What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-02-09 compared with 2023-08-09 · 119 added, 166 removed, 296 unchanged (49% of the section changed)

2 unchanged sentences

Condensed Interim Consolidated Balance Sheets

June 30, 2023

December 31, 2023

September 30, 2023

15 unchanged sentences

Non-current liabilities:

Long-term payables

Long-term right-of-use lease liabilities

17 unchanged sentences

Three Months Ended

Nine Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

December 31, 2023

December 31, 2022

Research and development

3 unchanged sentences

( 2,378,305 )

( 6,853,095 )

( 15,534,479 )

Other income (loss):

2 unchanged sentences

Foreign exchange loss

Loss before income taxes

( 1,678,451 )

( 2,334,817 )

( 6,653,272 )

( 14,734,213 )

Income tax expense

( 1,984,906 )

( 5,787,020 )

( 6,654,072 )

( 14,735,013 )

Exchange differences on translation

2 unchanged sentences

$ ( 2,359,884 )

$ ( 6,630,657 )

$ ( 14,655,539 )

Weighted average number of common shares

3 unchanged sentences

Condensed Interim Consolidated Statements of Cash Flows

Nine Months Ended

June 30, 2023

June 30, 2022

Three Months Ended

December 31, 2023

December 31, 2022

Cash flows from operating activities:

12 unchanged sentences

Cash flows from investing activities:

Purchase of property and equipment

Net cash used in investing activities

1 unchanged sentence

Proceeds from issuance of common shares and warrants

Proceeds from exercise of warrants

Payments for issuance costs of common shares and warrants

2 unchanged sentences

Net change in cash and cash equivalents

( 1,093,610 )

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental Disclosure of Noncash Financing Activities:

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

Fair value of placement agent warrants

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

6 unchanged sentences

Total Shareholders' Equity

Three Months Ended June 30, 2023

Balance - March 31, 2023

$ ( 230,026 )

$ ( 48,713,719 )

Issuance of common shares and warrants in equity offering

Issuance costs

Share-based compensation

Net loss and comprehensive loss

( 1,984,906 )

( 1,945,067 )

Balance - June 30, 2023

$ ( 190,187 )

$ ( 50,698,625 )

Three Months Ended June 3, 2022

Balance - March 31, 2022

$ ( 160,347 )

$ ( 35,443,622 )

Share-based compensation

Net loss and comprehensive loss

( 5,787,020 )

( 5,752,461 )

Balance - June 30, 2022

$ ( 125,788 )

$ ( 41,230,642 )

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Balance - September 30, 2023

1 unchanged sentence

$ ( 52,418,968 )

Issuance of common shares and warrants in equity offering

Issuance of common shares upon exercise of warrants

Issuance of common shares

Issuance costs

3 unchanged sentences

( 1,679,023 )

Balance - June 30, 2023

Balance - December 31, 2023

$ ( 215,220 )

$ ( 54,097,419 )

Nine Months Ended June 30, 2022

Three Months Ended December 31, 2022

Balance - September 30, 2022

1 unchanged sentence

$ ( 44,044,553 )

Issuance of common shares and warrants in equity offering

Issuance costs including fair value of placement agent warrants

( 1,311,559 )

Issuance of common shares and warrants

Issuance costs

Share-based compensation

2 unchanged sentences

( 2,359,884 )

Balance - June 30, 2022

Balance - December 31, 2022

$ ( 238,669 )

18 unchanged sentences

All adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods.

Operating results for the three and nine months ended June 30, 2023 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2023.

Operating results for the three months ended December 31, 2023 are not necessarily indicative of the results that may be expected for other interim periods or the fiscal year ending September 30, 2024.

Use of estimates

27 unchanged sentences

Intangible assets, net consisted of the following:

June 30, 2023

September 30,

2 unchanged sentences

Total intangible assets, net

Amortization expense amounted to $ 0.03 million for each of the three months ended June 30, 2023 and 2022 and $ 0.08 million for each of the nine months ended June 30, 2023 and 2022.

Amortization expense amounted to $ 0.03 million for each of the three months ended December 31, 2023 and 2022 , respectively.

Total estimated future amortization of intangible assets for each fiscal year is as follows:

9 unchanged sentences

Three Months Ended

Nine Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

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

Lease terms and discount rates were as follows:

June 30, 2023

September 30,

1 unchanged sentence

Estimated incremental borrowing rate:

The future minimum lease payments under right-of-use leases at June 30, 2023 were as follows:

September 30, 2023

The future minimum lease payments under right-of-use leases at December 31, 2023 were as follows:

September 30, 2024

6 unchanged sentences

Cash flow information was as follows:

Nine Months Ended

June 30, 2023

June 30, 2022

Three Months Ended

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.

1 unchanged sentence

The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers.

Approximate aggregate future contractual payments at June 30, 2023 are as follows:

Approximate aggregate future contractual payments at December 31, 2023 are as follows:

September 30, 2024

4 unchanged sentences

License and royalty commitments

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to certain know-how, patents and data relating to the Constructs, including sublicensing rights.

In April 2020, through its Ontario subsidiary, the Company entered into a license agreement with a third party to obtain exclusive world-wide rights to the Constructs, including sublicensing rights.

An intangible asset for the acquired license has been recognized.

2 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 milestone, royalty or sublicensing payments were made to the third party during the three and nine months ended June 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, payable in two installments.

The Company recorded expense of $2.5 million for the second installment during the three and nine months ended June 30, 2022.

No expense was recorded during the three and nine months ended June 30, 2023.

No milestone, royalty or sublicensing payments were made to the third party during the three months ended December 31, 2023 and 2022.

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 $ 0.04 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 would pay the third party a percentage of the valuation of the licensed technology sold as determined by an external objective expert.

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.

The Company also has a commitment to pay the third party a royalty based on net sales of the product in countries where the Company, or an affiliate, directly commercializes the product and a percentage of sublicensing revenue received by the Company and its affiliates in the countries where it does not directly commercialize the product.

Milestone payments totaling $ 0.04 million and $ 0.16 million were made to the third party during the three and nine months ended June 30, 2023, respectively.

No milestones were met during the three and nine months ended June 30, 2022.

No royalty or sublicensing payments were made to the third party during the three and nine months ended June 30, 2023 and 2022.

A milestone payment of $ 0.1 million was made to the third party during the three months ended December 31, 2022 and no milestone payments were made during the three months ended December 31, 2023.

In March 2021, through its Ontario subsidiary, the Company entered into a license agreement with the inventor of the same pharmaceutical product to acquire global rights for all fields of use beyond those named under the 2016 license agreement.

Milestone payments of $ 0.03 million were made under the 2021 agreement during the nine months ended June 30, 2022.

No milestones were met during the three and nine months ended June 30, 2023 or the three months ended June 30, 2022.

The Company is committed to remaining milestone 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 or prorated license fee annually as long as the requirement to file an IND remains unfulfilled.

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 quarterly as long as the requirement to file an IND remains unfulfilled.

For the three months ended December 31, 2023, the Company recorded an expense of $ 25,000 as a result of meeting milestones outlined in the 2021 license agreement.

There were no milestones achieved in the three months ended December 31, 2022 and no expenses were incurred.

Capital Shares

Equity Distribution Agreements

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (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 allow the Company to offer and sell common shares having an aggregate gross sales price of up to $ 8.37 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 three months ended June 30, 2023, the Company sold a total of 808,107 common shares pursuant to the agreement for net proceeds of $ 0.69 million after deducting commissions and costs.

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 nine months ended June 30, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for net proceeds of $ 2.62 million.

Equity offerings

3 unchanged sentences

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 $ 1.00 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.

On March 24, 2022, the Company completed a registered direct offering of 1,540,000 common shares, no par value, and pre-funded warrants to purchase up to an aggregate of 1,199,727 common shares.

In a concurrent private placement, the Company issued common share purchase warrants to purchase an aggregate of up to 2,739,727 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 (using a total fair value of $ 5.87 million) and the common share purchase warrants (using a total fair value of $ 4.13 million).

The common share purchase warrants were immediately exercisable at an exercise price of $ 3.52 per share and will expire on September 24, 2027 .

The pre-funded warrants were immediately exercisable at an exercise price of $ 0.0001 per share and do not expire.

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

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

In connection with the offering, the Company issued warrants to purchase an aggregate of 191,780 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 $ 4.5625 per share, and will expire on March 21, 2027 with a fair value of $ 0.41 million.

Equity distribution agreement

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord, 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 three months ended December 31, 2023, the Company sold a total of 89,249 common shares pursuant to the agreement for gross proceeds of approximately $ 0.3 million after deducting commissions and direct costs.

Black-Scholes option valuation model

12 unchanged sentences

Weighted Average Exercise Price

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Balance - September 30, 2023

Balance - June 30, 2023

Nine Months Ended June 30, 2022

Balance - December 31, 2023

Three Months Ended December 31, 2022

Balance - September 30, 2022

Balance - June 30, 2022

The weighted average contractual life remaining on the outstanding warrants at June 30, 2023 is 34 months.

The following table summarizes information about the warrants outstanding at June 30, 2023:

Balance - December 31, 2022

The weighted average contractual life remaining on the outstanding warrants at December 31, 2023 is 38 months.

The following table summarizes information about the warrants outstanding at December 31, 2023:

Number of Warrants (#)

1 unchanged sentence

December 2025

February 2026

September 2027

The fair value of warrants granted during the nine months ended June 30, 2023 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended June 30, 2023

Nine Months Ended June 30, 2022

The fair value of warrants granted during the three months ended December 31, 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:

Three Months Ended December 31, 2022

Class A Warrants

Class B Warrants

Common Warrants

Placement Agent Warrants

Risk free interest rate

2 unchanged sentences

Expected dividend yield

Pre-funded Warrants

A summary of the Company’s pre-funded warrants activity is as follows:

Number of Pre-funded Warrant Shares (#)

Nine Months Ended June 30, 2022

Balance - September 30, 2021

Balance - June 30, 2022

There were no pre-funded warrants during the nine months ended June 30, 2023.

Share options

1 unchanged sentence

Options, restricted shares and restricted share units are eligible for grant under the 2019 Plan.

At June 30, 2023, the total number of shares available for issuance is 1,557,766 including shares available for the exercise of outstanding options under the 2019 Plan.

The remaining number of options available for grant at June 30, 2023 is 1,557,766 .

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 December 31, 2023 is 81,371 .

The Company’s 2019 Plan allows options to be granted to directors, officers, employees and certain external consultants and advisers.

Under the 2019 Plan, the option term is not to exceed 10 years and the exercise price of each option is determined by the independent members of the Board of Directors.

Options granted for directors normally have monthly vesting in equal proportions over 12 months beginning on the grant date.

Options granted for employees normally have monthly vesting in equal proportions over 36 months beginning on the grant date.

Options granted for new employees normally have monthly vesting in equal proportions over 36 months beginning on the monthly anniversary of the grant date following 90 days of employment.

Options have been granted under the 2019 Plan allowing the holders to purchase common shares of the Company as follows:

2 unchanged sentences

Weighted Average Grant Date Fair Value

Nine Months Ended June 30, 2023

Three Months Ended December 31, 2023

Balance - September 30, 2023

Balance - June 30, 2023

Nine Months Ended June 30, 2022

Balance - December 31, 2023

Three Months Ended December 31, 2022

Balance - September 30, 2022

Balance - June 30, 2022

During the nine months ended June 30, 2023, the independent members of the Board of Directors granted 332,950 employee and new employee options pursuant to the 2019 Plan.

During the nine months ended June 30, 2022, the independent members of the Board of Directors granted 415,083 employee options and 85,000 director options.

Balance - December 31, 2022

During the three months ended December 31, 2023, the independent members of the Board of Directors granted 500 employee options and no director options.

The options have a term of 10 years and an exercise price equal to the Nasdaq closing price on the grant date.

The weighted average contractual life remaining on the outstanding options at June 30, 2023 is 90 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at June 30, 2023:

The weighted average contractual life remaining on the outstanding options at December 31, 2023 is 83 months.

The following table summarizes information about the options under the 2019 Plan outstanding and exercisable at December 31, 2023:

Number of Options (#)

Exercisable at

June 30, 2023 (#)

December 31, 2023 (#)

Range of Exercise Prices

$ 246.96 - 596.82

Sep 2023 - Mar 2025

Aug 2027 - Dec 2028

June 2024 - 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

Dec 2032 - Feb 2033

The fair value of options granted during the nine months ended June 30, 2023 and 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:

Nine Months Ended

June 30, 2023

June 30, 2022

Apr 2024 - Jul 2033

The options exercisable at December 31, 2023 had a weighted average exercise price of $ 29.99 , $ 245 intrinsic value and a weighted average remaining life of 74 months.

There were 108,584 options at December 31, 2023 that had not vested with a weighted average exercise price of $ 12.43 , no intrinsic value and a weighted average remaining life of 109 months.

The fair value of options granted during the three months ended December 31, 2023 and 2022 was estimated using the Black-Scholes option valuation model using the following assumptions:

Three Months Ended December 31, 2023

Three Months Ended December 31, 2022

Risk free interest rate

3.62 %- 4.18 %

1.71 % - 2.54 %

Expected life

Expected share price volatility

95.3 %- 97.34 %

85.91 % - 86.59 %

Expected dividend yield

The Company recorded $ 0.11 million and $ 0.57 million of share-based compensation expenses for the three months ended June 30, 2023 and 2022, respectively and $ 0.73 million and $ 1.80 million for the nine months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, the Company had $ 0.46 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31 months.

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 June 30, 2023, the grant program is complete and all grant reimbursements have been received.

The Company recorded $ 0.2 million and $ 0.3 million of share-based compensation expenses for the three months ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the Company had approximately $ 0.3 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 31months.

Restricted Share Units (RSU)

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 initial grant of RSUs was in August 2023.

The following is a summary of changes in the status of RSUs from October 1, 2023 through December 31, 2023:

Number of RSU (#)

Weighted Average Grant Date Fair Value

Three Months Ended December 31, 2023

Balance - September 30, 2023 and December 31, 2023

The following table summarizes information about the RSUs under the 2019 Plan outstanding and exercisable at December 31, 2023:

Number of RSU (#)

Fully-vested RSUs

August 4, 2033

All RSUs that were granted 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.

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 a multi-year contribution agreement (the 2021 SIF Agreement) with the Canadian Government’s Strategic Innovation Fund.

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.

No further funding will be received from the 2021 SIF Agreement.

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

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 2023 SIF Agreement the Company recorded grant income of $ 0.1 million for the three months ended December 31, 2023.

No grant income was recorded under the 2023 SIF Agreement for the three months ended December 31, 2022.

Financial Instruments

10 unchanged sentences

The carrying value of certain financial instruments such as cash and cash equivalents, accounts and other receivable, accounts payable and accrued liabilities approximates fair value due to the short-term nature of such instruments.

The fair value of lease obligations on right-of-use assets approximates carrying value due to a fixed lease rate, which represents market rate.

(b) Interest rate and credit risk

2 unchanged sentences

The Company is also exposed to credit risk at period end from the carrying value of its cash and cash equivalents and accounts and other receivable.

The Company manages this risk by maintaining bank accounts with Canadian Chartered Banks, U.S.

banks believed to be credit worthy and money market mutual funds of U.S.

The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank and a U.S.

bank believed to be credit worthy and money market mutual funds of U.S.

government securities.

1 unchanged sentence

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 the HST refunds receivable are not considered significant since amounts are due from 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.

The Company and its Canadian subsidiary have balances in Canadian dollars that give rise to exposure to foreign exchange (FX) risk relating to the impact of translating certain non-U.S.

The Company and its subsidiary have balances in Canadian dollars that give rise to exposure to foreign exchange (FX) risk relating to the impact of translating certain non-U.S.

dollar balance sheet accounts as these statements are presented in U.S.

3 unchanged sentences

The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks.

At June 30, 2023, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 3.3 million and the U.S.

At December 31, 2023, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$ 1.9 million and the U.S.

dollar exchange rate at this date was equal to 1.3257 Canadian dollars.

Based on the exposure at June 30, 2023, a 10% annual change in the Canadian/U.S.

Based on the exposure at December 31, 2023, a 10% annual change in the Canadian/U.S.

exchange rate would impact the Company’s loss and other comprehensive loss by approximately $0.1 million .

5 unchanged sentences

Related Party Transactions

During each of three and nine months ended June 30, 2023 and 2022, the Company paid cash of $ 0.02 million and $ 0.06 million, respectively, for a right of use lease from a company controlled by the Company’s CEO.

During each of the three months ended December 31, 2023 and 2022, the Company paid cash of $ 20,000 and $ 19,000 , 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.

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.

Rent of approximately $ 15,000 was payable at December 31, 2023.

There was no rent payable at December 31, 2022.

In October 2023, we entered into $ 10.0 million revolving credit agreement with Pardeep Nijhawan Medicine Professional Corporation, an entity controlled by Dr.

Pardeep Nijhawan, MD, our Chief Executive Officer and Secretary and member of our board of directors (Credit Agreement), providing an unsecured revolving credit facility, with a credit limit of $ 3.5 million (Credit Limit) which was 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.

The Company has not drawn any funds from the Credit Agreement.

During the three months ended December 31, 2023 the Company incurred a standby charge of $ 12,000 .

There was no standby charge in the three months ended December 31, 2022.

Subsequent Events

Subsequent to June 30, 2023, equity sales under the Company’s at-the-market offering program have resulted in the issuance of 226,882 common shares and receipt of net cash proceeds of $ 0.19 million after deducting sales agent commissions.

Subsequent to the quarter end, the Company granted 497,000 share options to employees and directors and 326,200 restricted shares units to certain employees in lieu of cash-based incentive compensation and to one employee for payment of past consulting services.

Subsequent to December 31, 2023, equity sales under the Company’s at-the-market offering program have resulted in the issuance of 7,038 common shares and receipt of net cash proceeds of $ 0.03 million after deducting sales agent commissions.

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-Q

Item 1. Financial Statements