Cover
Cover - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 14, 2022 | Mar. 31, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | EDESA BIOTECH, INC | ||
Entity Central Index Key | 0001540159 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Sep. 30, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 19,353,351 | ||
Entity Public Float | $ 35,987,404 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-37619 | ||
Entity Incorporation State Country Code | Z4 | ||
Entity Address Address Line 1 | 100 Spy Court | ||
Entity Address City Or Town | Markham | ||
Entity Address State Or Province | ON | ||
Entity Address Country | CA | ||
Entity Address Postal Zip Code | L3R 5H6 | ||
City Area Code | 289 | ||
Local Phone Number | 800-9600 | ||
Security 12b Title | Common Shares, without par value | ||
Trading Symbol | EDSA | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Auditor Name | MNP LLP | ||
Auditor Location | Toronto, Canada | ||
Auditor Firm Id | 1930 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 7,090,919 | $ 7,839,259 |
Accounts and other receivable | 1,255,451 | 3,302,827 |
Prepaid expenses and other current assets | 745,543 | 948,645 |
Total current assets | 9,091,913 | 12,090,731 |
Non-current assets: | ||
Property and equipment, net | 12,694 | 14,989 |
Long term deposits | 171,464 | 0 |
Intangible asset, net | 2,281,192 | 2,382,364 |
Right-of-use assets | 18,465 | 96,571 |
Total assets | 11,575,728 | 14,584,655 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 2,121,802 | 1,379,842 |
Short-term right-of-use lease liabilities | 18,975 | 78,808 |
Total current liabilities | 2,140,777 | 1,458,650 |
Non-current liabilities: | ||
Long-term payables | 43,662 | 47,202 |
Long-term right-of-use lease liabilities | 0 | 20,512 |
Total liabilities | 2,184,439 | 1,526,364 |
Shareholders' equity: | ||
Capital shares Authorized unlimited common and preferred shares without par value Issued and outstanding 16,662,014 common shares (September 30, 2021 - 13,295,403): | 42,473,099 | 34,887,721 |
Additional paid-in capital | 11,176,345 | 4,871,461 |
Accumulated other comprehensive loss | (213,602) | (205,262) |
Accumulated deficit | (44,044,553) | (26,495,629) |
Total shareholders' equity | 9,391,289 | 13,058,291 |
Total liabilities and shareholders' equity | $ 11,575,728 | $ 14,584,655 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 |
Consolidated Balance Sheets | ||
Capital Shares, Par Value | $ 0 | $ 0 |
Capital Shares, Issued | 16,662,014 | 13,295,403 |
Capital Shares, Outstanding | 16,662,014 | 13,295,403 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Expenses: | ||
Research and development | $ 13,335,334 | $ 17,947,072 |
General and administrative | 5,035,456 | 5,734,260 |
Loss from Operations | (18,370,790) | (23,681,332) |
Other Income (Loss): | ||
Reimbursement grant income | 780,257 | 10,340,839 |
Interest income | 63,523 | 11,165 |
Foreign exchange loss | (21,114) | (13,022) |
Other income expense | 822,666 | 10,338,982 |
Loss before income taxes | (17,548,124) | (13,342,350) |
Income tax expense | 800 | 800 |
Net Loss | (17,548,924) | (13,343,150) |
Exchange differences on translation | (8,340) | 81,942 |
Net Comprehensive Loss | $ (17,557,264) | $ (13,261,208) |
Weighted average number of common shares | 16,662,014 | 12,077,822 |
Loss per common share - basic and diluted | $ (1.05) | $ (1.10) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (17,548,924) | $ (13,343,150) |
Adjustments for: | ||
Depreciation and amortization | 118,188 | 118,788 |
Share-based compensation | 2,260,634 | 3,195,469 |
Changes in working capital items: | ||
Accounts and other receivable | (2,027,454) | (3,229,954) |
Prepaid expenses and other current assets | (19,497) | (281,361) |
Accounts payable and accrued liabilities | 882,843 | (124,724) |
Net cash used in operating activities | (12,279,302) | (13,664,932) |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (5,656) | (6,146) |
Net cash used in investing activities | (5,656) | (6,146) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of common shares and warrants | 11,957,687 | 12,662,357 |
Proceeds from exercise of warrants | 0 | 1,658,769 |
Proceeds from exercise of share options | 0 | 41,981 |
Payments for issuance costs of common shares | (328,059) | (188,366) |
Net cash provided by financing activities | 11,629,628 | 14,174,741 |
Effect of exchange rate changes on cash and cash equivalents | (93,010) | 121,901 |
Net change in cash and cash equivalents | (748,340) | 625,564 |
Cash and cash equivalents, beginning of year | 7,839,259 | 7,213,695 |
Cash and cash equivalents, end of year | 7,090,919 | 7,839,259 |
Supplemental Disclosure of Noncash Financing Activities: | ||
Preferred shares converted from temporary equity to common shares | 0 | 2,496,480 |
Issuance costs withheld from gross proceeds from issuance of common shares and warrants | 393,461 | 1,087,184 |
Fair value of placement agent/underwriter warrants | $ 408,059 | $ 407,022 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders Equity - USD ($) | Total | Common Shares | Additional Paid-In Capital | Accumulated other comprehensive loss | Accumulated Deficit |
Balance, amount at Sep. 30, 2020 | $ 6,631,175 | $ 18,500,853 | $ 1,550,480 | $ (287,204) | $ (13,132,954) |
Balance, shares at Sep. 30, 2020 | 9,615,119 | ||||
Issuance of common shares and warrants in equity offering, shares | 2,148,963 | ||||
Issuance of common shares and warrants in equity offering, amount | 13,749,541 | $ 13,749,541 | 0 | 0 | 0 |
Issuance costs including fair value of underwriter warrants | (1,434,391) | $ (1,841,413) | 407,022 | 0 | 0 |
Issuance of common shares upon exercise of warrants, shares | 381,650 | ||||
Issuance of common shares upon exercise of warrants, amount | 1,658,769 | $ 1,912,725 | (253,956) | 0 | 0 |
Issuance of common shares upon exercise of share options, shares | 19,746 | ||||
Issuance of common shares upon exercise of share options, amount | 41,981 | $ 69,535 | (27,554) | 0 | 0 |
Conversion of convertible preferred shares, amount | 2,496,480 | $ 0 | 2,496,480 | 0 | 0 |
Conversion of convertible preferred shares, shares | 1,129,925 | ||||
Preferred return on convertible preferred shares, amount | (19,525) | $ 0 | 0 | 0 | (19,525) |
Share-based compensation | 3,195,469 | 0 | 3,195,469 | 0 | 0 |
Net loss and comprehensive loss | (13,261,208) | $ 0 | 0 | 81,942 | (13,343,150) |
Balance, shares at Sep. 30, 2021 | 13,295,403 | ||||
Balance, amount at Sep. 30, 2021 | 13,058,291 | $ 34,887,721 | 4,871,461 | (205,262) | (26,495,629) |
Issuance of common shares and warrants in equity offering, shares | 2,166,884 | ||||
Issuance of common shares and warrants in equity offering, amount | 12,941,474 | $ 6,239,181 | 6,702,293 | 0 | 0 |
Share-based compensation | 2,260,634 | 0 | 2,260,634 | 0 | 0 |
Net loss and comprehensive loss | (17,557,264) | 0 | 0 | (8,340) | (17,548,924) |
Issuance costs including fair value of placement agent warrants | (1,311,965) | $ (863,227) | (448,738) | 0 | 0 |
Issuance of common shares upon exercise of pre-funded warrants, net of costs, shares | 1,199,727 | ||||
Issuance of common shares upon exercise of pre-funded warrants, net of costs, amount | 120 | $ 2,209,424 | (2,209,304) | 0 | 0 |
Balance, shares at Sep. 30, 2022 | 16,662,014 | ||||
Balance, amount at Sep. 30, 2022 | $ 9,391,289 | $ 42,473,099 | $ 11,176,345 | $ (213,602) | $ (44,044,553) |
Nature of operations
Nature of operations | 12 Months Ended |
Sep. 30, 2022 | |
Nature of operations | |
1. Nature Of Operations | 1. Nature of operations Edesa Biotech, Inc. (the Company or Edesa) is a biopharmaceutical company focused on acquiring, developing and commercializing clinical stage drugs for inflammatory and immune-related diseases with clear unmet medical needs. The Company is organized under the laws of British Columbia, Canada and is headquartered in Markham, Ontario. It operates under its wholly owned subsidiaries, Edesa Biotech Research, Inc., an Ontario, Canada corporation, and Edesa Biotech USA, Inc., a California, USA corporation. The Company’s common shares trade on The Nasdaq Capital Market in the United States under the symbol “EDSA”. Liquidity 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. In March 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 to the Company were approximately $9.01 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. |
Basis of presentation
Basis of presentation | 12 Months Ended |
Sep. 30, 2022 | |
Basis of presentation | |
2. Basis Of Presentation | 2. Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and include the accounts of the Company and its wholly owned subsidiaries, Edesa Biotech Research, Inc. and Edesa Biotech USA, Inc. All intercompany balances and transactions have been eliminated upon consolidation. The accompanying consolidated financial statements include the years ended September 30, 2022 and 2021. |
Significant accounting policies
Significant accounting policies | 12 Months Ended |
Sep. 30, 2022 | |
Significant accounting policies | |
3.Significant accounting policies | 3. Significant accounting policies Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; operating lease right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption. Functional and reporting currencies The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars. Cash and cash equivalents Cash and cash equivalents consist of demand deposits with financial institutions held in checking, savings and money market mutual funds and highly liquid investments which are readily convertible into cash with maturities of three months or less when purchased. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term nature. Accounts and other receivable 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. As of September 30, 2022, all outstanding accounts, grants and HST refunds receivable were deemed to be fully collectible, and therefore, no allowance for doubtful accounts was recorded. Property and equipment Property and equipment are recorded at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is recorded to write off the cost of assets less their residual values over their useful lives, using the declining balance and straight-line methods. Maintenance and repair expenditures that do not improve or extend the life are expensed in the period incurred. Any gain or loss arising on the disposal or retirement of an item of property and equipment is recognized as the difference between the sales proceeds and the carrying amount of the asset. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis. The depreciation policy for the principal asset categories are calculated as follows: Computer equipment 30% declining balance method or straight line 3 years Furniture and equipment 20% declining balance method Intangible assets Intangible assets represent the exclusive world-wide rights to know-how, patents and data relating to certain monoclonal antibodies (the Constructs), including sublicensing rights, acquired by entering into a license agreement with a pharmaceutical development company. Unless earlier terminated, the term of the license agreement will remain in effect for 25 years from the date of first commercial sale of licensed products containing the Constructs. Subsequently, the license agreement will automatically renew for five-year periods unless either party terminates the agreement in accordance with its terms. 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. Impairment of long-lived assets Long-lived assets are tested for impairment when indicators of impairment exist. When a significant change in the expected timing or amount of the future cash flows of the financial asset is identified, the carrying amount of the financial asset is reduced and the amount of the write-down is recognized as a loss. 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. 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. Fair value measurement The Company uses the fair value measurement framework for valuing financial assets and liabilities. See Note 11. Revenue recognition Reimbursement grant income is recognized based on the reimbursement rate included in the government contribution agreement when allowable expenses have been incurred. Research and development Research and development expenses principally consist of (i) contract research organizations for clinical trial management services, (ii) contract manufacturing organizations for manufacturing the drug compound(s) for use in clinical trials and (iii) salaries of employees directly involved in research and development efforts. Research and development costs are expensed as incurred. Share-based compensation 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. Translation of foreign currency transactions The Company’s reporting currency is the U.S. dollar. The financial statements of the wholly owned Canadian subsidiary is measured using the Canadian dollar as the functional currency. Assets and liabilities of the Canadian operation have been translated at year-end exchange rates and related revenue and expenses have been translated at average exchange rates for the year. Accumulated gains and losses resulting from the translation of the financial statements of the Canadian operation are included as part of accumulated other comprehensive loss, a separate component of shareholders’ equity. For other transactions denominated in currencies other than the Company’s functional currency, the monetary assets and liabilities are translated at the year-end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. Non-monetary balance sheet and related income statement accounts are remeasured into U.S. dollar using historical exchange rates. All of the exchange gains or losses resulting from these other transactions are recognized in the statements of operations and comprehensive loss. Income taxes 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. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized. The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. The Company is subject to examination by taxing authorities in Canada and the U.S. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying financial statements. The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense. The Company accounts for income taxes on a tax jurisdictional basis. The Company files income tax returns in Canada, the provinces of British Columbia and Ontario, the U.S. and the state of California. 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. 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. Segmented Information The Company’s operations comprise a single reportable segment engaged in the research and development, manufacturing and commercialization of innovative pharmaceutical products. As the operations comprise a single reportable segment, amounts disclosed in the consolidated financial statements for net loss, comprehensive loss, depreciation and total assets also represent segmented amounts. 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. 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. 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. |
Property and equipment
Property and equipment | 12 Months Ended |
Sep. 30, 2022 | |
Property and equipment | |
4.Property and equipment | 4. Property and equipment Property and equipment, net consisted of the following: September 30, 2022 September 30, 2021 Computer equipment $ 46,674 $ 42,855 Furniture and equipment 5,538 5,987 52,212 48,842 Less: accumulated depreciation (39,518 ) (33,853 ) Total property and equipment, net $ 12,694 $ 14,989 Depreciation expense amounted to $6,991 and $8,323 for the years ended September 30, 2022 and 2021, respectively. |
Intangible assets
Intangible assets | 12 Months Ended |
Sep. 30, 2022 | |
Intangible assets | |
5.Intangible assets | 5. Intangible assets Acquired License In April 2020, the Company entered into a license agreement with a pharmaceutical development company to obtain exclusive world-wide rights to know-how, patents and data relating to certain monoclonal antibodies (the Constructs), including sublicensing rights. Unless earlier terminated, the term of the license agreement will remain in effect for 25 years from the date of first commercial sale of licensed products containing the Constructs. Subsequently, the license agreement will automatically renew for five-year periods unless either party terminates the agreement in accordance with its terms. Under the license agreement, the Company is exclusively responsible, at its expense, for the research, development manufacture, marketing, distribution and commercialization of the Constructs and licensed products and to obtain all necessary licenses and rights. The Company is required to use commercially reasonable efforts to develop and commercialize the Constructs in accordance with the terms of a development plan established by the parties. The Company has determined that the license has multiple alternative future uses in research and development projects and sublicensing in other countries or for other disease indications. The value of the acquired license is recorded as an intangible asset with amortization over the estimated useful life of 25 years and evaluation for impairment at the end of each reporting period. The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares, which have been fully converted to common shares. The value of the license includes acquisition legal costs. See Note 7 for license commitments. Intangible assets, net consisted of the following: September 30, 2022 September 30, 2021 The Constructs $ 2,529,483 $ 2,529,483 Less: accumulated amortization (248,291 ) (147,119 ) Total intangible assets, net $ 2,281,192 $ 2,382,364 Amortization expense amounted to $101,172 for each of the years ended September 30, 2022, and 2021, respectively. Total estimated future amortization of intangible assets for each fiscal year is as follows: Year Ending September 30, 2023 $ 101,172 September 30, 2024 101,172 September 30, 2025 101,172 September 30, 2026 101,172 September 30, 2027 101,172 Thereafter 1,775,332 $ 2,281,192 |
Leases
Leases | 12 Months Ended |
Sep. 30, 2022 | |
Leases | |
6.Leases | 6. Leases 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 Assets: Right-of-use assets $ 18,465 $ 96,571 Liabilities: Current: Short-term right-of-use lease liabilities $ 18,975 $ 78,808 Long-term: Long-term right-of-use lease liabilities - 20,512 Total right-of-use lease liabilities $ 18,975 $ 99,320 The components of right-of-use lease cost were as follows: Years Ended September 30, 2022 September 30, 2021 Right-of-use lease cost, included in general and administrative on the Statements of Operations $ 80,375 $ 81,207 Lease terms and discount rates were as follows: September 30, 2022 September 30, 2021 Remaining lease term (months): 3 15 Estimated incremental borrowing rate: 6.5 % 6.5 % The approximate future minimum lease payments under right-of-use leases at September 30, 2022 were as follows: Year Ending September 30, 2023 $ 19,181 Total lease payment 19,181 Less imputed interest 206 Present value of right-of-use lease liabilities included in current liabilities $ 18,975 Cash flow information was as follows: Years Ended September 30, 2022 September 30, 2021 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 $ 80,377 $ 81,209 |
Commitments
Commitments | 12 Months Ended |
Sep. 30, 2022 | |
Commitments | |
7. Commitments | 7. Commitments Research and other commitments The Company has commitments for contracted research organizations who perform clinical trials for the Company’s ongoing clinical studies and other service providers. Aggregate future contractual payments at September 30, 2022 are as follows: Year Ending September 30, 2023 $ 2,612,000 September 30, 2024 386,000 September 30, 2025 50,000 September 30, 2026 37,000 September 30, 2027 49,000 $ 3,134,000 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 certain monoclonal antibodies (the Constructs), including sublicensing rights. An intangible asset for the acquired license has been recognized. See Note 5 for intangible assets. Under the license agreement, the Company is committed to payments of up to an aggregate amount of $356 million contingent upon meeting certain milestones outlined in the license agreement, primarily relating to future potential commercial approval and sales milestones. 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. 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. 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. The Company will use the exclusive rights to develop the product for therapeutic, prophylactic and diagnostic uses in topical dermal applications and anorectal applications. 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. 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. No license or royalty payments were made to the third party during the years ended September 30, 2022 and 2021, respectively. 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. For the years ended September 30, 2022 and 2021, the Company recorded expenses of $25,693 and $212,000, respectively, as a result of meeting milestones outlined in the 2021 license agreement. The Company is committed to remaining payments of up to an aggregate amount of $69.1 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. Retirement savings plan 401(k) contributions Executive officers and employees of our California subsidiary are eligible to receive the Company’s non-elective safe harbor employer contribution of 3% of eligible compensation under a 401(k) plan to provide retirement benefits. Employees are 100% vested in employer contributions and in any voluntary employee contributions. Contributions to the 401(k) plan were $19,740 and $23,786 during the years ended September 30, 2022 and 2021, respectively. |
Capital shares
Capital shares | 12 Months Ended |
Sep. 30, 2022 | |
Capital shares | |
8. Capital Shares | 8. Capital shares Equity offerings 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 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). 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 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. 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. During the year ended September 30, 2022, the Company sold a total of 626,884 common shares pursuant to the agreement for net proceeds of $2.62 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 The Company uses the Black-Scholes option valuation model to determine the fair value of share-based compensation for share options and compensation warrants granted and the fair value of warrants issued. Option valuation models require the input of highly subjective assumptions including the expected price volatility. The Company calculates expected volatility based on historical volatility of the Company’s share price. When there is insufficient data available, the Company uses a peer group that is publicly traded to calculate expected volatility. The Company adopted interest-free rates by reference to the U.S. treasury yield rates. The Company calculated the fair value of share options granted based on the expected life of 5 years considering expected forfeitures during the option term of 10 years. Expected life of warrants is based on warrant terms. The Company did not and is not expected to declare any dividends. Changes in the subjective input assumptions can materially affect the fair value estimates, and therefore the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s warrants and share options. Warrants A summary of the Company’s warrants activity is as follows: Number of Warrant Shares (#) Weighted Average Exercise Price Balance – September 30, 2020 992,721 $ 4.92 Issued 109,375 8.00 Exercised (381,650 ) 4.35 Balance – September 30, 2021 720,446 $ 5.69 Issued 2,931,507 3.59 Balance – September 30, 2022 3,651,953 $ 4.00 The weighted average contractual life remaining on the outstanding warrants at September 30, 2022 is 50 months. The following table summarizes information about the warrants outstanding at September 30, 2022: Number of Warrants (#) Exercise Prices Expiry Dates 28,124 $ 15.90 May 2023 563,685 $ 4.80 July 2023 7,484 $ 4.81 June 2024 11,778 $ 3.20 January 2025 109,375 $ 8.00 February 2025 191,780 $ 4.56 March 2027 2,739,727 $ 3.52 September 2027 3,651,953 The fair value of warrants issued during the years ended September 30, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions: Year Ended September 30, 2022 Year Ended September 30, 2021 Common Warrants Placement Agent Warrants Underwriter Warrants Risk free interest rate 2.37 % 2.37 % 0.67 % Expected life 5.5 years 5 years 5 years Expected share price volatility 87.09 % 87.09 % 94.20 % Expected dividend yield 0.00 % 0.00 % 0.00 % Pre-funded Warrants A summary of the Company’s pre-funded warrant activity is as follows: Number of Pre-funded Warrant Shares (#) Balance - September 30, 2021 - Issued 1,199,727 Exercised (1,199,727 ) Balance - September 30,2022 - Share Options The Company adopted an Equity Incentive Compensation Plan in 2019 (the 2019 Plan) administered by the independent members of the Board of Directors, which amended and restated prior plans. 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 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 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, 2020 675,437 $ 3.30 $ 2.56 Granted 1,145,000 6.21 4.65 Exercised (19,746 ) 2.10 1.35 Forfeited (22,566 ) 6.02 4.02 Expired (1,906 ) 102.49 101.12 Balance – September 30, 2021 1,776,219 $ 5.06 $ 3.79 Granted 500,083 3.66 2.48 Forfeited (26,954 ) 6.56 4.97 Expired (45,649 ) 8.05 6.48 Balance – September 30, 2022 2,203,699 $ 4.66 $ 3.42 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. 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, 2022: Number of Options (#) Exercisable at September 30, 2022 (#) Range of Exercise Prices Expiry Dates 238 238 $ 304.08 Dec 2022 3,499 3,499 $ 35.28-93.24 Sep 2023-Mar 2025 296,403 296,403 C$ 2.16 Aug 2027-Dec 2028 323,976 293,810 $ 3.16 Feb 2030 397,000 264,550 $ 7.44-8.07 Sep 2030-Oct 2030 682,500 383,538 $ 5.25-5.74 Jan 2031-Sep 2031 500,083 146,396 $ 2.94-3.71 Feb 2032-Mar 2032 2,203,699 1,388,434 The options exercisable at September 30, 2022 had a weighted average exercise price of $4.51, no intrinsic value and a weighted average remaining life of 90 months. There were 815,265 options at September 30, 2022 that had not vested with a weighted average exercise price of $4.93 no intrinsic value and a weighted average remaining life of 105 months. The fair value of options granted during the years ended September 30, 2022 and 2021 was estimated using the Black-Scholes option valuation model using the following assumptions: Years Ended September 30, 2022 September 30, 2021 Risk free interest rate 1.71% - 2.54 % 0.31%-0.90 % Expected life 5 years 5 years Expected share price volatility 85.91% - 86.59 % 85.33%-97.28 % Expected dividend yield 0.00 % 0.00 % 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. As of September 30, 2022, the Company had approximately $1.04 million of unrecognized share-based compensation expense, which is expected to be recognized over a period of 28 months. |
Reimbursement Grant Income and
Reimbursement Grant Income and Receivable | 12 Months Ended |
Sep. 30, 2022 | |
Reimbursement Grant Income and Receivable | |
9. Reimbursement Grant Income And Receivable | 9. 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. |
Income Tax
Income Tax | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax | |
10.Income Tax | 10. Income Tax The reconciliation of the combined Canadian federal to the approximate effective tax rate is as follows: Years Ended September 30, 2022 September 30, 2021 Net loss before recovery of income taxes $ (17,548,000 ) $ (13,342,350 ) Canadian federal and provincial statutory income tax rate 26.5 % 26.5 % Expected income tax recovery $ (4,650,000 ) $ (3,536,000 ) Permanent differences and other adjustments 650,000 847,000 Effect of foreign currency and foreign tax rate differences 976,800 (309,200 ) Share issuance cost booked through equity or capitalization (449,000 ) (447,000 ) Change in valuation allowance 3,473,000 3,446,000 Income tax expense $ 800 $ 800 Components of the net deferred tax asset or liability Deferred taxes are provided as a result of temporary differences that arise due to the difference between the income tax values and the carrying amount of assets and liabilities. Approximate deferred tax assets and liabilities are as follows: September 30, 2022 September 30, 2021 Non-capital losses carried forward - Canada $ 11,740,000 $ 8,073,000 Non-capital losses carried forward - U.S. 1,631,000 1,628,000 Research and development tax credits 1,052,000 1,294,000 Share issuance and financing costs 686,000 628,000 Right-of-use lease liabilities 5,000 26,000 Other temporary differences 15,000 15,000 Subtotal $ 15,129,000 $ 11,664,000 Less: valuation allowance (15,093,000 ) (11,620,000 ) Total net deferred tax assets $ 36,000 $ 44,000 Property and equipment $ (15,000 ) $ (18,000 ) Right-of-use assets (5,000 ) (26,000 ) Deferred share issuance costs (16,000 ) - Total deferred tax liabilities $ (36,000 ) $ (44,000 ) Net deferred taxes $ - $ - Realization of the deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain. It is more likely than not that a tax benefit will not be realized. Accordingly, net deferred tax assets have been fully offset by a valuation allowance. Non-capital losses, capital losses, and research and development credits generated by Edesa Biotech USA, Inc. prior to changes in share ownership that occurred as a result of the reverse acquisition are substantially limited. It is unlikely that tax losses totaling $25.6 million and credits totaling $0.6 million will be utilized to offset potential future taxable income before expiration and they are excluded from deferred tax assets above. The approximate Canadian non-capital losses carried forward at September 30, 2022 expire as follows: 2025 C$ 21,000 2026 56,000 2027 114,000 2028 233,000 2029 688,000 2030 860,000 2031 685,000 2032 673,000 2033 107,000 2034 1,941,000 2035 2,207,000 2036 2,216,000 2037 2,123,000 2038 3,500,000 2039 1,732,000 2040 7,992,000 2041 13,919,000 2042 21,408,000 Total C$ 60,475,000 Share issuance and financing costs will be fully amortized in 2026. The U.S. non-capital losses carried forward at September 30, 2022 totaled approximately $7,666,000, which do not expire for federal taxes. The U.S. 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: 2039 $ 70,000 2040 150,000 2041 68,000 2042 9,000 Total $ 297,000 |
Financial instruments
Financial instruments | 12 Months Ended |
Sep. 30, 2022 | |
Financial instruments | |
11. Financial Instruments | 11. Financial instruments (a) Fair values 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. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels of inputs that may be used to measure fair value: · Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active. · Level 3 - Unobservable inputs for the asset or liability that are supported by little or no market activity. 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. (b) Interest rate and credit risk Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a significant change in market interest rates, relative to interest rates on cash and cash equivalents due to the short-term nature of these balances. 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. government securities. The Company’s cash is not subject to any external restrictions. 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. (c) Foreign exchange risk 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. dollars. A strengthening U.S. dollar will lead to a FX loss while a weakening U.S. dollar will lead to a FX gain. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks. At September 30, 2022, the Company and its Canadian subsidiary had assets denominated in Canadian dollars of approximately C$6.9 million and the U.S. dollar exchange rate at this date was equal to 1.3742 Canadian dollars. Based on the exposure at September 30, 2022, 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. (d) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown. |
Related party transactions
Related party transactions | 12 Months Ended |
Sep. 30, 2022 | |
Related party transactions | |
12. Related Party Transactions | 12. 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. 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. |
Subsequent events
Subsequent events | 12 Months Ended |
Sep. 30, 2022 | |
Reimbursement Grant Income and Receivable | |
13.Subsequent events | 13. 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. |
Significant accounting polici_2
Significant accounting policies (Policies) | 12 Months Ended |
Sep. 30, 2022 | |
Significant accounting policies | |
Use Of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period or year. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are valuation of accounts and other receivable; valuation and useful lives of property and equipment; intangible assets; operating lease right-of-use assets; deferred income taxes; the determination of fair value of share-based compensation; the determination of fair value of warrants in order to allocate proceeds from equity issuances; and forecasting future cash flows for assessing the going concern assumption. |
Functional And Reporting Currencies | The consolidated financial statements of the Company are presented in U.S. dollars, unless otherwise stated, which is the Company’s and its wholly owned subsidiary’s, Edesa Biotech USA, Inc., functional currency. The functional currency of the Company’s wholly owned subsidiary, Edesa Biotech Research, Inc., as determined by management, is Canadian dollars. |
Cash and cash equivalents | Cash and cash equivalents consist of demand deposits with financial institutions held in checking, savings and money market mutual funds and highly liquid investments which are readily convertible into cash with maturities of three months or less when purchased. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term nature. |
Accounts and other receivable | 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. As of September 30, 2022, all outstanding accounts, grants and HST refunds receivable were deemed to be fully collectible, and therefore, no allowance for doubtful accounts was recorded. |
Property and equipment | Property and equipment are recorded at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is recorded to write off the cost of assets less their residual values over their useful lives, using the declining balance and straight-line methods. Maintenance and repair expenditures that do not improve or extend the life are expensed in the period incurred. Any gain or loss arising on the disposal or retirement of an item of property and equipment is recognized as the difference between the sales proceeds and the carrying amount of the asset. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis. The depreciation policy for the principal asset categories are calculated as follows: Computer equipment 30% declining balance method or straight line 3 years Furniture and equipment 20% declining balance method |
Intangible assets | Intangible assets represent the exclusive world-wide rights to know-how, patents and data relating to certain monoclonal antibodies (the Constructs), including sublicensing rights, acquired by entering into a license agreement with a pharmaceutical development company. Unless earlier terminated, the term of the license agreement will remain in effect for 25 years from the date of first commercial sale of licensed products containing the Constructs. Subsequently, the license agreement will automatically renew for five-year periods unless either party terminates the agreement in accordance with its terms. 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. |
Impairment of long-lived assets | Long-lived assets are tested for impairment when indicators of impairment exist. When a significant change in the expected timing or amount of the future cash flows of the financial asset is identified, the carrying amount of the financial asset is reduced and the amount of the write-down is recognized as a loss. 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. 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. |
Fair value measurement | The Company uses the fair value measurement framework for valuing financial assets and liabilities. See Note 11. |
Revenue recognition | Reimbursement grant income is recognized based on the reimbursement rate included in the government contribution agreement when allowable expenses have been incurred. |
Research and development | Research and development expenses principally consist of (i) contract research organizations for clinical trial management services, (ii) contract manufacturing organizations for manufacturing the drug compound(s) for use in clinical trials and (iii) salaries of employees directly involved in research and development efforts. Research and development costs are expensed as incurred. |
Share-based compensation | 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. |
Translation of foreign currency transactions | The Company’s reporting currency is the U.S. dollar. The financial statements of the wholly owned Canadian subsidiary is measured using the Canadian dollar as the functional currency. Assets and liabilities of the Canadian operation have been translated at year-end exchange rates and related revenue and expenses have been translated at average exchange rates for the year. Accumulated gains and losses resulting from the translation of the financial statements of the Canadian operation are included as part of accumulated other comprehensive loss, a separate component of shareholders’ equity. For other transactions denominated in currencies other than the Company’s functional currency, the monetary assets and liabilities are translated at the year-end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. Non-monetary balance sheet and related income statement accounts are remeasured into U.S. dollar using historical exchange rates. All of the exchange gains or losses resulting from these other transactions are recognized in the statements of operations and comprehensive loss. |
Income taxes | 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. A valuation allowance is provided against deferred tax assets when it is determined to be more likely than not that the deferred tax asset will not be realized. The Company assesses the likelihood of the financial statement effect of a tax position that should be recognized when it is more likely than not that the position will be sustained upon examination by a taxing authority based on the technical merits of the tax position, circumstances, and information available as of the reporting date. The Company is subject to examination by taxing authorities in Canada and the U.S. Management does not believe that there are any uncertain tax positions that would result in an asset or liability for taxes being recognized in the accompanying financial statements. The Company recognizes tax-related interest and penalties, if any, as a component of income tax expense. The Company accounts for income taxes on a tax jurisdictional basis. The Company files income tax returns in Canada, the provinces of British Columbia and Ontario, the U.S. and the state of California. |
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. 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. |
Segmented Information | The Company’s operations comprise a single reportable segment engaged in the research and development, manufacturing and commercialization of innovative pharmaceutical products. As the operations comprise a single reportable segment, amounts disclosed in the consolidated financial statements for net loss, comprehensive loss, depreciation and total assets also represent segmented amounts. |
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. |
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. 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. |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Property and equipment | |
Schedule of Property and equipment | September 30, 2022 September 30, 2021 Computer equipment $ 46,674 $ 42,855 Furniture and equipment 5,538 5,987 52,212 48,842 Less: accumulated depreciation (39,518 ) (33,853 ) Total property and equipment, net $ 12,694 $ 14,989 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Intangible assets | |
Intangible Assets | September 30, 2022 September 30, 2021 The Constructs $ 2,529,483 $ 2,529,483 Less: accumulated amortization (248,291 ) (147,119 ) Total intangible assets, net $ 2,281,192 $ 2,382,364 |
Estimated Future Amortization Of Intagible Assets | Year Ending September 30, 2023 $ 101,172 September 30, 2024 101,172 September 30, 2025 101,172 September 30, 2026 101,172 September 30, 2027 101,172 Thereafter 1,775,332 $ 2,281,192 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Leases | |
Gross amount of asstes and liabilities in lease | September 30, 2022 September 30, 2021 Assets: Right-of-use assets $ 18,465 $ 96,571 Liabilities: Current: Short-term right-of-use lease liabilities $ 18,975 $ 78,808 Long-term: Long-term right-of-use lease liabilities - 20,512 Total right-of-use lease liabilities $ 18,975 $ 99,320 |
Lease Cost Components | Years Ended September 30, 2022 September 30, 2021 Right-of-use lease cost, included in general and administrative on the Statements of Operations $ 80,375 $ 81,207 |
Lease Terms And Discount Rates | September 30, 2022 September 30, 2021 Remaining lease term (months): 3 15 Estimated incremental borrowing rate: 6.5 % 6.5 % |
Future Minimum Lease Payments | Year Ending September 30, 2023 $ 19,181 Total lease payment 19,181 Less imputed interest 206 Present value of right-of-use lease liabilities included in current liabilities $ 18,975 |
Cash Paid-lease Liabilities | Years Ended September 30, 2022 September 30, 2021 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 $ 80,377 $ 81,209 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Commitments | |
Future Contractual Payments | Year Ending September 30, 2023 $ 2,612,000 September 30, 2024 386,000 September 30, 2025 50,000 September 30, 2026 37,000 September 30, 2027 49,000 $ 3,134,000 |
Capital Shares (Tables)
Capital Shares (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Capital Shares (Tables) | |
Warrant Activity | Number of Warrant Shares (#) Weighted Average Exercise Price Balance – September 30, 2020 992,721 $ 4.92 Issued 109,375 8.00 Exercised (381,650 ) 4.35 Balance – September 30, 2021 720,446 $ 5.69 Issued 2,931,507 3.59 Balance – September 30, 2022 3,651,953 $ 4.00 |
Warrants Outstanding | Number of Warrants (#) Exercise Prices Expiry Dates 28,124 $ 15.90 May 2023 563,685 $ 4.80 July 2023 7,484 $ 4.81 June 2024 11,778 $ 3.20 January 2025 109,375 $ 8.00 February 2025 191,780 $ 4.56 March 2027 2,739,727 $ 3.52 September 2027 3,651,953 |
fair value of warrants issued | Year Ended September 30, 2022 Year Ended September 30, 2021 Common Warrants Placement Agent Warrants Underwriter Warrants Risk free interest rate 2.37 % 2.37 % 0.67 % Expected life 5.5 years 5 years 5 years Expected share price volatility 87.09 % 87.09 % 94.20 % Expected dividend yield 0.00 % 0.00 % 0.00 % |
Share Options | Number of Options (#) Weighted Average Exercise Price Weighted Average Grant Date Fair Value Balance – September 30, 2020 675,437 $ 3.30 $ 2.56 Granted 1,145,000 6.21 4.65 Exercised (19,746 ) 2.10 1.35 Forfeited (22,566 ) 6.02 4.02 Expired (1,906 ) 102.49 101.12 Balance – September 30, 2021 1,776,219 $ 5.06 $ 3.79 Granted 500,083 3.66 2.48 Forfeited (26,954 ) 6.56 4.97 Expired (45,649 ) 8.05 6.48 Balance – September 30, 2022 2,203,699 $ 4.66 $ 3.42 |
Pre-Funded Warrant Activity | Number of Pre-funded Warrant Shares (#) Balance - September 30, 2021 - Issued 1,199,727 Exercised (1,199,727 ) Balance - September 30,2022 - |
Stock Options Outstanding | Number of Options (#) Exercisable at September 30, 2022 (#) Range of Exercise Prices Expiry Dates 238 238 $ 304.08 Dec 2022 3,499 3,499 $ 35.28-93.24 Sep 2023-Mar 2025 296,403 296,403 C$ 2.16 Aug 2027-Dec 2028 323,976 293,810 $ 3.16 Feb 2030 397,000 264,550 $ 7.44-8.07 Sep 2030-Oct 2030 682,500 383,538 $ 5.25-5.74 Jan 2031-Sep 2031 500,083 146,396 $ 2.94-3.71 Feb 2032-Mar 2032 2,203,699 1,388,434 |
Fair Value Of warrant Granted Assumptions | Years Ended September 30, 2022 September 30, 2021 Risk free interest rate 1.71% - 2.54 % 0.31%-0.90 % Expected life 5 years 5 years Expected share price volatility 85.91% - 86.59 % 85.33%-97.28 % Expected dividend yield 0.00 % 0.00 % |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax | |
reconciliation of the combined Canadian federal to the approximate effective tax rate | Years Ended September 30, 2022 September 30, 2021 Net loss before recovery of income taxes $ (17,548,000 ) $ (13,342,350 ) Canadian federal and provincial statutory income tax rate 26.5 % 26.5 % Expected income tax recovery $ (4,650,000 ) $ (3,536,000 ) Permanent differences and other adjustments 650,000 847,000 Effect of foreign currency and foreign tax rate differences 976,800 (309,200 ) Share issuance cost booked through equity or capitalization (449,000 ) (447,000 ) Change in valuation allowance 3,473,000 3,446,000 Income tax expense $ 800 $ 800 |
Deferred taxes | September 30, 2022 September 30, 2021 Non-capital losses carried forward - Canada $ 11,740,000 $ 8,073,000 Non-capital losses carried forward - U.S. 1,631,000 1,628,000 Research and development tax credits 1,052,000 1,294,000 Share issuance and financing costs 686,000 628,000 Right-of-use lease liabilities 5,000 26,000 Other temporary differences 15,000 15,000 Subtotal $ 15,129,000 $ 11,664,000 Less: valuation allowance (15,093,000 ) (11,620,000 ) Total net deferred tax assets $ 36,000 $ 44,000 Property and equipment $ (15,000 ) $ (18,000 ) Right-of-use assets (5,000 ) (26,000 ) Deferred share issuance costs (16,000 ) - Total deferred tax liabilities $ (36,000 ) $ (44,000 ) Net deferred taxes $ - $ - |
Canadian non-capital losses | 2025 C$ 21,000 2026 56,000 2027 114,000 2028 233,000 2029 688,000 2030 860,000 2031 685,000 2032 673,000 2033 107,000 2034 1,941,000 2035 2,207,000 2036 2,216,000 2037 2,123,000 2038 3,500,000 2039 1,732,000 2040 7,992,000 2041 13,919,000 2042 21,408,000 Total C$ 60,475,000 |
U.S. state non-capital losses | 2039 $ 70,000 2040 150,000 2041 68,000 2042 9,000 Total $ 297,000 |
Nature of operations (Details N
Nature of operations (Details Narrative) - USD ($) | 1 Months Ended | 4 Months Ended | 12 Months Ended | ||||
Mar. 02, 2022 | Nov. 30, 2022 | Mar. 24, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 02, 2022 | |
Reimbursement grant income | $ 780,000 | $ 10,340,000 | |||||
Net Loss | 17,550,000 | 13,340,000 | |||||
Common shares purchase | 1,345,665 | 1,345,665 | |||||
Research and development expenses | 14,050,000 | $ 11,000,000 | |||||
Cash and cash equivalents | 7,090,000 | ||||||
Working capital | 6,950,000 | ||||||
Shareholders' equity | 9,390,000 | ||||||
Accumulated deficit | $ 44,040,000 | ||||||
Issued | 2,931,507 | 109,375 | |||||
Net proceeds from the offering | $ 9,010,000 | ||||||
Private Placement [Member] | |||||||
Common shares purchase | 1,345,665 | ||||||
Placement of units consisting of common shares | 2,691,337,000,000 | ||||||
Gross proceeds | $ 3,000,000 | ||||||
Warrants To Purchase Common Stock | 2,739,727 | ||||||
March 2021 [Member] | |||||||
Common shares in public offerings, shares | $ 1,562,500 | ||||||
Common shares in public offerings, value | $ 88,900 | ||||||
March 2022 [Member] | |||||||
Common shares in public offerings, shares | $ 1,540,000 | ||||||
Issued | 1,199,727 | ||||||
Warrants To Purchase Common Stock | 2,739,727 | ||||||
Net proceeds from the offering | $ 9,010,000 | ||||||
Equity Distribution Agreement [Member] | RBC Capital Markets, LLC [Member] | |||||||
Issuance of common shares upon exercise of warrants | $ 401,396 | ||||||
Net cash proceeds | $ 26,200 | 34,200 | |||||
Common Share Sold Aggregate Price | $ 15,400,000 | $ 1,700,000 | |||||
Common Shares Sold | 626,884 | 626,884 | 586,463 |
Significant accounting polici_3
Significant accounting policies (Details Narrative) | 12 Months Ended |
Sep. 30, 2022 | |
Operating leases with terms | 12 years |
Computer Equipment | |
Depreciation | 30% |
Useful life | 3 years |
Furniture and equipment | |
Depreciation | 20% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Property and equipment, gross | $ 52,212 | $ 48,842 |
Less: accumulated depreciation | (39,518) | (33,853) |
Total property and equipment, net | 12,694 | 14,989 |
Computer Equipment | ||
Property and equipment, gross | 46,674 | 42,855 |
Furniture and Equipment | ||
Property and equipment, gross | $ 5,538 | $ 5,987 |
Property and Equipment (Detai_2
Property and Equipment (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Property and equipment | ||
Depreciation expense | $ 6,991 | $ 8,323 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Intangible assets | ||
The Constructs | $ 2,529,483 | $ 2,529,483 |
Less: Accumulated Amortization | (248,291) | (147,119) |
Intangible Assets, Net | $ 2,281,192 | $ 2,382,364 |
Intagible Assets (Details 1)
Intagible Assets (Details 1) | Sep. 30, 2022 USD ($) |
Intangible assets | |
September 30, 2023 | $ 101,172 |
September 30, 2024 | 101,172 |
September 30, 2025 | 101,172 |
September30, 2026 | 101,172 |
September 30, 2027 | 101,172 |
Thereafter | 1,775,332 |
Total | $ 2,281,192 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) $ in Thousands | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Intangible assets | |
Amortization Expense | $ 1,011,720 |
Useful Life | 25 years |
Description Of Licence Agreement | The required upfront license payment of $2.5 million was paid by issuance of Series A-1 Convertible Preferred Shares |
Leases (Details)
Leases (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Assets: | ||
Right-of-use assets | $ 18,465 | $ 96,571 |
Current: | ||
Short-term right-of-use lease liabilities | 18,975 | 78,808 |
Long-term: | ||
Long-term right-of-use lease liabilities | 0 | 20,512 |
Total right of use lease liabilities | $ 18,975 | $ 99,320 |
Leases (Details 1)
Leases (Details 1) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
General and Administrative Expense | ||
Right-of-use lease cost, included in general and administrative on the statements of operations | $ 80,375 | $ 81,207 |
Leases (Details 2)
Leases (Details 2) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||
Remaining Lease Term (months) | 3 years | 15 years |
Estimated Incremental Borrowing Rate | 6.50% | 6.50% |
Leases (Details 3)
Leases (Details 3) | Sep. 30, 2022 USD ($) |
Year Ending | |
September 30, 2023 | $ 19,181 |
Total Lease Payment | 19,181 |
Less Imputed Interest | 206 |
Present value of right-of-use lease liabilities included in current liabilities | $ 18,975 |
Leases (Details 4)
Leases (Details 4) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||
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 | $ 80,377 | $ 81,209 |
Leases (Details Narrative)
Leases (Details Narrative) | 12 Months Ended |
Sep. 30, 2022 | |
Leases | |
Related Party Operating Lease Description | six-year term through December 2022, with options to renew for another two-year term. |
Commitments (Details)
Commitments (Details) $ in Millions | Sep. 30, 2022 USD ($) |
Year Ending September 30, | |
September 30, 2023 | $ 2,612,000 |
September 30, 2024 | 386,000 |
September 30, 2025 | 50,000 |
September 30, 2026 | 37,000 |
September 30, 2027 | 49,000 |
Total | $ 3,134,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Employer contributions to 401K plan | $ 19,740,000,000 | $ 23,786,000,000 |
Eligible compensarion,percentage | 3% | |
April 2020 [Member] | License Commitments [Member] | ||
Remaining payments of contingent | $ 356,000,000 | |
Expenses | $ 2,500,000 | |
Description of acquired drugs | 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 | |
2021 [Member] | License Commitments Agreement [Member] | ||
Payments to investors | $ 69,100,000 | |
License expenses | 25,693 | $ 212,000 |
2016 [Member] | License Commitments [Member] | ||
Payments to third party | $ 18,400,000 |
Capital Shares (Details)
Capital Shares (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Number of warrants, beginning balance | 720,446 | 992,721 |
Issued | 2,931,507 | 109,375 |
Exercised | (381,650) | |
Weighted average exercise price, beginning balance | $ 5.69 | $ 4.92 |
Issued | $ 3.59 | 8 |
Exercised | $ 4.35 | |
Number of warrants, ending balance | 3,651,953 | 720,446 |
Weighted average exercise price, ending balance | $ 4 | |
Pre-Funded Warrant [Member] | ||
Number of warrants, beginning balance | 0 | |
Issued | 1,199,727 | |
Exercised | (1,199,727) | |
Number of warrants, ending balance | 0 | 0 |
Capital Shares (Details 1)
Capital Shares (Details 1) - $ / shares | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Number of warrants, beginning balance | 3,651,953 | 720,446 | 992,721 |
Weighted average exercise price, beginning balance | $ 4.51 | $ 5.69 | $ 4.92 |
Warrant 1 | |||
Number of warrants, beginning balance | 28,124 | ||
Weighted average exercise price, beginning balance | $ 15.90 | ||
Expiry date | May 2023 | ||
Warrant 2 | |||
Number of warrants, beginning balance | 563,685 | ||
Weighted average exercise price, beginning balance | $ 4.80 | ||
Expiry date | July 2023 | ||
Warrant 3 | |||
Number of warrants, beginning balance | 7,484 | ||
Weighted average exercise price, beginning balance | $ 4.81 | ||
Expiry date | June 2024 | ||
Warrant 4 | |||
Number of warrants, beginning balance | 11,778 | ||
Weighted average exercise price, beginning balance | $ 3.20 | ||
Expiry date | January 2025 | ||
Warrant 5 | |||
Number of warrants, beginning balance | 109,375 | ||
Weighted average exercise price, beginning balance | $ 8 | ||
Expiry date | February 2025 | ||
Warrant 6 | |||
Number of warrants, beginning balance | 191,780 | ||
Weighted average exercise price, beginning balance | $ 4.56 | ||
Expiry date | March 2027 | ||
Waraant 7 | |||
Number of warrants, beginning balance | 2,739,727 | ||
Weighted average exercise price, beginning balance | $ 3.52 | ||
Expiry date | September 2027 |
Capital Shares (Details 2)
Capital Shares (Details 2) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Common Warrants | ||
Risk free interest rate | 2.37% | |
Expected life (years) | 5 years 6 months | |
Expected share price volatility | 87.09% | |
Expected dividend yield | 0% | |
Placement Agent Warrants | ||
Risk free interest rate | 2.37% | |
Expected life (years) | 5 years | |
Expected share price volatility | 87.09% | |
Expected dividend yield | 0% | |
Underwriter Warrants | ||
Risk free interest rate | 0.67% | |
Expected life (years) | 5 years | |
Expected share price volatility | 94.20% | |
Expected dividend yield | 0% |
Capital Shares (Details 3)
Capital Shares (Details 3) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Capital shares | ||
Number of options, beginning balance | 1,776,219 | 675,437 |
Number of options granted | 500,083 | 1,145,000 |
Number of options, exercised | (19,746) | |
Number of options, forfeited | (26,954) | (22,566) |
Number of options expired | (45,649) | (1,906) |
Weighted average exercise price, beginning balance | $ 5.06 | $ 3.30 |
Weighted average exercise price granted | 3.66 | 6.21 |
Weighted average exercise price exercised | 2.10 | |
Weighted average exercise price forfeited | 6.56 | 6.02 |
Weighted average exercise price expired | $ 8.05 | $ 102.49 |
Weighted average grant date fair value, beginning balance | $ 37,900 | $ 25,600 |
Weighted average grant date fair value, granted | 24,800 | 46,500 |
Weighted average grant date fair value, exercised | 13,500 | |
Weighted average grant date fair value, forfeited | 49,700 | 40,200 |
Weighted average grant date fair value, expired | $ 64,800 | $ 1,011,200 |
Number of options, ending balance | 2,203,699 | 1,776,219 |
Weighted average exercise price, ending balance | $ 4.66 | $ 5.06 |
Weighted average grant date fair value, ending balance | $ 34,200 |
Capital Shares (Details 4)
Capital Shares (Details 4) - $ / shares | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Number of options, beginning balance | 2,203,699 | 1,776,219 | 675,437 |
Options exercisable | 1,388,434 | ||
Weighted average exercise price, beginning balance | $ 4.66 | $ 5.06 | $ 3.30 |
Stock Option 7 | |||
Number of options, beginning balance | 500,083 | ||
Options exercisable | 146,396 | ||
Stock Option 7 | Minumum | |||
Weighted average exercise price, beginning balance | $ 2.94 | ||
Expiry dates | Feb 2032 | ||
Stock Option 7 | Maximum | |||
Weighted average exercise price, beginning balance | $ 3.71 | ||
Expiry dates | Mar 2032 | ||
Stock Option 1 | |||
Number of options, beginning balance | 238 | ||
Options exercisable | 238 | ||
Weighted average exercise price, beginning balance | $ 304.08 | ||
Expiry dates | Dec 2022 | ||
Stock Option 2 | |||
Number of options, beginning balance | 3,499 | ||
Options exercisable | 3,499 | ||
Stock Option 2 | Minumum | |||
Weighted average exercise price, beginning balance | $ 35.28 | ||
Expiry dates | Sep 2023 | ||
Stock Option 2 | Maximum | |||
Weighted average exercise price, beginning balance | $ 93.24 | ||
Expiry dates | Mar 2025 | ||
Stock Option 3 | |||
Number of options, beginning balance | 296,403 | ||
Options exercisable | 296,403 | ||
Weighted average exercise price, beginning balance | $ 2.16 | ||
Stock Option 3 | Minumum | |||
Expiry dates | Aug 2027 | ||
Stock Option 3 | Maximum | |||
Expiry dates | Dec 2028 | ||
Stock Option 4 | |||
Number of options, beginning balance | 323,976 | ||
Options exercisable | 293,810 | ||
Weighted average exercise price, beginning balance | $ 3.16 | ||
Expiry dates | Feb 2030 | ||
Stock Option 5 | |||
Number of options, beginning balance | 397,000 | ||
Options exercisable | 264,550 | ||
Stock Option 5 | Minumum | |||
Weighted average exercise price, beginning balance | $ 7.44 | ||
Expiry dates | Sep 2030 | ||
Stock Option 5 | Maximum | |||
Weighted average exercise price, beginning balance | $ 8.07 | ||
Expiry dates | Oct 2030 | ||
Stock Option 6 | |||
Number of options, beginning balance | 682,500 | ||
Options exercisable | 383,538 | ||
Stock Option 6 | Minumum | |||
Weighted average exercise price, beginning balance | $ 5.25 | ||
Expiry dates | Jan 2031 | ||
Stock Option 6 | Maximum | |||
Weighted average exercise price, beginning balance | $ 5.74 | ||
Expiry dates | Sep 2031 |
Capital Shares (Details 5)
Capital Shares (Details 5) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Capital shares | ||
Risk Free Interest Rate, Minimum | 1.71% | 0.31% |
Risk Free Interest Rate, Maximum | 2.54% | 0.90% |
Expected Life (years) | 5 years | 5 years |
Expected Share Price Volatility, Minimum | 85.91% | 85.33% |
Expected Share Price Volatility, Maximum | 86.59% | 97.28% |
Expected Dividend Yield | 0% | 0% |
Capital Shares (Details Narrati
Capital Shares (Details Narrative) - USD ($) | 1 Months Ended | 4 Months Ended | 12 Months Ended | ||||
Mar. 24, 2022 | Apr. 30, 2021 | Oct. 31, 2020 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Weighted Average Contractual Life Remaining On Outstanding Options | 50 years | ||||||
Unrecognized Share-based Compensation | $ 1,040,000 | ||||||
Weighted average contractual life remaining on outstanding options | 90 years | ||||||
Warrant Exercise Price Per Share | $ 4.51 | $ 5.69 | $ 4.92 | ||||
Aggregate intrinsic values | $ 4,460,000 | ||||||
Aggregate intrinsic values,options exercised | $ 0 | $ 90,000 | |||||
Unrecognized share-based compensation recognition period | 96 years | 36 years | |||||
Granted option shares | 603,000 | 430,000 | 112,000 | ||||
Exercise price | $ 4.93 | ||||||
Expected term | 10 years | 10 years | |||||
Net proceeds from the offering | $ 9,010,000 | ||||||
Options | 815,265 | ||||||
Share-based Compensation | $ 2,260,634 | $ 3,195,469 | |||||
Number of warrants, beginning balance | 3,651,953 | 720,446 | 992,721 | ||||
2019 Plan [Member] | |||||||
Number Of Shares Available For Issuance | 2,625,951 | ||||||
Option Term | 10 years | ||||||
Remaining Number Of Options Available For Grant | 422,252 | ||||||
March 2, 2021 [Member] | |||||||
Warrant Exercise Price Per Share | $ 8 | ||||||
Warrant Expiry Date | Feb. 26, 2026 | ||||||
Gross Proceeds | $ 8,890,000 | ||||||
Fair value | $ 410,000 | ||||||
Number of warrants, beginning balance | 109,375 | ||||||
Common shares in public offerings, shares | $ 1,562,500 | ||||||
Common shares in public offerings price per share | $ 6.40 | ||||||
March 24, 2022 [Member] | |||||||
Warrant Exercise Price Per Share | $ 3.52 | ||||||
Offering Common Shares | 1,540,000 | ||||||
Warrant Expiry Date | Sep. 24, 2027 | ||||||
Black Scholes Option [Member] | |||||||
Expected Option Forfeitures Term | 10 years | ||||||
Options Granted Expected Life | 5 years | ||||||
Affiliated Designees [Member] | |||||||
Warrant Exercise Price Per Share | $ 4.5625 | ||||||
Warrant Expiry Date | Mar. 21, 2027 | ||||||
Warrants To Purchase Common Stock | 191,780 | ||||||
Fair value | $ 410,000 | ||||||
Pre-Funded Warrant [Member] | |||||||
Warrant Exercise Price Per Share | $ 0.0001 | ||||||
Gross Proceeds | $ 5,870,000 | ||||||
Warrants To Purchase Common Stock | 1,199,727 | ||||||
Number of warrants, beginning balance | 0 | 0 | |||||
Warrants Additional Paid In Capital [Member] | |||||||
Gross Proceeds | $ 4,130,000 | ||||||
Private Placement [Member] | |||||||
Warrants To Purchase Common Stock | 2,739,727 | ||||||
Employees [Member] | |||||||
Granted option shares | 415,083 | ||||||
Expected Option Forfeitures Term | 10 years | ||||||
Director [Member] | |||||||
Granted option shares | 55,000 | 30,000 | |||||
Equity Distribution Agreement [Member] | |||||||
Gross Proceeds | $ 3,420,000 | ||||||
Proceeds from public offering | $ 9,200,000 | ||||||
Common shares | 586,463 | ||||||
Equity Distribution Agreement [Member] | RBC Capital Markets, LLC [Member] | |||||||
Gross Proceeds | $ 26,200 | ||||||
Common Share Sold Aggregate Price | $ 15,400,000 | $ 1,700,000 | |||||
Common Shares Sold | 626,884 | 626,884 | 586,463 |
Reimbursement Grant Income an_2
Reimbursement Grant Income and Receivable (Details Narrative) $ in Millions | Sep. 30, 2022 USD ($) |
Reimbursement Grant Income and Receivable (Details Narrative) | |
Grant reimbursements receivable | $ 1.1 |
Income Tax (Details)
Income Tax (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax | ||
Net loss before recovery of income taxes | $ (17,548,000) | $ (13,342,350) |
Canadian federal and provincial statutory income tax rate | 26.50% | 26.50% |
Expected income tax recovery | $ (4,650,000) | $ (3,536,000) |
Permanent differences | 650,000 | 847,000 |
Effect of foreign currency and foreign tax rate differences | 976,800 | (309,200) |
Share issuance cost booked through equity or capitalization | (449,000) | (447,000) |
Change in valuation allowance | 3,473,000 | 3,446,000 |
Income tax (recovery) expense | $ 800 | $ 800 |
Income Tax (Details 1)
Income Tax (Details 1) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Income Tax | ||
Non-capital losses carried forward - Canada | $ 11,740,000 | $ 8,073,000 |
Non-capital losses carried forward - US | 1,631,000 | 1,628,000 |
Research and development tax credits | 1,052,000 | 1,294,000 |
Share issuance and financing costs | 686,000 | 628,000 |
Right-of-use lease liabilities | 5,000 | 26,000 |
Other temporary differences | 15,000 | 15,000 |
Subtotal | 15,129,000 | 11,664,000 |
Less: valuation allowance | (15,093,000) | (11,620,000) |
Total net deferred tax assets | 36,000 | 44,000 |
Property and equipment | (15,000) | (18,000) |
Right-of-use assets | (5,000) | (26,000) |
Deferred share issuance costs | (16,000) | 0 |
Total deferred tax liabilities | 36,000 | 44,000 |
Net deferred taxes | $ 0 | $ 0 |
Income Tax (Details 2)
Income Tax (Details 2) - Sep. 30, 2022 | CAD ($) | USD ($) |
Canada | ||
Non-capital income tax losses | $ 60,475,000 | |
United States | ||
Non-capital income tax losses | $ 297,000 | |
2042 | Canada | ||
Non-capital income tax losses | 21,408,000 | |
2042 | United States | ||
Non-capital income tax losses | 9,000 | |
2028 | Canada | ||
Non-capital income tax losses | 233,000 | |
2029 | Canada | ||
Non-capital income tax losses | 688,000 | |
2030 | Canada | ||
Non-capital income tax losses | 860,000 | |
2031 | Canada | ||
Non-capital income tax losses | 685,000 | |
2032 | Canada | ||
Non-capital income tax losses | 673,000 | |
2033 | Canada | ||
Non-capital income tax losses | 107,000 | |
2034 | Canada | ||
Non-capital income tax losses | 1,941,000 | |
2035 | Canada | ||
Non-capital income tax losses | 2,207,000 | |
2036 | Canada | ||
Non-capital income tax losses | 2,216,000 | |
2037 | Canada | ||
Non-capital income tax losses | 2,123,000 | |
2038 | Canada | ||
Non-capital income tax losses | 3,500,000 | |
2039 | Canada | ||
Non-capital income tax losses | 1,732,000 | |
2039 | United States | ||
Non-capital income tax losses | 70,000 | |
2040 | Canada | ||
Non-capital income tax losses | 7,992,000 | |
2040 | United States | ||
Non-capital income tax losses | 150,000 | |
2041 | Canada | ||
Non-capital income tax losses | 13,919,000 | |
2041 | United States | ||
Non-capital income tax losses | $ 68,000 | |
2025 | Canada | ||
Non-capital income tax losses | 114,000 | |
2026 | Canada | ||
Non-capital income tax losses | 56,000 | |
2027 | Canada | ||
Non-capital income tax losses | $ 21,000 |
Income Tax (Details Narrative)
Income Tax (Details Narrative) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Income Tax | |
U.S. non-capital losses carried forward | $ 7,666,000 |
The U.S. state research and development tax credits carried forward | 619,000 |
Credits totaling | 600,000 |
Tax losses totaling future income | $ 25,600,000 |
Financial Instruments (Details
Financial Instruments (Details Narrative) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Sep. 30, 2022 USD ($) $ / shares | Sep. 30, 2022 CAD ($) | Sep. 30, 2021 USD ($) | |
Assets | $ 11,575,728 | $ 14,584,655 | |
USD to CAD [Member] | |||
Currency exchange rate | $ / shares | $ 1.3742 | ||
Ontario Subsidary [Member] | |||
Assets | $ 6.9 | ||
Currency exchange rate description | Based on the exposure at September 30, 2022, a 10% annual change in the Canadian/U.S. exchange rate would impact the Company’s loss and other comprehensive loss by approximately $501,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Related party transactions | |
Rent expense | $ 81,000 |
Royalty payable | $ 22,000 |
Subsequent events (Details Narr
Subsequent events (Details Narrative) - USD ($) $ in Millions | Nov. 02, 2022 | Nov. 30, 2022 |
Common shares purchase | 1,345,665 | 1,345,665 |
Subsequent Event [Member] | ||
Common shares purchase | 1,345,665 | |
Placement of units consisting of common shares | 2,691,337 | |
Gross proceeds | $ 3 |