to support growth in private and public companies.

Since 2010 he has been a managing director at VRG Capital, having previously held various executive roles in several of the firm’s portfolio companies since 2000, including Wheels Group Inc., a North American third-party logistics company acquired by Radiant Logistics, Inc.

in 2015, and Thomas International Ltd., a global provider of psychometric and aptitude tests acquired by Palamon Capital Partners in 2018.

Marshall currently serves as President and board member of Adrem Brands Inc., a privately held Canadian company focused on the over-the-counter and nutritional supplements markets, a position he has held since January 2016.

Prior to 2000, he held fundraising, business development and strategy roles for various international enterprises and non-governmental organizations.

Marshall is a cofounder and board member of Together Project (since 2016) and a trustee of Lakefield College School (since 2012).

He received his Bachelor of Arts in Sociology from Queen's University and Master of Business Administration from the University of Exeter.

Marshall’s qualifications to serve on our board of directors include his experience managing and building companies, strategic transactions, raising capital and prior board experience.

Pardeep Nijhawan, MD, FRCPC, AGAF has served as our Chief Executive Officer, Corporate Secretary and a member of our board of directors since June 2019, having previously founded and led our principal operating subsidiary, Edesa Biotech Research, since January 2015.

Nijhawan is a seasoned pharmaceutical entrepreneur with more than 20 years of experience in cross-functional leadership roles in finance, marketing, corporate strategy and business development.

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Nijhawan received his MD from the University of Ottawa and completed his internship at Yale University, and his internal medicine residency and fellowship at the Mayo Clinic.

Nijhawan’s qualifications to serve on the board of directors include his extensive executive leadership and experience in the life sciences industry and his knowledge of our business as its chief executive.

Nijhawan’s qualifications to serve on our board of directors include his extensive executive leadership and experience in the life sciences industry and his knowledge of our business as its chief executive.

Frank Oakes has more than 40 years of executive leadership experience.

He has been a director of the company since April 2010 and served as the Chairman of the Board until June 2019.

From 1999 to 2019, he also served as the President and Chief Executive Officer of the company’s legacy operating subsidiary, which he founded.

He has been a member of our board of directors since April 2010 and served as the Chairman of the Board until June 2019.

From 1999 to 2019, he also served as the President and Chief Executive Officer of our legacy operating subsidiary, which he founded.

Prior to founding Stellar Biotechnologies, Inc., he was the Chief Executive Officer of The Abalone Farm, Inc., where he led the company through the research and development, capitalization, and commercialization phases of development to become the largest abalone producer in the United States at the time.

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He received his BS degree from California State Polytechnic University, San Luis Obispo and is a graduate of the Los Angeles Regional Technology Alliance University’s management program.

Oakes qualifications to serve on the board of directors include his extensive operational experience building companies and management teams and leading a U.S.

Oakes qualifications to serve on our board of directors include his extensive operational experience building companies and management teams and leading a U.S.

and Canadian publicly listed life science company.

Paul Pay is an executive with over 40 years of experience in the pharmaceutical/biotechnology industry.

From November 2002 to May 2021, he led all business development activity at Norgine.

He is currently Senior Advisor, Corporate & Business Development at Norgine reporting to the Chairman.

Prior to joining Norgine, Mr.

Pay held senior management positions at large, specialty and early-stage pharmaceutical companies, and cofounded a university spin-out company.

His commercial roles have included sales, marketing, market research, licensing, business development, public relations, intellectual property and product development.

He is a past Director of Exzell Pharma, a specialty pharmaceutical company;

of Arc Medical Design, a medical device development company and of Norgine Ltd., an affiliate of Norgine and of Merus Labs International, a Norgine wholly owned subsidiary.

Pay received a BSC (Hons) from the University of Leeds.

Pay’s qualifications to serve on the board of directors include his extensive experience in the pharmaceutical/biotechnology industry and his knowledge of Edesa’s business.

Carlo Sistilli, CPA, CMA Mr.

Sistilli has more than 35 years of financial experience and has held a variety of executive positions in accounting and finance during his career.

He has been a member of our board of directors since June 2019, having previously served as a board observer of the company’s principal operating subsidiary, Edesa Biotech Research, Inc., since September 2017.

Charles Olson, DSc is a CMC consultant with more than 40 years of biotech experience.

From September 2021 to April 2023 he was Chief Operating Officer at Dendreon Corporation, where he was responsible for the commercial manufacturing of Provenge, a commercial cell-based product for prostate cancer, overseeing multiple sites and several hundred employees.

From September 2017 to August 2021, he was a senior Vice President of Operations at Applied Molecular Transport.

From April 2010 to August 2017, Dr.

Olson held various leadership roles at Anthera Pharmaceuticals Inc., including Chief Technology Officer.

He has also been a Principal Biotechnology Consultant for Compass Biotechnology LLC since 2006.

Olson previously held senior and executive management positions at NGM Biopharmaceuticals Inc., Coherus BioSciences Inc., Nexbio Inc., Cell Genesys, Inc., Biomarin Pharmaceuticals, Inc, and Onyx Pharmaceuticals, Inc.

From December 2016 to June 2019, Dr.

Olson served on the board of directors of Edesa Biotech, Inc.

(then operating as Stellar Biotechnologies, Inc.), having previously served on Stellar’s scientific advisory board.

After graduate school, Dr.

Olson was a Research Scientist at Kaiser Hospitals, followed by Scientist and Senior Scientist positions at Genentech and Bayer, respectively.

He holds a B.A.

in biology and chemistry from Westmont College, an M.A.

in chemistry from the University of California at Santa Barbara and a D.Sc.

in biochemistry.

Olson qualifications to serve on our board of directors include his extensive scientific, manufacturing operations, process development and senior management and board experience in the biopharmaceutical industry.

Carlo Sistilli, CPA, CMA has more than 35 years of financial experience and has held a variety of executive positions in accounting and finance during his career.

He has been a member of our board of directors since June 2019, having previously served as a board observer of our principal operating subsidiary, Edesa Biotech Research, since September 2017.

Sistilli has served as the Chief Financial Officer of Arista Homes since March 2003 to present.

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Sistilli holds a Bachelor of Arts from York University, with a major in economics, Certified Management Accountant Designation and a Chartered Professional Accountant Designation.

Sistilli’s qualifications to serve on the board of directors include his knowledge of Edesa’s business and his background in accounting and finance.

Sistilli’s qualifications to serve on our board of directors include his knowledge of Edesa’s business and his background in accounting and finance.

Executive Officers

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Nijhawan, who is a director and an executive officer, may be found in the above section entitled “Directors.” The executive officers serve at the pleasure of our Board of Directors.

Position(s) Held Date of Appointment

Position(s) Held

Date of Appointment

Pardeep Nijhawan, MD

Director, Chief Executive Officer and Corporate Secretary June 7, 2019

Kathi Niffenegger, CPA 65

Chief Financial Officer November 1, 2013

Director, Chief Executive Officer and Corporate Secretary

Stephen Lemieux, CPA

Chief Financial Officer

July 15, 2023

Michael Brooks, PhD

President June 7, 2019

Kathi Niffenegger, CPA has served as our Chief Financial Officer since 2013.

She also previously served as the company’s Corporate Secretary from 2013 to June 2019.

Niffenegger has more than 30 years of experience in accounting and finance in a range of industries, and has led audits of manufacturing, pharmaceutical and governmental grant clients.

She has also developed specialized expertise in cost accounting systems and internal controls.

Prior to joining the company, she held positions of increasing responsibility in the audit division of Glenn Burdette CPAs and served most recently as technical partner.

Earlier in her career, she was the Chief Financial Officer of Martin Aviation.

Niffenegger holds a B.S.

degree in Business Administration, Accounting from California State University, Long Beach.

She is a member of the American Institute of Certified Public Accountants (AICPA) and holds the Chartered Global Management Accountant (CGMA) designation.

Michael Brooks, PhD was appointed President of Edesa in June 2019, having served as Vice President of Corporate Development and Strategy for the company’s principal operating subsidiary, Edesa Biotech Research, Inc., since January 2015.

Stephen Lemieux, CPA was appointed Chief Financial Officer in July 2023.

He is a veteran of the healthcare and biopharmaceutical sectors, with more than 20 years of experience in financial planning and analysis, licensing and mergers & acquisitions.

Prior to joining the Company, Mr.

Lemieux held senior financial leadership positions at healthcare and biopharmaceutical biotechnology companies, where he guided financial strategies, optimized capital structures and supported significant corporate transactions and sales growth.

From July 2021 until June 2023, Mr.

Lemieux served as CFO of Titan Medical Inc., and from April 2019 to July 2021 as CFO and Secretary of NeuPath Health.

Previously, he was the CFO and Secretary of Cipher Pharmaceuticals (TSX:

CPH) from September 2016 to March 2019 and during his tenure served as Interim-CEO from November 2016 to April 2017.

Prior to Cipher, he was CFO at Nuvo Pharmaceuticals and Crescita Therapeutics.

Lemieux is a Chartered Professional Accountant and holds a Master of Management & Professional Accounting degree from the University of Toronto.

Michael Brooks, PhD was appointed President of Edesa in June 2019, having served as Vice President of Corporate Development and Strategy for our principal operating subsidiary, Edesa Biotech Research, since January 2015.

Prior to joining Edesa, Dr.

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Brooks received his MBA degree from the Rotman School of Management where he was a Canadian Institute for Health Research (CIHR) Science-to- Business Scholar.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires that our directors, executive officers, and beneficial owners of more than ten percent of our common shares file reports with the SEC on their initial beneficial ownership of our common shares and any subsequent changes.

To our knowledge, based solely on a review of copies of such reports filed electronically with the Securities and Exchange Commission during the Company’s year ended September 30, 2022, during such period, each of our directors, executive officers, and beneficial owners of more than ten percent of our common shares filed on a timely basis all reports required by Section 16(a) of the Exchange Act except for:

one report on Form 4 reporting one share option grant that was inadvertently filed late by each of Dr.

MacDonald, Dr.

Nijhawan, Mr.

Sistilli, Dr.

Brooks and Ms.

and one report on Form 4 reporting one transaction that was inadvertently filed late by Dr.

Code of Ethics

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A copy of our Code of Ethics and Business Conduct is available on the Investor Relations section of our website at edesabiotech.com/investors/governance, in the Corporate Governance section, under the Governance Documents section.

We intend to satisfy the SEC’s disclosure requirements regarding amendments to, or waivers of, our Code of Ethics and Business Conduct by posting such information on our website.

We intend to satisfy the SEC’s disclosure requirements regarding amendments to, or waivers of, our Code of Ethics and Business Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting such information on our website identified above.

Copies of our Code of Ethics and Business Conduct may be obtained, free of charge, by writing to our Corporate Secretary, Edesa Biotech, Inc., 100 Spy Court, Markham, ON Canada L3R 5H6.

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Our Board of Directors has appointed an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.

The Board of Directors has determined that each director who serves on these committees is “independent,” as that term is defined by the listing rules of Nasdaq and rules of the Securities and Exchange Commission.

The Board of Directors has determined that each director who serves on these committees is “independent,” as that term is defined by the listing rules of Nasdaq and rules of the SEC.

The Board of Directors has adopted written charters for its Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.

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Audit Committee

Our Audit Committee is composed of Jennifer Chao, Sean MacDonald and Carlo Sistilli (chair).

Our Audit Committee is composed of Joan Chypyha, Patrick Marshall and Carlo Sistilli (chair).

The purpose of the Audit Committee is to oversee our accounting and financial reporting processes and the audits of our financial statements.

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Compensation Committee

Our Compensation Committee is composed of Jennifer Chao, Lorin Johnson and Paul Pay (chair).

Our Compensation Committee is composed of Joan Chypyha (chair), Frank Oakes and Charles Olson.

The purpose of the Compensation Committee is to assist the Board’s oversight relating to compensation of our Chief Executive Officer and our other Named Executive Officers.

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Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is composed of Jennifer Chao (chair), Frank Oakes and Sean MacDonald.

Our Nominating and Corporate Governance Committee is composed of Patrick Marshall, Frank Oakes (chair) and Charles Olson.

The purpose of the Nominating and Corporate Governance Committee is to identify individuals qualified to become Board members;

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Our named executive officers for the year ended September 30, 2023 were Pardeep Nijhawan, MD, Director, Chief Executive Officer and Corporate Secretary;

Kathi Niffenegger, CPA, Chief Financial Officer;

and Michael Brooks, PhD, President.

Stephen Lemieux, CPA, Chief Financial Officer;

Michael Brooks, PhD, President and Kathi Niffenegger, CPA, Former Chief Financial Officer.

Summary Compensation Table

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Name and Principal Position

Stock Awards ($) (1)

Options Awards ($) (1)

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Pardeep Nijhawan, MD

$ 63,118 (2 )

Director, Chief Executive Officer and Corporate Secretary

Kathi Niffenegger, CPA

Stephen Lemieux, CPA

Chief Financial Officer

Michael Brooks, PhD

The amounts shown in this column represent the aggregate grant date fair value of the share option awards computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification 718, not the actual amounts paid to or realized by the named executive officers during the covered fiscal year.

Kathi Niffenegger, CPA (8)

Former Chief Financial Officer

The amounts shown in these columns represent the aggregate grant date fair value of the restricted share units and share option awards computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification 718, not the actual amounts paid to or realized by the named executive officers during the covered fiscal year.

The assumptions used in determining grant date fair value of these awards are set forth in Note 8 to our audited consolidated financial statements for the year ended September 30, 2023 included in this Annual Report.

Represents (i) $32,415 in car allowance, (ii) $2,186 in health insurance and (iii) $28,517 in vacation payout in 2022 and (i) $30,453 in car allowance, (ii) $2,054 in health insurance and (iii) $31,266 in vacation payout in 2021.

Includes 14,186 restricted share units with an aggregate grant date fair value of $79,440 issued as partial payment of the bonus with the balance paid in cash.

Represents (i) $32,415 in car allowance and (ii) $2,186 in health insurance in 2023.

Represents (i) $32,415 in car allowance, (ii) $2,186 in health insurance and (iii) $28,517 in vacation payout in 2022.

All compensation to Dr.

Nijhawan was paid in Canadian dollars and was converted to US dollars using the average foreign exchange rate for the year from oanada.com.

Represents (i) $19,751 in health insurance, (ii) $9,150 in 401(k) company contributions and (iii) $21,645 in vacation pay out in 2022 and (i) $18,758 in health insurance and (ii) $12,150 in 401(k) company contributions in 2021.

Represents (i) $24,000 in car allowance (ii) $2,788 in health insurance and (iii) $15,120 in vacation payout in 2022 and (i) $22,548 in car allowance (ii) $2,597 in health insurance and (iii) $17,194 in vacation payout in 2021.

Nijhawan was paid in Canadian dollars and was converted from US dollars using the average foreign exchange rate for each bi-weekly pay period of the year from oanada.com.

Represents the aggregate grant date fair value of 2,486 restricted share units issued as partial payment on consulting invoices for services prior to Mr.

Lemieux’s appointment as Chief Financial Officer.

Represents (i) $5,000 in car allowance and (ii) $8,126 in consulting fees for services prior to Mr.

Lemieux’s appointment as Chief Financial Officer in 2023.

All compensation to Mr.

Lemieux was paid in Canadian dollars and was converted from US dollars using the average foreign exchange rate for the year from oanda.com.

Includes 13,315 restricted share units with an aggregate grant date fair value of $74,560 as partial payment of the bonus with the balance paid in cash.

Represents (i) $24,000 in car allowance and (ii) $2,060 in health insurance in 2023.

Represents (i) $24,000 in car allowance (ii) $2,788 in health insurance and (iii) $15,120 in vacation payout in 2022.

All compensation to Dr.

Brooks was paid in Canadian dollars and was converted to US dollars using the average foreign exchange rate for the year from oanda.com.

Brooks was paid in Canadian dollars and was converted from US dollars using the average foreign exchange rate for each bi-weekly pay period of the year from oanda.com.

Niffenegger served as Chief Financial Officer through July 15, 2023.

Includes 10,943 restricted share units with an aggregate grant date fair value of $61,280 as partial payment of the bonus with the balance paid in cash.

Represents (i) $21,273 in health insurance, (ii) $8,167 in 401(k) Company contributions and (iii) $18,974 in non-executive salary following Ms.

Niffenegger’s tenure as Chief Financial Officer in 2023.

Represents (i) $19,751 in health insurance, (ii) $9,150 in 401(k) Company contributions and (iii) $21,645 in vacation pay out in 2022.

Narrative Disclosure to Summary Compensation Table Employment Agreements

We have entered into employment agreements with each of our named executive officers.

The employment agreements provide for the annual base salary for each named executive officer, which amounts are subject to annual review by and at the sole discretion of our board of directors or its designee.

Each named executive officer is also eligible to earn an annual cash performance bonus, which is based on our attainment of financial or other operating criteria established by our board of directors or its designee, as determined by our board of directors or its designee.

Employment Agreement with Pardeep Nijhawan effective as of June 7, 2019 and amended March 19, 2021 and April 12, 2022

On June 14, 2019 but effective as of June 7, 2019, we entered into an employment agreement with Pardeep Nijhawan.

Pursuant to the employment agreement, Dr.

Nijhawan will serve as our Chief Executive Officer for an indefinite term until Dr.

Nijhawan’s employment is terminated in accordance with the agreement.

Amended and Restated Employment Agreement with Pardeep Nijhawan effective as of August 4, 2023, as amended December 7, 2023

On August 4, 2023, the Company entered into an amended and restated employment agreement with Pardeep Nijhawan, the Company’s Chief Executive Officer that superseded prior employment agreements (as amended, the Nijhawan Employment Agreement).

Pursuant to the Nijhawan Employment Agreement, Dr.

Nijhawan serves as the Company’s Chief Executive Officer as well as Chief Executive Officer of each of the Company’s subsidiaries, Edesa Biotech Research and Edesa Biotech USA, Inc.

and a director of Edesa Biotech Research.

Nijhawan’s employment will continue for an indefinite term until terminated in accordance with the Nijhawan Employment Agreement.

Pursuant to the Nijhawan Employment Agreement, Dr.

Nijhawan is entitled to a base salary of $357,700 per year effective May 13, 2023 and is eligible to receive a target annual bonus of 40% of his base salary, subject to the achievement of corporate and personal targets as determined by the Company and the Board of Directors.

Nijhawan’s base salary is subject to annual review by the Board of Directors.

Nijhawan is also entitled to an automobile allowance of $2,701.50 per month and is eligible to participate in the Company’s group insured benefits program, as may be in effect from time-to-time for employees generally, and executive employees specifically.

Nijhawan is eligible for equity-based awards pursuant to the Company’s Equity Incentive Compensation Plan, as determined by the Board of Directors or Compensation Committee, commensurate with Dr.

Nijhawan’s position and any business milestones that may be established by the Company.

Nijhawan’s employment is terminated for “Cause” (as such term is defined in the Nijhawan Employment Agreement), subject to applicable law, Dr.

Nijhawan is entitled to his base salary and vacation pay earned through the date of termination, and all of Dr.

Nijhawan’s non-vested equity-based awards will be automatically extinguished.

All vested equity-based awards shall be subject to the terms of the Company’s Equity Incentive Compensation Plan.

Nijhawan is terminated without “Cause”, subject to Dr.

Nijhawan signing a general release of claims, Dr.

Nijhawan is entitled to:

(i) a lump sum payment equal to Dr.

Nijhawan’s then current base salary for 12 months plus one additional month for every completed year of service since August 1, 2017 (the Nijhawan Severance Period) which shall not exceed 24 months, inclusive of, and not in addition to, his notice and severance entitlements, if any, pursuant to applicable law, (ii) a lump sum payment of the annual bonus to which Dr.

Nijhawan is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Nijhawan’s annual bonus entitlement, prorated over Dr.

Nijhawan’s length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Nijhawan Employment Agreement, (iv) payment of Dr.

Nijhawan’s annual bonus entitlement during the full Nijhawan Severance Period, calculated in accordance with the terms of the Nijhawan Employment Agreement, (v) continuation of Dr.

Nijhawan’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Nijhawan Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr.

Nijhawan shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

In the event that Dr.

Nijhawan is terminated or constructively terminated, which includes a material change in Dr.

Nijhawan’s title, responsibilities, authority or status or a material reduction of his compensation, without “Cause” upon or within a 12-month period following a “Change of Control” (as such term is defined in the Nijhawan Employment Agreement), Dr.

Nijhawan is entitled to (i) a change of control payment equal to 24 months of the value of Dr.

Nijhawan’s then current base salary as of the date of termination, (ii) a lump sum payment of the annual bonus to which Dr.

Nijhawan is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Nijhawan’s annual bonus entitlement, prorated over Dr.

Nijhawan’s length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Nijhawan Employment Agreement, (iv) payment of Dr.

Nijhawan’s annual bonus entitlement during the full Nijhawan Severance Period, calculated in accordance with the terms of the Nijhawan Employment Agreement, (v) continuation of Dr.

Nijhawan shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

Nijhawan may resign from his employment at any time by providing the Company with a minimum of 60 days advance notice, in writing.

Nijhawan’s notice may be waived by the Company, subject only to providing Dr.

Nijhawan with payment of his base salary and continuation of benefits until the end of the notice period.

Nijhawan resigns from his employment, subject to applicable law, (i) all non-vested equity based awards held by Dr.

Nijhawan shall be automatically extinguished and (ii) Dr.

Nijhawan shall not be entitled to any bonus or pro rata bonus payment not already awarded on or before the date of termination.

All vested equity-based awards shall be subject to the terms of the applicable Equity Incentive Compensation Plan.

During the term of Dr.

Nijhawan’s employment and for 12 months following the cessation of Dr.

Nijhawan’s employment, Dr.

Nijhawan is prohibited from competing with the business of the Company in North America.

In addition, for 24 months following the cessation of Dr.

Nijhawan’s employment, Dr.

Nijhawan is prohibited from soliciting customers or prospective customers for any purpose competitive with the business of the Company, encouraging any customer to cease doing business with the Company and soliciting the employment or engagement of certain of Company’s employees.

Prior Employment Agreement with Pardeep Nijhawan effective as of June 7, 2019 and amended March 19, 2021 and April 12, 2022

Prior to the Nijhawan Employment Agreement, on June 14, 2019 but effective as of June 7, 2019, we entered into an employment agreement with Pardeep Nijhawan (as amended, the Nijhawan Prior Employment Agreement).

Pursuant to the Nijhawan Prior Employment Agreement, Dr.

Nijhawan agreed to serve as our Chief Executive Officer for an indefinite term until Dr.

Nijhawan’s employment was terminated in accordance with the agreement.

As compensation for his services to us, Dr.

Nijhawan received a base salary of $300,000 per year and is eligible to receive a target annual bonus of 40% of his base salary, subject to achieving corporate and personal targets to be determined by us.

The base salary increased to $320,000 per year effective January 1, 2021 and $331,200 effective March 24, 2022.

Nijhawan also receives an automobile allowance of $2,700 per month and is eligible to participate in our group insured benefits program, as may be in effect from time-to-time for our employees generally, and executive employees specifically.

Nijhawan is eligible for future share and/or option grants, as determined by our Compensation Committee, commensurate with Dr.

Nijhawan’s position and any business milestones which may be established by the Compensation Committee and subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Nijhawan’s employment with us is terminated for “Cause” (as such term is defined in the employment agreement), subject to applicable law, our only obligation shall be to provide Dr.

Nijhawan received a base salary of $320,000 per year effective for the period January 1, 2021 to March 23, 2022 and a base salary of $331,200 per year effective for the period March 24, 2022 to May 12, 2023 and was eligible to receive a target annual bonus of 40% of his base salary, subject to achieving corporate and personal targets to be determined by us.

Nijhawan also received an automobile allowance of approximately $2,700 per month and was eligible to participate in our group insured benefits program, as may be in effect from time-to-time for our employees generally, and executive employees specifically.

Nijhawan was eligible for future share and/or option grants, as may have been determined by our Compensation Committee, commensurate with Dr.

Nijhawan’s position and any business milestones which may have been established by the Compensation Committee and subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Under the Nijhawan Prior Employment Agreement, if Dr.

Nijhawan’s employment with us was terminated for “Cause” (as such term is defined in the Nijhawan Prior Employment Agreement), subject to applicable law, our only obligation would have been to provide Dr.

Nijhawan with his base salary and vacation pay earned through the date of termination and all of Dr.

Nijhawan’s vested or non-vested stock options which have not been exercised by Dr.

Nijhawan as of the date of termination will be automatically extinguished.

Nijhawan is terminated by us without “Cause”, our only obligation shall be to provide Dr.

Nijhawan’s vested or non-vested share options which had not been exercised by Dr.

Nijhawan as of the date of termination would have been automatically extinguished.

Nijhawan was terminated by us without “Cause”, our obligation would have been to provide Dr.

Nijhawan with (i) a lump sum payment equal to Dr.

Nijhawan’s then current base salary for twenty-four months (the “Severance Period”), (ii) a lump sum payment of the annual bonus to which Dr.

Nijhawan is entitled for the fiscal year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Nijhawan’s then current base salary for twenty-four months (the Nijhawan Prior Severance Period), (ii) a lump sum payment of the annual bonus to which Dr.

Nijhawan would have been entitled for the fiscal year immediately preceding the date of termination, if such bonus had not already been paid, (iii) a lump sum payment equal to Dr.

Nijhawan’s annual bonus entitlement, prorated over Dr.

Nijhawan’s length of service in the fiscal year in which his employment is terminated, calculated in accordance with the terms of the employment agreement, (iv) payment of Dr.

Nijhawan’s annual bonus entitlement during the full Severance Period, calculated in accordance with the terms of the employment agreement, (v) continuation of Dr.

Nijhawan’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the employment agreement and (vi) subject to applicable law, all stock options granted to Dr.

Nijhawan shall be exercisable in accordance with the terms of the applicable stock option plan.

Nijhawan may resign from his employment at any time by providing us with a minimum of sixty days advance notice, in writing.

Nijhawan’s notice may be waived by us, subject only to providing Dr.

Nijhawan’s length of service in the fiscal year in which his employment was terminated, calculated in accordance with the terms of the Nijhawan Prior Employment Agreement, (iv) payment of Dr.

Nijhawan’s annual bonus entitlement during the full Nijhawan Prior Severance Period, calculated in accordance with the terms of the Nijhawan Prior Employment Agreement, (v) continuation of Dr.

Nijhawan’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Nijhawan Prior Employment Agreement and (vi) subject to applicable law, all share options granted to Dr.

Nijhawan would have been exercisable in accordance with the terms of the applicable share option plan.

Nijhawan could have resigned from his employment at any time by providing us with a minimum of sixty days advance notice, in writing.

Nijhawan’s notice could have been waived by us, subject only to providing Dr.

Nijhawan with payment of his base salary and continuation of benefits until the end of the notice period.

Nijhawan resigns from his employment, subject to applicable law, (i) all non-vested stock options and all vested stock options held by Dr.

Nijhawan which have not been exercised by Dr.

Nijhawan as of the date of termination shall be automatically extinguished and (ii) Dr.

Nijhawan shall not be entitled to any bonus or pro rata bonus payment not already paid on or before the date of termination.

Nijhawan had resigned from his employment, subject to applicable law, (i) all non-vested share options and all vested share options held by Dr.

Nijhawan which had not been exercised by Dr.

Nijhawan as of the date of termination would have been automatically extinguished and (ii) Dr.

Nijhawan would not have been entitled to any bonus or pro rata bonus payment not already paid on or before the date of termination.

During the term of Dr.

1 unchanged sentence

Nijhawan’s employment with us, Dr.

Nijhawan is prohibited from competing with our business in North America.

Nijhawan was prohibited from competing with our business in North America.

In addition, for twenty-four months following the cessation of Dr.

Nijhawan’s employment with us, Dr.

Nijhawan is prohibited from soliciting customers or prospective customers for any purpose competitive with our business, encouraging any customer to cease doing business with us and soliciting the employment or engagement of certain of our employees.

Employment Agreement with Michael Brooks effective as of June 7, 2019 and amended March 19, 2021 and April 12, 2022

On June 14, 2019 but effective as of June 7, 2019, we entered into an employment agreement with Michael Brooks, PhD.

Pursuant to the employment agreement, Dr.

Brooks will serve as our President for an indefinite term until Dr.

Brooks’ employment is terminated in accordance with the agreement.

Nijhawan was prohibited from soliciting customers or prospective customers for any purpose competitive with our business, encouraging any customer to cease doing business with us and soliciting the employment or engagement of certain of our employees.

Employment Agreement with Stephen Lemieux effective as of July 15, 2023

On June 26, 2023 but effective as of July 15, 2023, we entered into an employment agreement with Stephen Lemieux (the Lemieux Employment Agreement).

Pursuant to the Lemieux Employment Agreement, Mr.

Lemieux will serve as our Chief Financial Officer for an indefinite term until Mr.

Lemieux’s employment is terminated in accordance with the agreement.

As compensation for his services to us, Mr.

Lemieux will receive a base salary of $330,000 per year and is eligible to receive a target annual bonus of 40% of his base salary, subject to achieving corporate and personal targets to be determined by us.

Lemieux also receives an automobile allowance of $2,000 per month and is eligible to participate in our group insured benefits program, as may be in effect from time-to-time for our employees generally, and executive employees specifically.

Lemieux is eligible for future equity-based awards, as determined by our Compensation Committee, commensurate with Mr.

Lemieux’s position and any business milestones which may be established by the Compensation Committee and subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Lemieux’s employment with the Company is terminated for “Cause” (as such term is defined in the Lemieux Employment Agreement), subject to applicable law, the Company’s only obligation shall be to provide Mr.

Lemieux with his base salary and vacation pay earned through the date of termination and all of Mr.

Lemieux’s non-vested equity-based awards as of the date of termination will be automatically extinguished.

All vested equity-based awards will be subject to the terms of the applicable equity incentive compensation plan.

Lemieux is terminated by the Company without “Cause”, subject to Mr.

Lemieux executing a general release of claims in a form reasonably required by the Company, the Company’s obligation shall be to provide Mr.

Lemieux with (i) a lump sum payment equal to Mr.

Lemieux’s then current base salary for twelve months plus one additional month for every completed year of service since July 15, 2023, not to exceed an aggregate of twenty- four months (the Lemieux Severance Period), (ii) a lump sum payment of the annual bonus to which Mr.

Lemieux is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Mr.

Lemieux’s annual bonus entitlement, prorated over Mr.

Lemieux’s length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Lemieux Employment Agreement, (iv) payment of Mr.

Lemieux’s annual bonus entitlement during the full Lemieux Severance Period, calculated in accordance with the terms of the Lemieux Employment Agreement, (v) continuation of Mr.

Lemieux’s benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Lemieux Employment Agreement and (vi) subject to applicable law, any and all vested equity-based awards shall be exercisable in accordance with the terms of the applicable equity incentive compensation plan.

Lemieux’s employment is terminated or “constructively terminated” (as such term is defined in the Lemieux Employment Agreement) by the Company without “Cause” upon or within a twelve month period following a Change of Control (as such term is defined in the Lemieux Employment Agreement), Mr.

Lemieux shall be entitled to the payments and benefits provided as described in clauses (ii) to (v) above, plus a change of control payment equal to twenty-four months of his then current base salary.

Lemieux may resign from his employment at any time by providing the Company with a minimum of sixty days advance notice, in writing.

Lemieux’s notice may be waived by the Company, subject only to providing Mr.

Lemieux with payment of his base salary and continuation of benefits until the end of the notice period.

Lemieux resigns from his employment, subject to applicable law, (i) all non-vested equity-based awards held by Mr.

Lemieux as of the date of termination shall be automatically extinguished and all vested equity-based awards will be subject to the terms of the applicable equity incentive compensation plan and (ii) Mr.

Lemieux shall not be entitled to any bonus or pro rata bonus payment not already awarded on or before the date of termination.

During the term of Mr.

Lemieux’s employment with us and for twelve months following the cessation of Mr.

Lemieux’s employment with us, Mr.

Lemieux is prohibited from competing with our business in North America.

In addition, for twenty-four months following the cessation of Mr.

Lemieux’s employment with us, Mr.

Lemieux is prohibited from soliciting customers or prospective customers for any purpose competitive with our business, encouraging any customer to cease doing business with us and soliciting the employment or engagement of certain of our employees.

Prior Consulting Agreement with Stephen Lemieux effective December 22, 2022, terminated July 15, 2023

Prior to the Lemieux Employment Agreement, on December 21, 2022, the Company entered into a consulting agreement with Stephen Lemieux to provide, as an independent contractor, advice and services related to finance, accounting, financial reporting, financial planning and analysis and similar services as requested by the Company from time to time at a rate of C$135 per hour.

The agreement contained customary confidentiality, nondisclosure and proprietary information provisions.

The consulting agreement was terminated upon Mr.

Lemieux’s appointment as Chief Financial Officer.

Amended and Restated Employment Agreement with Michael Brooks effective as of August 4, 2023

On August 4, 2023, the Company entered into an amended and restated employment agreement with Michael Brooks, the Company’s President, that superseded prior employment agreements (the Brooks Employment Agreement).

Pursuant to the Brooks Employment Agreement, Dr.

Brooks serves as the Company’s President as well as President and a director of the Company’s subsidiary, Edesa Biotech Research.

Brooks’ employment will continue for an indefinite term until terminated in accordance with the Brooks Employment Agreement.

Pursuant to the Brooks Employment Agreement, Dr.

Brooks is entitled to a base salary of $335,340 per year effective May 13, 2023 and is eligible to receive a target annual bonus of 40% of his base salary, subject to the achievement of corporate and personal targets as determined by the Company and the Board of Directors.

Brooks’ base salary is subject to annual review by the Board of Directors.

Brooks is also entitled to an automobile allowance of $2,000 per month and is eligible to participate in the Company’s group insured benefits program, as may be in effect from time-to-time for employees generally, and executive employees specifically.

Brooks is eligible for equity-based awards pursuant to the Company’s Equity Incentive Compensation Plan, as determined by the Board of Directors or Compensation Committee, commensurate with Dr.

Brooks’ position and any business milestones that may be established by the Company.

Brooks’ employment is terminated for “Cause” (as such term is defined in the Brooks Employment Agreement), subject to applicable law, Dr.

Brooks is entitled to his base salary and vacation pay earned through the date of termination, and all of Dr.

Brooks’ non-vested equity-based awards will be automatically extinguished.

All vested equity-based awards shall be subject to the terms of the Company’s Equity Incentive Compensation Plan.

Brooks is terminated without “Cause”, subject to Dr.

Brooks signing a general release of claims, Dr.

Brooks is entitled to:

(i) a lump sum payment equal to Dr.

Brooks’ then current base salary for 12 months plus one additional month for every completed year of service since September 1, 2015 (the Brooks Severance Period) which shall not exceed 24 months, inclusive of, and not in addition to, his notice and severance entitlements, if any, pursuant to applicable law, (ii) a lump sum payment of the annual bonus to which Dr.

Brooks is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Brooks’ annual bonus entitlement, prorated over Dr.

Brooks’ length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Brooks Employment Agreement, (iv) payment of Dr.

Brooks’ annual bonus entitlement during the full Brooks Severance Period, calculated in accordance with the terms of the Brooks Employment Agreement, (v) continuation of Dr.

Brooks’ benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Brooks Employment Agreement, and (vi) subject to applicable law, all vested equity-based awards granted to Dr.

Brooks shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

In the event that Dr.

Brooks is terminated or constructively terminated, which includes a material change in Dr.

Brooks’ title, responsibilities, authority or status or a material reduction of the Employee’s compensation, without cause upon or within a 12-month period following a “Change of Control” (as such term is defined in the Brooks Employment Agreement), Dr.

Brooks is entitled to (i) a change of control payment equal to 24 months of the value of Dr.

Brooks’ then current base salary as of the date of termination, (ii) a lump sum payment of the annual bonus to which Dr.

Brooks is entitled for the calendar year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Brooks’ annual bonus entitlement, prorated over Dr.

Brooks’ length of service in the calendar year in which his employment is terminated, calculated in accordance with the terms of the Brooks Employment Agreement, (iv) payment of Dr.

Brooks’ annual bonus entitlement during the full Brooks Severance Period, calculated in accordance with the terms of the Brooks Employment Agreement, (v) continuation of Dr.

Brooks shall be exercisable in accordance with the terms of the applicable Equity Incentive Compensation Plan.

Brooks may resign from his employment at any time by providing the Company with a minimum of 60 days advance notice, in writing.

Brooks’ notice may be waived by the Company, subject only to providing Dr.

Brooks with payment of his base salary and continuation of benefits until the end of the notice period.

Brooks resigns from his employment, subject to applicable law, (i) all non-vested equity based awards held by Dr.

Brooks shall be automatically extinguished and (ii) Dr.

Brooks shall not be entitled to any bonus or pro rata bonus payment not already awarded on or before the date of termination.

All vested equity-based awards shall be subject to the terms of the applicable Equity Incentive Compensation Plan.

During the term of Dr.

Brooks’ employment and for 12 months following the cessation of Dr.

Brooks’ employment, Dr.

Brooks is prohibited from competing with the business of the Company in North America.

In addition, for 24 months following the cessation of Dr.

Brooks’ employment, Dr.

Brooks is prohibited from soliciting customers or prospective customers for any purpose competitive with the business of the Company, encouraging any customer to cease doing business with the Company and soliciting the employment or engagement of certain of Company’s employees.

Prior Employment Agreement with Michael Brooks effective as of June 7, 2019 and amended March 19, 2021 and April 12, 2022

Prior to the Brooks Employment Agreement, on June 14, 2019 but effective as of June 7, 2019, we entered into an employment agreement with Michael Brooks, PhD (as amended, the Brooks Prior Employment Agreement).

Pursuant to the Brooks Prior Employment Agreement, Dr.

Brooks agreed to serve as our President for an indefinite term until Dr.

Brooks’ employment was terminated in accordance with the agreement.

As compensation for his services to us, Dr.

Brooks received a base salary of $275,000 per year and is eligible to receive a target annual bonus of 40% of his base salary, subject to achieving corporate and personal targets to be determined by us.

The base salary increased to $300,000 per year effective January 1, 2021 and $310,500 effective March 24, 2022.

Brooks also receives an automobile allowance of $2,000 per month and is eligible to participate in our group insured benefits program, as may be in effect from time-to-time for our employees generally, and executive employees specifically.

Brooks is eligible for future share and/or option grants, as determined by our Compensation Committee, commensurate with Dr.

Brooks’ position and any business milestones which may be established by the Compensation Committee and subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Brooks’ employment with us is terminated for “Cause” (as such term is defined in the employment agreement), subject to applicable law, our only obligation shall be to provide Dr.

Brooks received a base salary of $300,000 per year effective for the period January 1, 2021 to March 23, 2022 and a base salary of $310,500 per year effective for the period March 24, 2022 to May 12, 2023 and was eligible to receive a target annual bonus of 40% of his base salary, subject to achieving corporate and personal targets to be determined by us.

Brooks also received an automobile allowance of $2,000 per month and was eligible to participate in our group insured benefits program, as may be in effect from time-to-time for our employees generally, and executive employees specifically.

Brooks was eligible for future share and/or option grants, as may have been determined by our Compensation Committee, commensurate with Dr.

Brooks’ position and any business milestones which may have been established by the Compensation Committee and subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Brooks’ employment with us was terminated for “Cause” (as such term is defined in the Brooks Prior Employment Agreement), subject to applicable law, our only obligation would have been to provide Dr.

Brooks with his base salary and vacation pay earned through the date of termination and all of Dr.

Brooks’ vested or non-vested stock options which have not been exercised by Dr.

Brooks as of the date of termination will be automatically extinguished.

Brooks is terminated by us without “Cause”, our only obligation shall be to provide Dr.

Brooks’ vested or non-vested share options which had not been exercised by Dr.

Brooks as of the date of termination would have been automatically extinguished.

Brooks was terminated by us without “Cause”, our obligation would have been to provide Dr.

Brooks with (i) a lump sum payment equal to Dr.

Brooks’ then current base salary for twelve months plus one additional month for every completed year of service since September 2015, not to exceed an aggregate of twenty-four months (the “Severance Period”), (ii) a lump sum payment of the annual bonus to which Dr.

Brooks is entitled for the fiscal year immediately preceding the date of termination, if such bonus has not already been paid, (iii) a lump sum payment equal to Dr.

Brooks’ then current base salary for months plus one additional month for every completed year of service since September 2015, not to exceed an aggregate of twenty-four months (the Brooks Prior Severance Period), (ii) a lump sum payment of the annual bonus to which Dr.

Brooks was entitled for the fiscal year immediately preceding the date of termination, if such bonus had not already been paid, (iii) a lump sum payment equal to Dr.

Brooks’ annual bonus entitlement, prorated over Dr.

Brooks’ length of service in the fiscal year in which his employment is terminated, calculated in accordance with the terms of the employment agreement, (iv) payment of Dr.

Brooks’ annual bonus entitlement during the full Severance Period, calculated in accordance with the terms of the employment agreement, (v) continuation of Dr.

Brooks’ benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the employment agreement and (vi) subject to applicable law, all stock options granted to Dr.

Brooks shall be exercisable in accordance with the terms of the applicable stock option plan.

Brooks’ employment is terminated or “constructively terminated” (as such term is defined in the employment agreement) by us without “Cause” upon or within a twelve month period following a Change of Control (as such term is defined in the employment agreement), Dr.

Brooks shall be entitled to the payments and benefits provided as described in clauses (ii) to (vi) above, plus a change of control payment equal to twenty-four months of the his then current base salary.

Brooks may resign from his employment at any time by providing us with a minimum of sixty days advance notice, in writing.

Brooks’ notice may be waived by us, subject only to providing Dr.

Brooks’ length of service in the fiscal year in which his employment was terminated, calculated in accordance with the terms of the Brooks Prior Employment Agreement, (iv) payment of Dr.

Brooks’ annual bonus entitlement during the full Brooks Prior Severance Period, calculated in accordance with the terms of the Brooks Prior Employment Agreement, (v) continuation of Dr.

Brooks’ benefits and car allowance and any other benefit required to be maintained by law in accordance with the terms of the Brooks Prior Employment Agreement and (vi) subject to applicable law, all share options granted to Dr.

Brooks would have been exercisable in accordance with the terms of the applicable share option plan.

Brooks’ employment was terminated or “constructively terminated” (as such term is defined in the Brooks Prior Employment Agreement) by us without “Cause” upon or within a twelve month period following a Change of Control (as such term is defined in the Brooks Prior Employment Agreement), Dr.

Brooks would have been entitled to the payments and benefits provided as described in clauses (ii) to (v) above, plus a change of control payment equal to twenty-four months of the his then current base salary.

Brooks could have resigned from his employment at any time by providing us with a minimum of sixty days advance notice, in writing.

Brooks’ notice could have been waived by us, subject only to providing Dr.

Brooks with payment of his base salary and continuation of benefits until the end of the notice period.

Brooks resigns from his employment, subject to applicable law, (i) all non-vested stock options and all vested stock options held by Dr.

Brooks which have not been exercised by Dr.

Brooks as of the date of termination shall be automatically extinguished and (ii) Dr.

Brooks shall not be entitled to any bonus or pro rata bonus payment not already paid on or before the date of termination.

Brooks had resigned from his employment, subject to applicable law, (i) all non-vested share options and all vested share options held by Dr.

Brooks which had not been exercised by Dr.

Brooks as of the date of termination would have been automatically extinguished and (ii) Dr.

Brooks would not have been entitled to any bonus or pro rata bonus payment not already paid on or before the date of termination.

During the term of Dr.

1 unchanged sentence

Brooks' employment with us, Dr.

Brooks is prohibited from competing with our business in North America.

Brooks was prohibited from competing with our business in North America.

In addition, for twenty-four months following the cessation of Dr.

Brooks' employment with us, Dr.

Brooks is prohibited from soliciting customers or prospective customers for any purpose competitive with our business, encouraging any customer to cease doing business with us and soliciting the employment or engagement of certain of our employees.

Employment Agreement with Kathi Niffenegger effective as of December 1, 2020 and amended March 19, 2021 and April 12, 2022

On December 1, 2020, we entered into an employment agreement with Ms.

Niffenegger that superseded prior employment agreements.

Pursuant to the employment agreement, Ms.

Niffenegger will continue to serve as our Chief Financial Officer.

Niffenegger and we have the right to terminate the employment relationship at any time, with or without cause.

Brooks was prohibited from soliciting customers or prospective customers for any purpose competitive with our business, encouraging any customer to cease doing business with us and soliciting the employment or engagement of certain of our employees.

Prior Employment Agreement with Kathi Niffenegger effective as of December 1, 2020 and amended March 19, 2021 and April 12, 2022, which terminated July 15, 2023

Prior to the Non-Executive Employment Agreement (as defined below), on December 1, 2020, we entered into an employment agreement with Ms.

Niffenegger (as amended, the Niffenegger Employment Agreement) that superseded prior employment agreements.

Pursuant to the Niffenegger Employment Agreement, Ms.

Niffenegger had agreed to continue to serve as our Chief Financial Officer.

Niffenegger and we had the right to terminate the employment relationship at any time, with or without cause.

As compensation for her services to us, Ms.

Niffenegger received a base salary of $275,000 per year retroactive to June 1, 2020, is eligible to receive a discretionary bonus in an amount up to 40% of her base salary based on her performance and the company’s performance and such other employee benefits as are generally provided to similarly situated employees of the company.

The base salary increased to $290,000 per year effective January 1, 2021 and $300,150 per year effective March 24, 2022.

Niffenegger is eligible for future share and/or option grants in accordance with our executive compensation policy as in effect from time to time as determined by the independent members of our Board of Directors subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Niffenegger’s employment with us is terminated for “Cause” (as defined in the employment agreement) or if Ms.

Niffenegger resigns from her employment at any time, our only obligation is to provide Ms.

Niffenegger received a base salary of $290,000 per year effective for the period January 1, 2021 to March 23, 2022 and a base salary of $300,150 per year effective for the period March 24, 2022 to July 15, 2023 when Ms.

Niffenegger ended her tenure as Chief Financial Officer.

She was eligible to receive a discretionary bonus in an amount up to 40% of her base salary based on her performance and the Company’s performance and such other employee benefits as are generally provided to similarly situated employees of the Company.

Niffenegger was eligible for future share and/or option grants in accordance with our executive compensation policy as in effect from time to time as determined by the independent members of our Board of Directors subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

Niffenegger’s employment with us was terminated for “Cause” (as defined in the Niffenegger Employment Agreement) or if Ms.

Niffenegger resigned from her employment at any time, our only obligation would have been to provide Ms.

Niffenegger with:

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and (iii) any benefit required under applicable law.

Niffenegger is terminated by us without “Cause”, our only obligations are (a) to provide Ms.

Niffenegger was terminated by us without “Cause”, our obligations would have been (a) to provide Ms.

Niffenegger with the same payments and benefits as would be provided if we had terminated her employment for Cause;

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Niffenegger’s execution of a release in our favor, Ms.

Niffenegger will also be paid, as severance (the “Severance Amount”), (i) a lump sum payment equal to twelve months of Ms.

Niffenegger’s then current base salary, plus one additional month of base salary for every completed year of service since June 2019, not to exceed an aggregate of twenty-four months, (ii) a lump sum payment of any discretionary bonus for the prior calendar year already determined by our Board of Directors, but not yet paid;

Niffenegger would have also been paid, as severance (the Prior Severance Payment), (i) a lump sum payment equal to twelve months of Ms.

Niffenegger’s then current base salary, plus one additional month of base salary for every completed year of service since June 7, 2019, not to exceed an aggregate of twenty-four months, (ii) a lump sum payment of any discretionary bonus for the prior calendar year already determined by our Board of Directors, if such bonus had not yet been paid;

and (iii) a lump sum payment equal to Ms.

Niffenegger’s potential discretionary bonus for the calendar year in which the Separation Date occurs, prorated over Ms.

Niffenegger’s length of service in the calendar year in which her employment is terminated, calculated in accordance with the terms of the employment agreement.

Niffenegger’s employment is terminated or “constructively terminated” (as such term is defined in the employment agreement) by us without “Cause” upon or within a twelve month period following a Change of Control (as such term is defined in the employment agreement), Ms.

Niffenegger shall be entitled to the Severance Amount described above, except that the portion of the Severance Payment established by (b)(i) shall be equal to twenty four months of Ms.

Niffenegger’s potential discretionary bonus for the calendar year in which the Separation Date occurred, prorated over Ms.

Niffenegger’s length of service in the calendar year in which her employment was terminated, calculated in accordance with the terms of the Niffenegger Employment Agreement.

Niffenegger’s employment was terminated or “constructively terminated” (as such term is defined in the Niffenegger Employment Agreement) by us without “Cause” upon or within a twelve month period following a Change of Control (as such term is defined in the Niffenegger Employment Agreement), Ms.

Niffenegger would have been entitled to the Prior Severance Payment described above, except that the portion of the Prior Severance Payment established by (b)(i) would be equal to twenty four months of Ms.

Niffenegger’s base salary.

The Agreement provides that during the term of Ms.

The Niffenegger Employment Agreement provided that during the term of Ms.

Niffenegger’s employment with us and for a period of one year thereafter, Ms.

Niffenegger was prohibited from soliciting for employment certain of our employees.

The Agreement also provided that both during and after Ms.

Niffenegger’s employment with us, she was prohibited from (i) making use of our trade secrets to solicit on behalf of Ms.

Niffenegger or any other person business from any of our customers and (ii) inducing or attempting to induce any person to sever any existing contractual relationship they have with us.

Non-executive Employment Agreement with Kathi Niffenegger effective as of July 15, 2023

On July 16, 2023 following Ms.

Niffenegger’s tenure as Chief Financial Officer, Edesa Biotech USA, Inc.

entered into a non-executive employment agreement with Ms.

Niffenegger (the Non-Executive Employment Agreement) that superseded the Niffenegger Employment Agreement described above.

Pursuant to the Non-Executive Employment Agreement, both Ms.

Niffenegger and we have the right to terminate the employment relationship at any time, with or without cause.

As compensation for her services to us.

Niffenegger received a base salary of $100,000 per year effective July 16, 2023 and a one-time retention bonus of $10,000.

She is eligible to receive a discretionary bonus in an amount up to 40% of her prorated base salary under the current and prior employment agreements based on her performance and the Company’s performance and such other employee benefits as are generally provided to similarly situated employees of the Company.

Niffenegger is eligible for future share and/or option grants commensurate with her current position in accordance with our non-executive compensation policy as in effect from time to time as determined by the independent members of our Board of Directors subject to availability of shares and/or options for grant under our Equity Incentive Compensation Plan.

The Non-Executive Employment Agreement provides that during the term of Ms.

Niffenegger’s employment with us and for a period of one year thereafter, Ms.

Niffenegger is prohibited from soliciting for employment certain of our employees.

The Agreement also provides that both during and after Ms.

The Non-Executive Employment Agreement also provides that both during and after Ms.

Niffenegger’s employment with us, she is prohibited from (i) making use of our trade secrets to solicit on behalf of Ms.

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Pardeep Nijhawan, MD

Kathi Niffenegger, CPA 12/22/15 238

2/12/20 80,452

10/13/20 33,336

4/22/21 39,996

2/28/22 9,664

Stephen Lemieux, CPA

Michael Brooks, PhD

9/26/17 24,299

12/28/18 1,620

2/12/20 62,570

10/13/20 33,336

4/22/21 39,996

2/28/22 9,664

Kathi Niffenegger, CPA (3)

Former Chief Financial Officer

Our options vesting policy is described in the Outstanding Equity Awards Narrative Disclosure section.

The option will vest over a period of three years, with one-third vesting on the date of grant and the remainder vesting on a pro-rata basis monthly thereafter.

The option will vest over a period of three years, with monthly vesting on a pro-rata basis beginning on the date of grant.

Niffenegger served as Chief Financial Officer through July 15, 2023.

Outstanding Equity Awards Narrative Disclosure

Equity Incentive Compensation Plan

We adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) which amended and restated our 2017 Incentive Compensation Plan (the 2017 Plan).

We adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) which amended and restated prior plans.

Under the 2019 Plan, we are authorized to grant options, restricted shares and restricted share units (RSUs) to any of our officers, directors, employees, and consultants and those of our subsidiaries and other designated affiliates.

The number of shares available for issuance under the 2019 Plan is 2,625,951, including shares available for the exercise of outstanding options under the 2017 Plan.

The number of shares available for issuance under the 2019 Plan is 575,737, including shares available for the exercise of outstanding options and RSUs under the 2019 Plan and prior plans.

The purpose of the 2019 Plan is to advance the interests of the Company by encouraging equity participation through the acquisition of common shares of the Company.

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Options to purchase 420,615 common shares at prices ranging from C$15.12 and $5.79 to $596.82 are outstanding at September 30, 2023.

No restricted shares or restricted share units have been granted as of September 30, 2022.

RSUs eligible for conversion to 33,045 common shares are outstanding at September 30, 2023.

Options granted during the year ended September 30, 2023 to directors, officers and employees under the 2019 Plan totaled 118,579 options to purchase common shares at exercise prices ranging from $5.79 to $10.01.

Options granted during the year ended September 30, 2022 to directors, officers and employees under the 2019 Plan totaled 71,451 options to purchase common shares at exercise prices ranging from $20.58 to $25.97.

There were 46,602 RSUs granted during the year ended September 30, 2023.

These RSUs were immediately vested and were for payment of bonuses or consulting fees to the current CFO.

There were no RSUs granted during the year ended September 30, 2022.

Options Vesting Policy

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The following table sets forth information regarding the compensation of our non-employee directors for the year ended September 30, 2023.

Fees Earned of Paid in Cash ($)

Fees Earned or Paid in Cash ($)

Option Awards ($) (1)

All Other Compenstation ($)

Jennifer Chao

Lorin Johnson, PhD

Sean MacDonald

Patrick Marshall

Charles Olson, DSc

Carlo Sistilli, CPA, CMA

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The compensation was paid in Canadian dollars or British pounds and was converted from US dollars using the average foreign exchange rate for each month of the year from oanda.com.

Outstanding Equity Awards at September 30, 2022

The following table summarizes the equity awards made to our directors that were outstanding at September 30, 2022.

Outstanding Options (#)

Jennifer Chao

Lorin Johnson, PhD

Sean MacDonald

Carlo Sistilli, CPA, CMA

As of September 30, 2023, (i) Ms.

Marshall and Dr.

Olson each held 2,858 share options, (ii) Mr.

MacDonald and Mr.

Sistilli each held 11,773 share options and Mr.

Oakes held 11,909 share options.

The compensation was paid in Canadian dollars and was converted from US dollars using the average foreign exchange rate for each month of the year from oanda.com.

Narrative to Director Compensation Table

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The Chief Executive Officer does not receive any additional compensation for his services on the Board of Directors.

Prorated during the period October 1, 2020 through March 23, 2022, each non-executive director received annual base remuneration of $30,000 and the Chairman of the Board received annual remuneration of $50,000, inclusive of compensation for his services on committees of the board of directors.

Each member of the Company’s Audit Committee received annual remuneration of $5,000, and the Chair of the Audit Committee received $10,000 annually for his services.

Each member of the Company’s Compensation Committee and Nominating and Corporate Governance Committee received annual remuneration of $3,500 for each committee on which they serve, and the Chairs of each of the Compensation Committee and Nominating and Corporate Governance Committee received $7,500 annually for their services.

Prorated during the period March 24, 2022 through September 30, 2022, each non-executive director received annual base remuneration of $35,000 and the Chairman of the Board received annual remuneration of $65,000, inclusive of compensation for his services on committees of the board of directors.

From March 24, 2022 through September 30, 2023, each non-executive director received annual base remuneration of $35,000 and the Board Chair received annual remuneration of $65,000, inclusive of compensation for his services on committees of the Board of Directors.

Each member of the Company’s Audit Committee received annual remuneration of $7,500, and the Chair of the Audit Committee received $15,000 annually for his services.

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Plan Category

Number of securities to be issued upon exercise of outstanding options, warrants and rights

Weighted-average exercise price of outstanding options, warrants and rights

Number of securities to be issued upon exercise of outstanding options and rights

Weighted-average exercise price of outstanding options and rights

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

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Equity compensation plans not approved by security holders

Includes 422,615 common shares issuable upon the exercise of outstanding options and 33,045 common shares issuable upon the conversion of outstanding RSUs.

The weighted-average exercise price does not consider shares issuable upon the conversion of outstanding RSUs, which have no exercise price.

Warrants and other equity held by directors, officers and employees outside of the compensation plans are not included in the table above.

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Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all common shares that they beneficially own, subject to applicable community property laws.

Common shares subject to options or warrants currently exercisable or exercisable within 60 days of December 14, 2022 are deemed outstanding for computing the share ownership and percentage of the person holding such options and warrants, but are not deemed outstanding for computing the percentage of any other person.

Common shares subject to options, warrants or restricted share units currently exercisable or exercisable within 60 days of December 13, 2023 are deemed outstanding for computing the share ownership and percentage of the person holding such options, warrants and restricted share units, but are not deemed outstanding for computing the percentage of any other person.

The percentage ownership of our common shares of each person or entity named in the following table is based on 3,164,722 common shares outstanding as of December 13, 2023.

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Name and Address of Beneficial Owner (1)

Beneficial Ownership

Jennifer Chao

Lorin Johnson, PhD

Number of Shares Beneficially Owned

Percentage of Shares Beneficially Owned

Sean MacDonald

Patrick Marshall

Pardeep Nijhawan, MD

4,424,719 (5 )

Charles Olson, DSc

Carlo Sistilli, CPA, CMA

Stephen Lemieux, CPA

Michael Brooks, PhD

Kathi Niffenegger, CPA

212,797 (10 )

All directors and executive officers as a group (9 persons)

5,403,260 (11 )

All directors and named executive officers as a group (10 persons)

* Percentage of shares beneficially owned does not exceed one percent.

Unless otherwise indicated, the address of each beneficial owner is c/o Edesa Biotech, Inc., 100 Spy Court, Markham, ON Canada L3R 5H6.

Consists of 27,500 Common Shares issuable upon exercise of options that are exercisable within sixty days of December 14, 2022.

Consists of (i) 12,786 Common Shares, (ii) 6,393 Common Shares issuable upon exercise of 2020 Class A Warrants and (iii) 57,957 Common Shares issuable upon exercise of options that are exercisable within sixty days of December 14, 2022.

Consists of (i) 29 common shares and (ii) 1,666 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023.

Consists of (A)(i) 594,812 Common Shares and (ii) 185,444 Common Shares issuable upon exercise of options exercisable within sixty days of December 14, 2022 held by Pardeep Nijhawan;

(B)(i) 2,356,914 Common Shares, (ii) 6,942 Common Shares issuable upon exercise of 2020 Class A Warrants, (iii) 114,131 Common Shares issuable upon exercise of Class A Warrants and (iv) 114,131 Common Shares issuable upon exercise of Class B Warrants held by Pardeep Nijhawan Medicine Professional Corporation for which Pardeep Nijhawan has sole voting and dispositive power over all such shares;

Consists of (i) 2,053 common shares and (ii) 10,581 common shares issuable upon exercise of options exercisable within sixty days December 13, 2023.

Consists of (i) 1,666 common shares issuable upon exercise of options exercisable within sixty days December 13, 2023 held by Patrick Marshall and.(ii) 465 common shares held by Quidnet Inc.

for which Patrick Marshall has sole voting and dispositive power over all such shares.

Consists of (A)(i) 84,973 common shares, (ii) 39,761 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023 and (iii) 14,186 common shares issuable upon the conversion of restricted share units held by Pardeep Nijhawan;

(B)(i) 336,702 common shares and (ii) 32,610 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 held by Pardeep Nijhawan Medicine Professional Corporation for which Pardeep Nijhawan has sole voting and dispositive power over all such shares;

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(D) 53,104 common shares held by 1968160 Ontario Inc.

for which Pardeep Nijhawan has sole voting and dispositive power over all such shares and (E)(i) 228,262 Common Shares, (ii) 114,131 Common Shares issuable upon exercise of Class A Warrants and (iii) 114,131 Common Shares issuable upon exercise of Class B Warrants held by The New Nijhawan Family Trust 2015 for which each of Pardeep Nijhawan and Nidhi Nijhawan, as trustees, have voting and dispositive power over all such shares.

Consists of (A)(i) 58,909 Common Shares issuable upon exercise of options that are exercisable within sixty days of December 14, 2022 held by Frank Oakes and (B)(i) 914 Common Shares issuable upon exercise of 2020 Class A Warrants held by Frank and Dorothy Oakes Family Trust for which each of Frank Oakes and Dorothy Oakes, as trustees, have voting and dispositive power over all such shares.

Consists of (i) 3,654 Common Shares, (ii) 1,827 Common Shares issuable upon exercise of 2020 Class A Warrants and (iii) 90,356 Common Shares issuable upon exercise of options exercisable within sixty days of December 14, 2022.

Consists of (A) 57,957 Common Shares issuable upon exercise of options exercisable within sixty days of December 14, 2022 held by Carlo Sistilli and (B)(i) 3,654 Common Shares and (ii) 1,827 Common Shares issuable upon exercise of 2020 Class A Warrants held by York-Cav Enterprises Inc.

for which Pardeep Nijhawan has sole voting and dispositive power over all such shares and (E)(i) 32,609 common shares and (ii) 32,610 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 held by The New Nijhawan Family Trust 2015 for which each of Pardeep Nijhawan and Nidhi Nijhawan, as trustees, have voting and dispositive power over all such shares.

Consists of 10,717 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023.

Consists of 1,666 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023.

Consists of (i) 10,581 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023 held by Carlo Sistilli and (ii) 522 Common Shares held by York-Cav Enterprises Inc.

for which Carlo Sistilli, as President and Director, has sole voting and dispositive power over all such shares.

Consists of (i) 30,480 Common Shares, (ii) 1,371 Common Shares issuable upon exercise of 2020 Class A Warrants, (iii) 2,119 Common Shares issuable upon exercise of Class A Warrants, (iv) 2,119 Common Shares issuable upon exercise of Class B Warrants and (v) 333,595 Common Shares issuable upon exercise of options exercisable within sixty days of December 14, 2022.

Consists of (A) 192,280 Common Shares issuable upon exercise of options that are exercisable within sixty days of December 14, 2022 held by Kathi Niffenegger and (B)(i) 10,715 Common Shares, (ii) 914 Common Shares issuable upon exercise of 2020 Class A Warrants, (iii) 4,444 Common Shares issuable upon exercise of Class A Warrants and (iv) 4,444 Common Shares issuable upon exercise of Class B Warrants held by the Kathi Niffenegger Trust for which Kathi Niffenegger, as trustee, has sole voting and dispositive power over all such shares.

Consists of (i) 3,851,467 Common Shares, (ii) 20,188 Common Shares issuable upon exercise of 2020 Class A Warrants, (iii) 234,825 Common Shares issuable upon exercise of Class A Warrants, (iv) 234,825 Common Shares issuable upon exercise of Class B Warrants and (v) 1,061,955 Common Shares issuable upon exercise of options that are exercisable within sixty days of December 14, 2022.

Consists of (i) 2,086 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023 and (ii) 2,486 common shares issuable upon the conversion of restricted share units.

Consists of (i) 4,354 common shares, (ii) 57,340 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023, (iii) 606 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 and (iv) 13,315 common shares issuable upon conversion of restricted share units.

Consists of (A)(i) 10,943 common shares and (ii) 37,117 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023 held by Kathi Niffenegger and (B)(i) 1,531 common shares and (ii) 1,270 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 held by the Kathi Niffenegger Trust for which Kathi Niffenegger, as trustee, has sole voting and dispositive power over all such shares.

Consists of (i) 559,298 common shares, (ii) 173,181 common shares issuable upon exercise of options exercisable within sixty days of December 13, 2023, (iii) 67,096 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 and (iv) 29,987 common shares issuable upon conversion of restricted share units.

Shareholders Known by Us to Own 5% or More of Our Common Shares

Name and Address of Beneficial Owner

Beneficial Ownership

Beneficially Owned

Number of Shares Beneficially Owned

Percentage of Shares Beneficially Owned

Lumira Capital II, L.P.

and Lumira Capital II (International), L.P.

2,178,352 (1)

Consists of (A)(i) 1,897,428 Common Shares and (ii) 96,542 Common Shares issuable upon exercise of 2020 Class A Warrants held by Lumira Capital II, L.P.

and (B)(i) 175,454 Common Shares and (ii) 8,928 Common Shares issuable upon exercise of 2020 Class A Warrants held by Lumira Capital II (International), L.P., an affiliate of Lumira Capital II, L.P.

Lumira Capital GP, L.P., the general partners of which are Lumira GP Inc.

and Lumira GP Holdings Co., is the general partner of each of Lumira Capital II, L.P.

and Lumira Capital II (International), L.P.

Each of Lumira Capital II, L.P.

Velan Capital Partners LP (2)

Consists of (i) 214,913 common shares held by Lumira Capital II, L.P.

and (ii) 19,873 common shares held by Lumira Capital II (International), L.P.

and beneficially owned by affiliates of Lumira Capital II, L.P.

and Lumira Capital II (International), L.P.

is managed by Lumira Capital Investment Management Inc.

Each of Lumira Capital GP, L.P., Lumira GP Inc., Lumira GP Holdings Co.

and Lumira Capital Investment Management Inc.

may be deemed to beneficially own the shares held by Lumira Capital II, L.P.

and Lumira Capital II (International), L.P and such entities control voting and investment power over such shares through an investment committee of the Lumira group.

The address of each entity listed in this note is 141 Adelaide Street West, Suite 770, Toronto, Ontario, Canada M5H 3L5.

We relied in part on the Schedule 13D/A filed with the SEC by Lumira Capital II, L.P.

on January 16, 2020 for this information.

The address of both entities is 141 Adelaide Street West, Suite 770, Toronto, Ontario, Canada M5H 3L5.

We relied in part on the SEC Schedule 13D/A filed with the SEC on January 13, 2023 for this information.

Consists of (i) 190,476 common shares and (ii) 63,492 common shares issuable upon exercise of warrants exercisable within sixty days of December 13, 2023 held by Velan Capital Partners LP and beneficially owned by its affiliates.

The address is 1055b Powers Place, Alpharetta, GA 30009.

We relied in part on the SEC Schedule 13G filed with the SEC on January 6, 2023 for this information.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Related Party Transactions

Lease Agreement

In January 2017, Edesa Research entered into a lease agreement with a company related to Pardeep Nijhawan, our Chief Executive Officer, for office space that serves as our principal executive office.

The current lease has an original expiration date of December 2022 with the option to extend the lease for an additional two years.

We anticipate extending the lease through December 2024.

The following is a description of transactions since October 1, 2021 to which we have been a participant in which the amount involved exceeded or will exceed the lesser of (i) $120,000 and (ii) one percent of the average of our total assets at year end for the last two completed fiscal years in which any of our directors, executive officers or holders of more than 5% of our voting securities, or any members of their immediate family, had or will have a direct or indirect material interest, other than compensation arrangements.

Right-of-Use Lease Agreement

In January 2017, Edesa Biotech Research entered into a right-of-use lease agreement with 1968160 Ontario Inc., a company related to Dr.

Nijhawan, our Chief Executive Officer, for office space that serves as our principal executive office.

The original lease expired on December 31, 2022 and we executed a two-year term extension through December 31, 2024.

Monthly rents during the term ranged from C$8,320 to C$9,020 plus HST.

Rents of approximately $81,000 were incurred during each of the years ended September 30, 2022 and 2021.

Rents of approximately $22,000 were payable at September 30, 2022.

No rent was payable at September 30, 2021.

Rents of approximately $82,000 and $81,000 were incurred during the years ended September 30, 2023 and 2022, respectively.

Rents of approximately $15,000 and $22,000 were payable at September 30, 2023 and September 30, 2022, respectively.

Credit Agreement

On October 20, 2023, the Company entered into the Credit Agreement with Pardeep Nijhawan Medicine Professional Corporation, an entity controlled by Dr.

Nijhawan, our Chief Executive Officer, providing for the Line of Credit in the principal amount of up to $10 million, with the Credit Limit of $3.5 million, which was available immediately upon the execution of the Credit Agreement.

Subject to the terms of the Credit Agreement, the Credit Limit may be increased by the lender upon request from the Company in an amount not to exceed $10 million.

The Line of Credit bears interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3% per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice.

The Company has the right at any time, and from time to time, to prepay all or any portion of each advance without premium or penalty.

Additionally, the Company agreed to pay a monthly standby fee for the term of the Credit Agreement, calculated as of the last business day of each month, on the difference between the Credit Limit at such time and the principal amount of outstanding advances, based on an annual interest rate of 1.5%.

As of December 13, 2023, the entire $3.5 million Credit Limit was available on the Line of Credit and the Company accrued $0.01 million in monthly standby fees.

Director Independence

In evaluating the independence of our Board members and the composition of the committees of our Board of Directors, the Board of Directors utilizes the definition of “independence” as that term is defined by the Securities Exchange Act of 1934, and the Nasdaq Listing Rules.

Using this standard, the Board of Directors has determined that Jennifer Chao, Lorin Johnson, Sean MacDonald, Frank Oakes, Paul Pay and Carlo Sistilli are “independent directors.” This means that our Board of Directors is composed of a majority of independent directors as required by the rules of Nasdaq.

Using this standard, the Board of Directors has determined that Joan Chypyha, Sean MacDonald, Patrick Marshall, Frank Oakes, Charles Olson and Carlo Sistilli are “independent directors.” Accordingly, our Board of Directors is composed of a majority of independent directors as required by the rules of Nasdaq.

Pardeep Nijhawan is not an independent director due to his position as our Chief Executive Officer.

We have established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each of which are composed of independent directors.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

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Type of Service

Audit fees consisted of fees incurred for professional services rendered for audits and interim reviews of the years ended September 30, 2022 and 2021 and include procedures related to registrations and offerings.

Year Ended 2023

Year Ended 2022

Audit-related Fees

Audit fees consisted of fees incurred for professional services rendered for audits and interim reviews of the years ended September 30, 2023 and 2022.

Audit-related fees include assurance and related services that were incurred for procedures related to registrations and offerings.

Tax fees consisted of fees incurred for professional services rendered for tax compliance related to tax returns during the years ended September 30, 2023 and 2022.

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as a part of this Annual Report:

The following documents are filed as a part of this Annual Report:

Financial Statements

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Form of Class B Warrant (included as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 3, 2022, and incorporated herein by reference).

Description of Securities (filed herewith).

Form of Common Share Purchase Warrant issued to H.C.

Wainwright & Co., Inc.

designees on June 7, 2019 (filed herewith).

Advance Notice Policy, adopted October 31, 2013 (included as Exhibit 10.14 to the Company's Annual Report on Form 10-K filed on November 14, 2014, and incorporated herein by reference).

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Second Amendment to Exclusive License Agreement, dated May 7, 2017, by and between the Registrant and Yissum Research Development Company (included as Exhibit 10.4 to the Company's Current Report on Form 8-K filed on August 30, 2019, and incorporated herein by reference).

Third Amendment to Exclusive License Agreement, dated October 26, 2022, by and between the Registrant and Yissum Research Development Company (filed herewith).

Third Amendment to Exclusive License Agreement, dated October 26, 2022, by and between the Registrant and Yissum Research Development Company (included as Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on December 16, 2022 and incorporated herein by reference).

License and Development Agreement, dated as of August 27, 2017, by and between the Registrant and Pendopharm, a division of Pharmascience Inc.

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Strategic Innovation Fund Agreement among Edesa Biotech Research, Inc., Edesa Biotech, Inc., and her Majesty the Queen in right of Canada as represented by the Minister of Industry, dated February 2, 2021 (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 3, 2021, and incorporated herein by reference).

Exclusive License Agreement, dated as of March 16, 2021, by and between the Edesa Biotech Research, Inc.

Exclusive License Agreement, dated as of March 16, 2021, by and between Edesa Biotech Research, Inc.

Saul Yedgar (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 22, 2021, and incorporated herein by reference).

15 unchanged sentences

Subscription Agreement (included as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 3, 2022, and incorporated herein by reference).

Code of Ethics and Business Conduct (included as Exhibit 14.1 to the Company's Annual Report on Form 10-K filed on December 12, 2019, and incorporated herein by reference).

Lease Extending and Amending Agreement dated as of December 31, 2022 by and between Edesa Biotech Research, Inc.

and 1968160 Ontario, Inc.

(included as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on February 10, 2023 and incorporated herein by reference).

Equity Distribution Agreement, dated as of March 27, 2023, by and between Edesa Biotech, Inc.

and Canaccord Genuity LLC (included as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 27, 2023, and incorporated herein by reference).

Amendment No.

2 to Edesa Biotech, Inc.

2019 Equity Incentive Compensation Plan (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 24, 2023, and incorporated herein by reference).

Employment Agreement by and between the Company and Stephen Lemieux, dated June 26, 2023 (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 27, 2023, and incorporated herein by reference).

Amended and Restated Employment Agreement, by and between the Company and Pardeep Nijhawan, dated August 4, 2023 (included as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2023, and incorporated herein by reference).

Amended and Restated Employment Agreement, by and between the Company and Michael Brooks, dated August 4, 2023 (included as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2023, and incorporated herein by reference).

Strategic Innovation Fund Agreement, dated October 12, 2023, by and among Edesa Biotech Research, Inc., Edesa Biotech, Inc., and his Majesty the King in right of Canada as represented by the Minister of Industry (filed herewith).

Credit Agreement, effective as of October 20, 2023, by and between the Company and Pardeep Nijhawan Medicine Professional Corporation (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 23, 2023, and incorporated herein by reference).

First Amendment to Exclusive License Agreement, dated as of September 21, 2023, by and between Edesa Biotech Research, Inc.

Saul Yedgar (filed herewith).

First Amendment to Amended and Restated Employment Agreement, by and between the Company and Pardeep Nijhawan, dated December 7, 2023 (filed herewith).

Subsidiaries of Edesa Biotech, Inc.

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Certification of the Chief Executive Officer pursuant to 18 U.S.C.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Financial Officer pursuant to 18 U.S.C.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incentive Compensation Repayment (Clawback) Policy (filed herewith).

XBRL Instance Document

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* All schedules and exhibits to the Share Exchange Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.

** The information in this exhibit is furnished and deemed not filed with the Securities and Exchange Commission for purposes of section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of Edesa Biotech, Inc.

under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

** The information in this exhibit is furnished and deemed not filed with the SEC for purposes of section 18 of the Exchange Act, and is not to be incorporated by reference into any filing of Edesa Biotech, Inc.

under the Securities Act, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

@ Management contract or compensatory plan or arrangement.

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Director, Chief Executive Officer and Corporate Secretary (Principal Executive Officer)

December 15, 2023

/s/ Stephen Lemieux

Stephen Lemieux

Chief Financial Officer

(Principal Financial Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Pardeep Nijhawan and Kathi Niffenegger, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Pardeep Nijhawan and Stephen Lemieux, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and any of them or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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Corporate Secretary (Principal Executive Officer)

/s/ Kathi Niffenegger

/s/ Stephen Lemieux

Chief Financial Officer

December 15, 2023

Kathi Niffenegger

Stephen Lemieux

(Principal Financial and Accounting Officer)

/s/ Jennifer Chao

December 16, 2022

Jennifer Chao

/s/ Lorin Johnson

/s/ Joan Chypyha

December 15, 2023

Lorin Johnson

/s/ Sean MacDonald

Chairman of the Board of Directors

December 15, 2023

Sean MacDonald

/s/ Patrick Marshall

December 15, 2023

Patrick Marshall

/s/ Frank Oakes

December 15, 2023

/s/ Charles Olson

December 15, 2023

Charles Olson

/s/ Carlo Sistilli

Chairman of the Board of Directors

December 15, 2023

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Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Edesa Biotech, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Edesa Biotech, Inc.

(the Company) as of September 30, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ equity and cash flows for each of the years in the two-year period ended September 30, 2022, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2022 and 2021, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2019.

Toronto, Canada

December 16, 2022

EDESA BIOTECH, INC.

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Right-of-use assets

Liabilities, shareholders' equity and temporary equity:

Liabilities and shareholders' equity:

Current liabilities:

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Accounts and other receivable

( 3,229,954 )

Prepaid expenses and other current assets

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Proceeds from exercise of warrants

Proceeds from exercise of share options

Payments for issuance costs of common shares

Payments for issuance costs of common shares and warrants

Net cash provided by financing activities

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Net change in cash and cash equivalents

( 1,729,522 )

Cash and cash equivalents, beginning of year

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Supplemental Disclosure of Noncash Financing Activities:

Preferred shares converted from temporary equity to common shares

Issuance costs withheld from gross proceeds from issuance of common shares and warrants

Fair value of placement agent/underwriter warrants

Fair value of placement agent warrants

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

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Consolidated Statements of Changes in Shareholders’ Equity

Common Shares

Additional Paid-in Capital

Accumulated Other Comprehensive Loss

Accumulated Deficit

Total Shareholders' Equity

Comprehensive

Shareholders'

Balance - September 30, 2021

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Issuance of common shares and warrants in equity offering

Issuance costs including fair value of underwriter warrants

Issuance costs including fair value of placement agent warrants

( 1,311,966 )

Issuance of common shares upon exercise of pre-funded warrants, net of costs

( 2,209,304 )

Issuance of common shares upon exercise of warrants

Issuance of common shares upon exercise of share options

Conversion of convertible preferred shares

Preferred return on convertible preferred shares

Share-based compensation

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Issuance of common shares and warrants in equity offering

Issuance costs including fair value of placement agent warrants

( 1,311,965 )

Issuance of common shares upon exercise of pre-funded warrants, net of costs

( 2,209,304 )

Issuance of common shares upon exercise of warrants

Issuance of common shares upon exercise of restricted share units

Issuance costs

Share-based compensation

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The Company’s operations have historically been funded through issuances of common shares, exercises of common share purchase warrants, convertible preferred shares, convertible loans, government grants and tax incentives.

For the years ended September 30, 2022 and 2021, the Company reported net losses of $ 17.55 million and $ 13.34 million, respectively.

Under the Company’s contribution agreement with the Canadian government’s Strategic Innovation Fund (SIF), the Company is eligible to receive cash reimbursements up to C$ 14.05 million ($ 11 million USD) in the aggregate for certain research and development expenses related to the Company’s EB05 clinical development program.

For the years ended September 30, 2022 and 2021, the Company recorded $ 0.78 million and $ 10.34 million in grant income, respectively.

At September 30, 2023, the Company had an accumulated deficit of $ 52.4 million and working capital of $ 4.6 million, including $ 5.4 million in cash and cash equivalents.

In August 2022 the Company filed a $150.0 million shelf registration statement, under which the Company entered into an equity distribution agreement with Canaccord for $20.0 million in gross proceeds, subject to certain offering limitations that currently allows the Company to offer and sell common shares having an aggregate gross sales price of up to $8.4 million (Canaccord ATM).

There was approximately $7.1 million of available capacity on the Canaccord ATM as of September 30, 2023.

The Company’s primary use of cash and cash equivalents is to fund our operating expenses, which consist of research and development (R&D) and general and administrative (G&A) expenditures.

Cash used to fund operating expenses is impacted by the timing of when the Company pays these expenses, as reflected in the change in accounts payable and accrued expenses.

Net cash used in operating activities was $ 6.6 million and $ 12.3 million for the years ended September 30, 2023 and 2022, respectively.

The Company incurred net losses of $ 8.4 million and $ 17.6 million for the years ended September 30, 2023 and 2022.

Subsequent to the year end, in October 2023, the Company entered into a multi-year contribution agreement (2023 SIF Agreement) with the Canadian Government’s Strategic Innovation Fund (SIF).

Under the 2023 SIF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding.

Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by the Company.

The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when the Company earns gross revenue.

In February 2021, the Company signed a contribution agreement with the Canadian government’s SIF (2021 SIF Agreement), the Company was eligible to receive cash reimbursements up to C$14.1 million in the aggregate for certain R&D expenses related to our EB05 clinical development program.

All potential funding available under the 2021 SIF Agreement has been received.

For the years ended September 30, 2023 and 2022, the Company recorded grant income of $0.6 million and $0.8 million respectively related to both the 2023 SIF Agreement and the 2021 SIF Agreement.

Subsequent to the year end, in October 2023, the Company entered into $10.0 million revolving credit agreement with Pardeep Nijhawan Medicine Professional Corporation (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $ 3.5 million (Credit Limit) which is available immediately.

The line of credit bears interest at the Canadian Imperial Bank of Commerce US Base-Interest Rate plus 3% per annum and has a maturity date of March 31, 2026, unless terminated earlier by either party with 90 days’ notice.

Advances under the line of credit are tied to a borrowing base (Borrowing Base) consisting of eligible grant receivables from SIF, future potential license fee receivables and any other accounts receivable.

At no time shall the aggregate principal amount of all advances outstanding exceed the lesser of (i) the Credit Limit and (ii) an amount equal to 85% of the Borrowing Base.

No amounts have been drawn upon from the Credit Agreement.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

In March 2023, the Company entered into an equity distribution agreement with Canaccord, as sales agent, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $ 20 million in gross proceeds, subject to certain offering limitations that currently allows the Company to offer and sell common shares having an aggregate gross sales price of up to $ 8.4 million.

At September 30, 2023, the Company sold a total of 196,401 common shares pursuant to the agreement for gross proceeds of approximately $ 1.3 million.

In November 2022, the Company completed a private placement of units consisting of 384,475 common shares, 12-month warrants to purchase up to an aggregate of 192,248 common shares and 3-year warrants to purchase up to an aggregate of 192,248 common shares.

The gross proceeds from this offering are approximately $ 3 .0 million, before offering expenses.

In March 2022, the Company completed a registered direct offering of 220,000 common shares, no par value, and pre-funded warrants to purchase up to an aggregate of 171,390 common shares.

1 unchanged sentence

Net proceeds to the Company were approximately $ 9 .0 million.

In March 2021, the Company completed a registered public offering of an aggregate of 1,562,500 common shares, no par value, for net proceeds of $ 8.89 million, after deducting underwriter fees and related offering expenses.

During the years ended September 30, 2022 and 2021, the Company sold a total of 626,884 common shares for net proceeds of $ 2.62 million and 586,463 common shares for net proceeds of $ 3.42 million, respectively, under an at-the-market equity offering program.

For year ended September 30, 2021, the exercise of warrants and options resulted in the issuance of 401,396 common shares and net cash proceeds to the Company of $ 1.7 million.

At September 30, 2022, the Company had cash and cash equivalents of $ 7.09 million, working capital of $ 6.95 million, shareholders’ equity of $ 9.39 million and an accumulated deficit of $ 44.04 million.

Subsequent to September 30, 2022, in November 2022, the Company completed a private placement of units consisting of 2,691,337 common shares, twelve-month warrants to purchase up to an aggregate of 1,345,665 common shares and three-year warrants to purchase up to an aggregate of 1,345,665 common shares.

The gross proceeds from this offering were approximately $ 3.0 million, before offering expenses.

The Company plans to finance operations for at least the next twelve months with cash and cash equivalents on hand, including net proceeds of the November 2022 equity offering, and reimbursements of eligible research and development expenses under the Company’s agreement with the Canadian government’s SIF.

During the year ended September 30, 2022, the Company sold a total of 89,558 common shares for net proceeds of $ 2.6 million, under an at-the-market equity offering program.

The Company plans to finance operations for at least the next twelve months with cash and cash equivalents on hand, utilization of the Canaccord ATM, drawing upon the Credit Agreement and reimbursements of eligible R&D expenses under the Company’s 2023 SIF Agreement.

Basis of preparation

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All intercompany balances and transactions have been eliminated upon consolidation.

The accompanying consolidated financial statements include the years ended September 30, 2022 and 2021.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Significant accounting policies

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intangible assets;

operating lease right-of-use assets;

right-of-use assets;

deferred income taxes;

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The Company assesses the collectability of its accounts receivable through a review of its current aging and payment terms, as well as an analysis of its historical collection rate, general economic conditions and credit status of the government agencies.

Accounts and other receivable include reimbursement grant income for the Company’s federal grant with the Canadian government’s Strategic Innovation Fund (SIF) and Harmonized Sales Tax (HST) refunds receivable.

Accounts and other receivable include reimbursement grant income for the Company’s federal grant with the Canadian government’s SIF and Harmonized Sales Tax (HST) refunds receivable.

As of September 30, 2023, all outstanding accounts, grants and HST refunds receivable were deemed to be fully collectible, and therefore, no allowance for doubtful accounts was recorded.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

Property and equipment

12 unchanged sentences

Intangible assets are stated at their historical cost, amortized on a straight-line basis over their expected useful lives, which is 25 years, and subject to impairment review at the end of each reporting period.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Impairment of long-lived assets

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A previously recognized impairment loss may be reversed to the extent of the improvement, provided it is not greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously, and the amount of the reversal is recognized in net income (loss).

Right-of-Use assets

The Company recognizes lease right-of-use (ROU) assets and lease liabilities on the balance sheet for leases with terms longer than 12 months.

The Company follows the ongoing practical expedient not to recognize lease right-of-use assets and lease liabilities for short-term leases.

Right-of-Use assets and liabilities

The Company recognizes right-of-use (ROU) assets and liabilities on the balance sheet for operating leases with terms longer than 12 months.

The Company follows the ongoing practical expedient not to recognize ROU assets and liabilities for short-term leases.

The ROU assets are initially measured at cost and amortized using the straight-line method through the end of the lease term.

The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using our incremental borrowing rate.

The ROU liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company's incremental borrowing rate.

Fair value measurement

5 unchanged sentences

Research and development costs are expensed as incurred.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

Share-based compensation

The Company has equity incentive plans under which various types of equity-based awards including share options, restricted shares and restricted share unit awards may be granted to employees, non-employee directors and non-employee consultants and warrants that may be granted as compensation to non-employees.

The Company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted since the fair value of the goods or services received by the Company cannot be reliably estimated.

The Company grants options to buy common shares of the Company to its directors, officers, employees and consultants, and grants other equity- based instruments such as warrants to non-employees.

The fair value of share-based compensation is measured on the date of grant, using the Black-Scholes option valuation model and is recognized over the vesting period for employees or the service period for non-employees, net of forfeitures as they occur.

The provisions of the Company’s share-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity.

The Black-Scholes option valuation model requires the input of subjective assumptions, including price volatility of the underlying common shares, risk-free interest rate, dividend yield, and expected life of the option.

The Company recognizes compensation expense for all share-based awards based on the estimated grant-date fair values.

For restricted share unit awards to employees, the fair value is based on the 5-day volume weighted average price (VWAP) of the Company’s common shares up to the date of grant.

The value of the portion of the award that is ultimately expected to vest is recognized as expense on a straight-line basis over the requisite service period.

The fair value of share options is determined using the Black-Scholes option pricing model.

The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends and has no current intention of paying cash dividends.

The Company elected an accounting policy to record forfeitures as they occur.

See Note 8 for a discussion of the assumptions used by the Company in determining the grant date fair value of options granted under the Black-Scholes option pricing model, as well as a summary of the share option activity under the Company’s share-based compensation plan for all years presented.

The provisions of the Company’s share-based compensation plans do not require the Company to settle any options or restricted share units by transferring cash or other assets, and therefore the Company classifies the awards as equity.

Translation of foreign currency transactions

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All of the exchange gains or losses resulting from these other transactions are recognized in the statements of operations and comprehensive loss.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax bases of assets and liabilities and their financial statement reported amounts using enacted tax rates and laws in effect in the year in which the differences are expected to reverse.

8 unchanged sentences

Earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period.

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the year.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

The computation of diluted earnings (loss) per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings (loss) per share.

The dilutive effect of convertible securities would be reflected in diluted earnings per share by application of the “if converted” method.

The dilutive effect of outstanding options and warrants and their equivalents would be reflected in diluted earnings per share by application of the treasury stock method.

However, conversion of outstanding convertible preferred shares, options and warrants would have an antidilutive effect on loss per share for the years ended September 30, 2022 and 2021 and are therefore excluded from the computation of diluted loss per share.

See Note 8 for options and warrants at September 30, 2022 and 2021.

See Note 13 for subsequent issuance of common shares and warrants.

The dilutive effect of outstanding share options and warrants and their equivalents would be reflected in diluted earnings per share by application of the treasury stock method.

However, conversion of outstanding share options and warrants would have an antidilutive effect on loss per share for the years ended September 30, 2023 and 2022 and are therefore excluded from the computation of diluted loss per share.

See Note 8 for share options and warrants at September 30, 2023 and 2022.

Segmented Information

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Adoption of Recent Accounting Pronouncements

On October 1, 2021, the Company adopted Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes, which modified ASC Topic 740, Income Taxes to among other things, remove certain exceptions to the general principles in ASC 740 and seek more consistent application by clarifying and amending the existing guidance.

The Company did not adjust deferred income taxes as a result of adoption and there was no impact to opening accumulated deficit.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Future accounting pronouncements

In December 2021, the FASB issued ASU 2021-10, Disclosure by Business Entities About Government Assistance, modifying ASC Topic 832, Government Assistance.

On October 1, 2022, the Company adopted Accounting Standards Update ASU 2021-10 Disclosure by Business Entities About Government Assistance, modifying ASC Topic 832, Government Assistance.

The amendments in ASU 2021-10 require disclosure of information about certain types of government assistance received.

The guidance is effective for public entities for fiscal years beginning after December 15, 2021, including interim periods within those years, with early adoption permitted.

These standards are effective for the Company during the fiscal year ending September 30, 2023.

Management expects that ASU 2021-10 will result in expanded disclosures about the Company’s government assistance received.

The Company expanded its disclosures related to government assistance.

Future accounting pronouncements

In November 2023, the FASB issued Accounting Standards Update ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

Property and equipment

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Depreciation expense amounted to $ 4,328 and $ 6,991 for the years ended September 30, 2023 and 2022, respectively.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

Intangible assets

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Total intangible assets, net

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Amortization expense amounted to $ 101,172 for each of the years ended September 30, 2023, and 2022, respectively.

5 unchanged sentences

September 30, 2028

Related party right-of-use lease

The Company leases facilities used for executive offices from a related company for a six-year term through December 2022, with options to renew for another two-year term.

The option period is not included in the right-of-use assets and lease liabilities.

The gross amounts of assets and liabilities related to the right-of-use lease were as follows:

September 30, 2022

September 30, 2021

Right-of-use assets

Short-term right-of-use lease liabilities

Long-term right-of-use lease liabilities

Total right-of-use lease liabilities

The components of right-of-use lease cost were as follows:

September 30, 2022

September 30, 2021

Right-of-use lease cost, included in general and administrative on the Statements of Operations

Right-of-Use Asset and Liabilities

Related party ROU asset and liability

The Company leases a facility used for executive offices from a related company.

The original lease expired in December 2022 and the Company executed a two-year term extension through December 31, 2024.

EDESA BIOTECH, INC.

1 unchanged sentence

For the Years Ended September 30, 2023 and 2022

The components of lease cost were as follows:

September 30,

Right-of-use lease cost, included in general and administrative on the Statements of Operations

Lease terms and discount rates were as follows:

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Estimated incremental borrowing rate:

The approximate future minimum lease payments under right-of-use leases at September 30, 2022 were as follows:

The approximate future minimum lease payments under operating leases at September 30, 2023 were as follows:

September 30, 2024

Total lease payment

September 30, 2025

Total lease payments

Less imputed interest

Present value of right-of-use lease liabilities included in current liabilities

Present value of right-of-use lease liabilities

Present value included in current liabilities

Present value included in long-term liabilities

Cash flow information was as follows:

1 unchanged sentence

September 30,

Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flows

Cash paid for amounts included in the measurement of right-of-use lease liabilities, included in accounts payable and accrued liabilities on the Statements of Cash Flow.

Research and other commitments

15 unchanged sentences

The Company also has a commitment to pay royalties based on any net sales of products containing the Constructs in the countries where the Company directly commercializes the products containing the Constructs and a percentage of any sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the products containing the Constructs.

No royalty or sublicensing payments were made to the third party during the years ended September 30, 2022 and 2021.

No milestone, royalty or sublicensing payments were made to the third party during the years ended September 30, 2023 and 2022.

In connection with this license agreement and pursuant to a purchase agreement entered into in April 2020, the Company acquired drug substance of one of the Constructs for an aggregate purchase price of $5.0 million.

Payments of $2.5 million were made for the drug substance during each of the years ended September 30, 2022 and 2021 and included in research and development expenses .

The Company recorded an expense of $2.5 million for the second installment payment during the year ended September 30, 2022.

No expense was recorded during the year ended September 30, 2023 .

In 2016, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive rights to certain know-how, patents and data relating to a pharmaceutical product.

1 unchanged sentence

No intangible assets have been recognized under the license agreement with the third party.

Under the license agreement, the Company is committed to payments of various amounts to the third party upon meeting certain milestones outlined in the license agreement, up to an aggregate amount of $ 18.4 million after deducting $0.2 million that is included in the commitments table above for the year ending September 30, 2023.

Upon divestiture of substantially all of the assets of the Company, the Company shall pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert.

4 unchanged sentences

The Company is committed to remaining payments of up to an aggregate amount of $ 68.9 million, primarily relating to future potential commercial approval and sales milestones.

In addition, if the Company fails to file an investigational new drug application or foreign equivalent (IND) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed license fee annually as long as the requirement to file an IND remains unfulfilled.

In addition, if the Company fails to file an investigational new drug application or foreign equivalent (IND) for the product within a certain period of time following the date of the agreement, the Company is required to remit to the inventor a fixed license fee quarterly as long as the requirement to file an IND remains unfulfilled.

Retirement savings plan 401(k) contributions

4 unchanged sentences

Equity offerings

On November 2, 2022, the Company completed a private placement of units consisting of 384,475 common shares, Class A warrants to purchase up to an aggregate of 192,248 common shares and Class B warrants to purchase up to an aggregate of 192,248 common shares.

Net proceeds from the offering were $ 2.9 million, which were allocated between the relative fair values of the common shares (using a fair value of $2.7 million) and the common share purchase warrants (using a total fair value of $1.2 million).

The warrants became exercisable December 23, 2022 .

The Class A warrants have an exercise price of $ 10.50 per share and will expire on December 23, 2025 .

The Class B warrants have an exercise price of $ 7.00 per share and will expire on December 23, 2023.

The warrants are considered contracts on the Company’s own shares and are classified as equity.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

On March 24, 2022, the Company completed a registered direct offering of 220,000 common shares, no par value, and pre-funded warrants to purchase up to an aggregate of 171,390 common shares.

In a concurrent private placement, the Company issued common share purchase warrants to purchase an aggregate of up to 391,390 common shares.

Net proceeds from the offering were $ 9.01 million, which were allocated between the relative fair values of the common shares and pre-funded warrants issued (using a total fair value of $ 5.87 million) and the common share purchase warrants issued (using a total fair value of 4.13 million).

Net proceeds from the offering were $ 9.0 million.

The common share purchase warrants were immediately exercisable at an exercise price of $ 24.64 per share and will expire on September 24, 2027 .

1 unchanged sentence

The warrants are considered contracts on the Company’s own shares and are classified as equity.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

The Company allocated gross proceeds with $ 5.9 million as the value of common shares and pre-funded warrants and $ 4.1 million as the value of common share purchase warrants under additional paid-in capital on a relative fair value basis.

In connection with the offering, the Company issued warrants to purchase an aggregate of 27,397 common shares to certain affiliated designees of the placement agent as part of the placement agent’s compensation.

The placement agent warrants are exercisable on or after March 24, 2022, at an exercise price of $ 31.9375 per share and will expire on March 21, 2027 with a fair value of $ 0.4 million.

On March 2, 2021, the Company closed an underwritten offering of 1,562,500 common shares, no par value, at a price to the public of $ 6.40 per share less underwriting discounts and commissions.

Net proceeds from the offering were $ 8.89 million.

In connection with the offering, the Company issued underwriter warrants to purchase an aggregate of up to 109,375 common shares at an exercise price of $ 8.00 per share, expiring on February 26, 2026 with a fair value of $ 0.41 million.

Equity distribution agreements

On November 22, 2021, the Company entered into an equity distribution agreement with RBC Capital Markets, LLC (RBCCM), as sales agent.

Pursuant to the terms of the agreement, as amended March 4, 2022, the Company could offer and sell common shares through an at-the-market equity offering program having an aggregate offering price of up to $ 15.4 million.

On March 27, 2023, the Company entered into the Canaccord ATM, pursuant to which the Company may offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $ 20 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $ 8.4 million.

The Company has no obligation to sell any of the common shares and may at any time suspend sales or terminate the equity distribution agreement in accordance with its terms.

During the year ended September 30, 2023, the Company sold a total of 196,401 common shares pursuant to the agreement for gross proceeds of approximately $ 1.3 million.

From November 22, 2021 until terminated on March 21, 2022, the Company had an equity distribution agreement for an at-the-market equity offering program with another sales agent.

During the year ended September 30, 2022, the Company sold a total of 89,558 common shares pursuant to the agreement for net proceeds of $ 2.6 million.

The distribution agreement was terminated effective March 21, 2022.

On September 28, 2020, the Company entered into an equity distribution agreement with RBCCM, as sales agent, pursuant to which the Company could offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $ 9.2 million in gross cash proceeds.

The distribution agreement was terminated on February 25, 2021.

During the year ended September 30, 2021, 586,463 shares were sold under the distribution agreement, resulting in net proceeds of $ 3.42 million.

Black-Scholes option valuation model

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A summary of the Company’s warrants activity is as follows:

Number of Warrant Shares (#)

Weighted Average Exercise Price

Balance - September 30, 2021

Balance – September 30, 2021

Balance – September 30, 2022

September 30, 2022

September 30, 2023

EDESA BIOTECH, INC.

5 unchanged sentences

Exercise Prices

December 2023

December 2025

February 2026

3 unchanged sentences

Year Ended September 30, 2022

Common Warrants

Placement Agent Warrants

Underwriter Warrants

Risk free interest rate

4 unchanged sentences

A summary of the Company’s pre-funded warrant activity is as follows:

Number of Pre-funded Warrant Shares (#)

Balance - September 30, 2021

( 1,199,727 )

Balance - September 30, 2022

5 unchanged sentences

Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan.

The total number of shares available for issuance is 2,625,951 including shares available for the exercise of outstanding options under the 2019 Plan.

The remaining number of options available for grant at September 30, 2022 is 422,252 .

The total number of shares available for issuance under the terms of the 2019 Plan is 575,737 .

The remaining number of shares available to grant at September 30, 2023 is 81,765 .

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers.

1 unchanged sentence

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

Number of Options (#)

Weighted Average Exercise Price

Weighted Average Grant Date Fair Value

Balance - September 30, 2021

1 unchanged sentence

Balance - September 30, 2023

On February 28, 2022, the independent members of the Board of Directors granted a total of 415,083 options to employees of the Company pursuant to the 2019 Plan.

The options have a term of 10 years with vesting in equal proportions over 36 months beginning on the grant date, and an exercise price equal to the Nasdaq closing price on the grant dates.

On February 28,2022 and March 28, 2022, the independent directors of the Board of Directors granted a total of 55,000 and 30,000 options, respectively, to existing and new directors of the Company pursuant to the 2019 Plan.

The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant dates.

Options for directors have monthly vesting in equal proportions over 12 months beginning on the grant date.

In October 2020 and April 2021, the independent members of the Board of Directors granted a total of 430,000 and 603,000 options, respectively, to directors, officers and employees of the Company pursuant to the 2019 Plan.

The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant dates.

Options granted for directors in April 2021 have monthly vesting in equal proportions over 12 months beginning on the grant date.

Options granted for directors in October 2020 and all options for officers and current employees have monthly vesting in equal proportions over 36 months beginning on the grant date.

There were no options exercised during the years ended September 30, 2023 or September 30, 2022 and there was no intrinsic value of options outstanding at September 30, 2023.

The weighted average contractual life remaining on the outstanding options at September 30, 2022 is 85 months.

EDESA BIOTECH, INC.

1 unchanged sentence

For the Years Ended September 30, 2023 and 2022

During the year ended September 30, 2021, the independent members of the Board of Directors granted a total of 112,000 options to new employees of the Company pursuant to the 2019 Plan.

The options have a term of 10 years with vesting in equal proportions over 36 months beginning on the monthly anniversary of the grant date following 90 days of employment, and an exercise price equal to the Nasdaq closing price on the grant dates.

The aggregate intrinsic value of options outstanding at September 30, 2021 was $ 4.46 million.

The aggregate intrinsic value of options exercised during the year ended September 30, 2021 was $ 0.09 million.

There were no options exercised during the year ended September 30, 2022 and no intrinsic value of options outstanding at September 30, 2022.

The weighted average contractual life remaining on the outstanding options at September 30, 2022 is 96 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at September 30, 2023:

Number of Options (#)

Exercisable at September 30, 2022 (#)

Range of Exercise Prices

Exercisable at

September 30, 2023 (#)

Exercise Prices

$ 246.96 - 596.82

Sep 2023 - Mar 2025

Aug 2027 - Dec 2028

Dec 2023 - Mar 2025

May 2024 - Dec 2028

May 2024 - Feb 2030

$ 52.08 - 56.49

Sep 2030 - Oct 2030

May 2024 - Oct 2030

$ 36.75 - 40.18

Jan 2031 - Sep 2031

Apr 2024 - Sep 2031

$ 20.58 - 25.97

Feb 2032 - Mar 2032

Apr 2024 - Feb 2032

$ 5.79 - 10.01

Apr 2024 - Jul 2033

The options exercisable at September 30, 2023 had a weighted average exercise price of $ 31.03 , no intrinsic value and a weighted average remaining life of 74 months.

5 unchanged sentences

3.62 % - 4.18 %

1.71 % - 2.54 %

Expected life

3 unchanged sentences

Expected dividend yield

The Company recorded $ 2,260,634 and $ 3,195,469 of share-based compensation expenses for the years ended September 30, 2022 and 2021, respectively.

The Company recorded $ 1.2 million and $ 2.3 million of share-based compensation expenses for the years ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, the Company had approximately $ 0.5 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31 months.

Restricted Share Units

The Company's 2019 Plan allows restricted share units (RSUs) to be granted to directors, officers, employees and certain external consultants and advisers.

Under the 2019 Plan, the RSU term is not to exceed 10 years.

The fair value is based on the 5-day VWAP of the Company's common shares up to the date of grant.

The following is a summary of changes in the status of RSUs from October 1, 2021 through September 30, 2023:

Number of RSU (#)

Weighted Average Grant Date Fair Value

Balance - September 30, 2021 and 2022

Converted to common shares

Balance - September 30, 2023

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at September 30, 2023:

Number of RSU(#)

Fully-vested RSUs

August 4, 2033

The RSUs that were granted in the current year were in lieu of cash bonuses for certain employees and in lieu of payments on consulting invoices for services prior to the appointment of the new Chief Financial Officer.

All RSUs that were granted in the current year vested immediately upon the grant date.

The outstanding RSUs can be converted to common shares by the holder at any time prior to the expiry date.

There is no future unrecorded compensation expense for the RSUs.

EDESA BIOTECH, INC.

1 unchanged sentence

For the Years Ended September 30, 2023 and 2022

Reimbursement Grant Income and Receivable

Reimbursement grant income for the Company’s federal grant with the Canadian government’s Strategic Innovation Fund (SIF) is recorded based on the claim period of eligible costs.

At September 30,2022, grant reimbursements receivable of $ 1.1 million were included in accounts and other receivable.

The reconciliation of the combined Canadian federal to the approximate effective tax rate is as follows:

Government Contributions

Reimbursement grant income for the Company’s federal grant with the Canadian government’s SIF is recorded based on the claim period of eligible costs.

In February 2021, the Company entered into the 2021 SIF Agreement with the Canadian Government.

Under the 2021 SIF Agreement, the Government of Canada committed up to C$ 14.1 million in nonrepayable funding which was intended to support research and development related to our EB05 clinical program.

Under the February 2021 SIF Agreement the Company recorded grant income of $ 0.8 million for the year ended September 30, 2022.

No grant income was recorded under the 2021 SIF Agreement during the year ended September 30, 2023.

No further funding will be received from the 2021 SIF Agreement.

In October 2023, the Company entered into the 2023 SIF Agreement with the Canadian Government.

Under the 2023 SIF Agreement, the Government of Canada committed up to C$23 million in partially repayable funding toward (i) conducting and completing the Company’s Phase 3 clinical study of its experimental drug EB05 in critical-care patients with Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 or other infectious agents, (ii) submitting EB05 for governmental approvals and manufacturing scale-up, following, and subject to, completing the Phase 3 study and (iii) conducting two non-clinical safety studies to assess the potential long-term impact of EB05 exposure (the Project).

Of the C$23 million committed by SIF, up to C$5.8 million is not repayable by the Company.

The remaining C$17.2 million is conditionally repayable starting in 2029 only if and when the Company earns gross revenue .

The repayable portion would be payable over fifteen ( 15 ) years based on a percentage rate of the Company’s annual revenue growth.

The maximum amount repayable under the Agreement is 1.4 times the original repayable amount.

In addition, the Company is entitled to partial reimbursement of certain eligible expenses under the Agreement.

Under the Agreement, the Company agreed to certain financial and non-financial covenants and other obligations in relation to the Project.

Pursuant to the Agreement, certain customary events of default, such as the Company’s or Edesa Biotech Research’s breach of their covenants and obligations under the Agreement, their insolvency, winding up or dissolution, and other similar events, may permit the Government of Canada to declare an event of default under the Agreement.

Upon an event of default, subject to applicable cure, the Government of Canada may exercise a number of remedies, including suspending or terminating funding under the Agreement, demanding repayment of funding previously received and/or terminating the Agreement.

The funding and any associated conditional repayments are not secured by any assets of Edesa Biotech Research or the Company.

The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three (3) years beyond the term or early termination of the Agreement .

Under the October 2023 SIF Agreement the Company recorded grant income of $ 0.6 million for the year ended September 30, 2023.

No grant income was recorded under the 2023 SIF Agreement during the year ended September 30, 2022.

The reconciliation of the combined Canadian federal and provincial statutory income tax rate to the approximate effective tax rate is as follows:

September 30,

7 unchanged sentences

$ ( 4,650,000 )

Permanent differences and other adjustments

Effect of foreign currency and foreign tax rate differences

Permanent differences

Share issuance cost booked through equity or capitalization

Non-capital losses limitation - U.S.

Change in valuation allowance

Income tax expense

Income tax (recovery) expense

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

Components of the net deferred tax asset or liability

15 unchanged sentences

Right-of-use assets

Grant Income receivable

Deferred share issuance costs

Total deferred tax liabilities

$ ( 233,000 )

Net deferred taxes

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

Realization of the deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain.

5 unchanged sentences

The approximate Canadian non-capital losses carried forward at September 30, 2023 expire as follows:

Share issuance and financing costs will be fully amortized in 2026.

non-capital losses carried forward at September 30, 2022 totaled approximately $ 7,666,000 , which do not expire for federal taxes.

state research and development tax credits carried forward at September 30, 2022 totaled approximately $ 619,000 , which do not expire for state taxes.

The approximate U.S.

state non-capital losses carried forward at September 30, 2022 expire as follows:

C$ 70,975,000

EDESA BIOTECH, INC.

1 unchanged sentence

For the Years Ended September 30, 2023 and 2022

Share issuance and financing costs will be fully amortized in 2026.

non-capital losses carried forward at September 30, 2023 totaled approximately $ 3.4 million, which do not expire for federal taxes.

state research and development tax credits carried forward at September 30, 2023 totaled approximately $ 0.6 million, which do not expire for state taxes.

The approximate U.S.

state non-capital losses carried forward at September 30, 2023 expire as follows:

Financial instruments

1 unchanged sentence

The Company uses the fair value measurement framework for valuing financial assets and liabilities measured on a recurring basis in situations where other accounting pronouncements either permit or require fair value measurements.

Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company follows the fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

16 unchanged sentences

The Company assesses the collectability of accounts receivable through a review of the current aging and terms, as well as an analysis of historical collection rates, general economic conditions and credit status of government agencies.

Credit risk for reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s Strategic Innovation Fund (SIF) and the Canada Revenue Agency.

Credit risk for the reimbursement grant and HST refunds receivable are not considered significant since amounts are due from the Canadian government’s SIF and the Canada Revenue Agency.

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2023 and 2022

8 unchanged sentences

Based on the exposure at September 30, 2023, a 10% annual change in the Canadian/U.S.

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $501,000 .

EDESA BIOTECH, INC.

Notes to Consolidated Financial Statements

For the Years Ended September 30, 2022 and 2021

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.2 million .

(d) Liquidity risk

1 unchanged sentence

In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

Loss per Share

The Company had securities outstanding which could potentially dilute basic earnings per share in the future but were excluded from the computation of diluted loss per share in the periods presented, as their effect would have been anti-dilutive.

Related party transactions

During each of the years ended September 30, 2022 and 2021, the Company paid cash for right-of-use lease of $ 81,000 from a company controlled by the Company’s CEO.

During each of the years ended September 30, 2023 and 2022, the Company paid cash of $ 82,000 and $ 81,000 , respectively, for a ROU lease from a company controlled by the Company's CEO.

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by both parties.

Rents of approximately $ 22,000 were payable at September 30, 2022.

No rent was payable at September 30, 2021.

On December 31, 2022, the Company executed a two-year lease extension through December 31, 2024 in accordance with the terms of the original lease agreement.

Rents of approximately $ 15,000 and $ 22,000 were payable at September 30, 2023 and September 30, 2022, respectively.

Subsequent events

On November 2, 2022, the Company completed a private placement of units consisting of 2,691,337 common shares, twelve-month warrants to purchase up to an aggregate of 1,345,665 common shares and three-year warrants to purchase up to an aggregate of 1,345,665 common shares.

The gross proceeds from this offering were approximately $ 3.0 million, before offering expenses.

Subsequent to the year end, equity sales under the Company’s at-the-market offering program have resulted in the issuance of 89,241 common shares and receipt of net cash proceeds of $ 0.3 million after deducting sales agent commissions.

In October 2023, the Company entered into $ 10.0 million revolving credit agreement with a company controlled by the Company's CEO, providing an unsecured revolving credit facility, with a credit limit of $ 3.5 million.

No amounts have been drawn on the credit agreement subsequent to the year end.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures