Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
Expressed in Canadian Dollars
Corporate Office- Canada
Suite 300 - Bellevue Centre
235 -15th Street
West Vancouver, BC V7T 2X1
Tel: 604-921-1810
Fax: 604- 921-1898
Corporate Office- US
820 Heinz Avenue
Berkeley, CA, 94710
Tel: 1-888-485-6340
Fax: 424- 245-3719
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of BriaCell Therapeutics Corp.,
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of BriaCell Therapeutics Corp. (the Company)
as of July 31, 2019 and 2018, and the related consolidated statements of operations and comprehensive loss, shareholders’
equity, and cash flows for each of the years ended July 31, 2019, 2018 and 2017, and the related notes (collectively referred to
as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of
the Company as of July 31, 2019 and 2018, and the results of its consolidated operations and its consolidated cash flows for
each of the years ended July 31, 2019, 2018 and 2017 in conformity with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
Material Uncertainty Related to Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered losses from inception and
negative operating cash flows that raise substantial doubt about its ability to continue as a going concern. Management's plans
with regards to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial
reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on
a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Chartered Professional Accountants
Licensed Public Accountants
We have served as the Company’s auditor since 2015.
Mississauga, Ontario
October 21, 2019
Page 2
BriaCell Therapeutics Corp
Consolidated Statements of Financial Position
As at July 31, 2019 and 2018
(Expressed in Canadian Dollars)
ASSETS
Current assets
Cash and cash equivalents
Short-term investments
Amounts receivables
Prepaid expenses
Total current assets
Security deposits
Investments
Intellectual property (Note 5)
July 31,
2019
July 31,
2018
$ 192,916
-
3,459
10,667
207,042
$ 938,448
1,341,043
18,975
147,734
2,446,200
-
2
339,215
172,980
2
357,958
Total Assets
$ 546,259
$ 2,977,140
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities (Note
10)
Unsecured convertible loan (Note 6)
Total liabilities
Shareholders' equity
Share capital (Note 7(b))
Share-based payment reserve (Note 8)
Warrant reserve (Note 7(c))
Accumulated other comprehensive loss
Deficit
Total shareholders' equity
$ 996,172
$ 285,712
396,224
1,392,396
1,460,138
1,745,850
13,651,217
877,089
2,870,442
(124,295)
(18,120,590)
(846,137)
10,213,174
905,257
2,907,337
(105,514)
(12,688,964)
1,231,290
Total liabilities and shareholders' equity
$ 546,259
$ 2,977,140
Nature of Operations and Going Concern (Note 1)
Commitments and Contingencies (Note 15)
Events After the Reporting Period (Note 16)
These consolidated financial statements were approved and authorized for issue on behalf of the Board of Directors
on October 21, 2019 by:
On behalf of the Board:
“Jamieson Bondarenko”
Director
“William Williams”
Director
The accompanying notes are an integral part of these consolidated financial statements.
Page 3
BriaCell Therapeutics Corp
Consolidated Statements of Operations and Comprehensive Loss
For the Years Ended July 31, 2019, 2018 and 2017
(Expressed in Canadian Dollars)
Expenses:
Research and development costs (Note 13)
General and administration costs (Note 14)
Share-based compensation (Note 8,10)
Total Expenses
Operating Loss
Interest income
Interest expense (Note 6)
Change in fair value of convertible debt (Note 6)
Foreign exchange gain (loss)
Years ended
July 31,
2018
2019
2017
$ 4,917,287
1,244,471
60,586
6,222,344
$ 3,112,579
1,387,713
476,211
4,976,503
$ 2,125,941
820,281
272,014
3,218,236
(6,222,344)
12,004
(31,317)
420,585
31,410
432,682
(4,976,503)
15,991
(20,364)
(407,709)
(24,078)
(436,160)
(3,218,236)
6,428
-
-
(8,913)
(2,485)
Loss For The Year
(5,789,662)
(5,412,663)
(3,220,721)
Items That Will Subsequently Be Reclassified To
Profit Or Loss
Foreign currency translation adjustment
(18,781)
(18,781)
(33,340)
(33,340)
41,828
41,828
Comprehensive Loss for the Year
$ (5,808,443)
$ (5,446,003)
$ (3,178,893)
Basic and Fully Diluted Loss Per Share
$ (0.03)
$ (0.04)
$ (0.03)
Weighted Average Number Of Shares Outstanding
173,899,129
128,344,435
101,912,205
The accompanying notes are an integral part of these consolidated financial statements.
Page 4
BriaCell Therapeutics Corp
Consolidated Statements of Cash Flows
For the Years Ended July 31, 2019, 2018 and 2017
(Expressed in Canadian Dollars)
Cash flow from operating activities
Net loss for the year
Items not affecting cash:
Depreciation and amortization
Share-based compensation
Accrued interest expense
Change in fair value of convertible loan
Changes in non cash working capital:
Amounts receivable
Prepaid expenses
Security deposits
Accounts payable and accrued liabilities
Cash flow from investing activities
Change in short-term investments
Cash flow from financing activities
Proceeds for private placements
Share issuance cost
Proceeds from unsecured convertible loan
Proceeds from exercise of warrants
Years ended
July 31,
2018
2019
2017
$ (5,789,662)
$ (5,412,663)
$ (3,220,721)
18,743
60,586
-
(420,585)
16,894
476,211
20,364
407,709
290
272,014
-
-
15,516
137,067
172,980
710,460
(5,094,895)
(11,994)
(117,051)
(151,413)
(186,650)
(4,958,593)
(3,494)
(2,250)
-
1,040,677
(1,913,484)
1,341,043
1,341,043
(591,043)
(591,043)
150,000
150,000
2,973,324
(117,540)
-
140,000
2,995,784
4,332,232
(465,849)
1,138,919
286,020
5,291,322
3,046,900
(238,389)
-
88,959
2,897,470
Increase (Decrease) in cash and cash equivalents
Effect of changes in foreign exchange rates
Cash and cash equivalents, beginning of year
(758,068)
12,536
938,448
(258,314)
(67,667)
1,264,429
1,133,986
(41,422)
171,865
Cash and cash equivalents, end of year
$ 192,916
$ 938,448
$ 1,264,429
The accompanying notes are an integral part of these consolidated financial statements.
Page 5
BriaCell Therapeutics Corp
Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
SHARE CAPITAL
SHARES
AMOUNT
SHARE-BASED
PAYMENT
RESERVE
WARRANT
RESERVE
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
ACCUMULATED
DEFICIT
TOTAL
SHAREHOLDERS'
EQUITY (DEFICIT)
Balance, July 31, 2016
Private Placement (Note 7(b)(i))
Private Placement (Note 7(b)(iv))
Exercise of warrants (Note 7(b)(i),(ii),(iii),(v))
Share-based compensation
Expiration of compensation warrants (Note 7(d)(i))
Cancellation of stock options (Note 8)
Foreign exchange translation
Loss for the year
Balance, July 31, 2017
Private Placement (Note 7(b)(vii))
Acquisition of Sapientia (Note 7(b)(viii))
Exercise of warrants (Note 7(b)(ix))
Private Placement (Note 7(b)(x))
Share issuance costs
Issuance of shares on conversion of Convertible Notes (Note 7(b)(xi))
Issuance of warrants on conversion of Convertible Notes
Expiration of warrants and compensation warrants (Note 8(d)(ii))
Share-based compensation
Expiration of options
Foreign exchange translation
Loss for the year
91,302,369 $ 4,489,797 $ 1,042,207 $ 1,107,863 $ (30,346) $ (5,581,404) $ 1,028,117
- - 1,485,761
8,500,000 948,258
- - 1,322,749
5,612,083 1,060,961
- - 88,960
490,109 110,599
- - 272,014
- 272,014
-
- 537,503
- 261,788
- (21,639)
-
-
- 44,067
- 429,458
-
-
- (44,067)
-
- (429,458)
-
- (41,828)
- - - - (41,828)
- - - - - (3,220,721) (3,220,721)
105,904,561 6,609,615 884,763 1,841,448 (72,174) (8,328,600) 935,052
- - - - 631,785
4,058,441 631,785
- - - - 375,000
2,500,002 375,000
- - 286,020
- (65,537)
2,043,000 351,557
- 1,687,573
- - 4,332,232
43,322,322 2,644,659
- - - - (465,850)
- (465,850)
- - 106,843
1,068,426 66,408
- 40,435
- - 97,875
- - - 97,875
- - - (694,457)
- 694,457
- - 378,336
- - (357,842)
- - - - (33,340)
- (33,340)
- - - - - (5,412,663) (5,412,663)
- - - 378,336
- - 357,842
-
-
Balance, July 31, 2018
158,896,752 10,213,174 905,257 2,907,337 (105,514) (12,688,964) 1,231,290
Issuance of shares and warrants on conversion of Convertible Notes (Note 7(b)(xii))
Exercise of warrants (Note 7(b)(xiii))
Private Placement (Note 7(b)(xiv))
Expiration of warrants (Note 7(c)(ii))
Expiration of options (Note 8(iv))
Share-based compensation (Note 8(v))
Foreign exchange translation
Loss for the year
- - 674,645
- 266,526
- (34,140)
- - 140,000
- - - - 2,855,784
- (269,282)
6,746,458 408,119
1,000,000 174,140
29,735,240 2,855,784
- 269,282
-
- - 88,754
- - (88,754)
- - - 60,586
- - 60,586
- - - - (18,781)
(18,781)
- - - - - (5,789,662) (5,789,662)
-
-
Balance, July 31, 2019
The accompanying notes are an integral part of these consolidated financial statements.
196,378,450 $ 13,651,217 $ 877,089 $ 2,870,442 $ (124,295) $ (18,120,590) $ (846,137)
Page 6
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
1. Nature of Operations and Going Concern
BriaCell Therapeutics Corp. (“BriaCell” or the “Company”) was incorporated under the Business
Corporations Act (British Columbia) on July 26, 2006 and is listed on the TSX Venture Exchange (“TSX
Venture”). The Company trades on the TSX Venture under the symbol “BCT.V”.
The Company’s head office is located at Suite 300 – 235 West 15th Street, West Vancouver, British
Columbia, V7T 2X1.
BriaCell is an immuno-oncology biotechnology company. BriaCell owns the US patent to Bria-IMT™, a
whole-cell cancer vaccine (US Patent No.7674456) (the “Patent”). The Company is currently advancing
its immunotherapy program, Bria-IMT™, to complete a 24-subject Phase I/IIa clinical trial and by research
activities in the context of BriaDx™, a companion diagnostic test to identify patients likely benefitting from
Bria-IMT™.
The accompanying consolidated financial statements have been prepared on the basis of a going
concern which contemplates the realization of assets and liquidation of liabilities in the normal course of
business for the foreseeable future. The Company has incurred losses from inception of $18,120,590
(July 31, 2018 - $12,688,964), and negative cash flows from operations of $5,094,895 (2018- $4,958,593,
2017- $1,913,484) is currently in the development stage and has not commenced commercial operations.
The Company’s ability to continue as a going concern is dependent upon its ability to attain future
profitable operations and to obtain the necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due. As at July 31, 2019, the Company had
not yet completed the clinical development of or achieved regulatory approval to market Bria-IMT™, its
lead product candidate and expects to incur further losses; the nature of a development stage immune-
oncology company requires the raising of financial capital to support its clinical development programs
and administrative costs. The uncertainty of the Company’s ability to raise such financial capital casts
significant doubt on the Company’s ability to continue as a going concern. These consolidated financial
statements do not include any adjustments to the amounts and classification of assets and liabilities that
might be necessary should the Company not be able to continue as a going concern.
These consolidated financial statements were authorized for issue by the Board of Directors on October
21, 2019.
Page 7
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
2. Basis of Presentation
Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), as issued by the international Accounting Standards Board (“IASB”) as
and interpretations of the IFRS Interpretations Committee (“IFRIC”).
The policies applied in these consolidated financial statements are based on IFRS effective as of July
31, 2019.
Basis of Presentation
The consolidated financial statements are prepared on a going concern basis and have been presented
in Canadian dollars which is the Company’s reporting currency. A summary of the significant accounting
policies is provided in Note 3. Standards and guidelines not effective for the current accounting period
are described in Note 4.
Basis of Measurement
Theses consolidated financial statements have been prepared on a going concern basis, under the
historical cost basis, except for financial instruments which have been measured at fair value.
Basis of Consolidation
These consolidated financial statements include the accounts of BriaCell and its wholly-owned US
subsidiary BriaCell Therapeutics Corp. (“BTC”) and BTC’s wholly owned subsidiary – Sapientia
Pharmaceuticals, Inc. (“Sapientia”). The financial statements of the subsidiaries are included in the
consolidated financial statements from the date that control commenced until the date control ceases.
Control exists when the Company has the power directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. The Company applies the
acquisition method to account for business combinations in accordance with IFRS 3.
All inter–company balances, and transactions, have been eliminated upon consolidation.
3. Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held with banks and other short-term highly
liquid investments with original maturities of three months or less. As at July 31, 2019 and 2018, the
Company had no cash equivalents.
Short-term Investments
Short-term investments consist of variable rate guaranteed investment certificates (“GICs”) with original
terms of one year or less but greater than three months.
Page 8
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Translation of Foreign Currencies
These consolidated financial statements are presented in Canadian dollars. The functional currency of
BriaCell is the Canadian dollar. The functional currency of BTC and Sapientia is the United States dollar.
Translation gains or losses resulting from the translation of the financial statements of BTC and Sapientia
into Canadian dollars for presentation purposes are recorded in other comprehensive (loss) income.
Within each entity, transactions in currencies other than the functional currency (“foreign currencies”) are
translated to the functional currency at the rate of exchange prevailing at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional
currency at the end of each reporting period at the period-end exchange rate. Exchange gains and losses
on the settlement of transactions and the translation of monetary assets and liabilities to the functional
currency are recorded in profit or loss.
Intangible assets
Separately acquired intangible assets are measured on initial recognition at cost including directly
attributable costs. Intangible assets acquired in a business combination are measured at fair value at the
acquisition date. Expenditures relating to internally generated intangible assets, excluding capitalized
development costs, are recognized in profit or loss when incurred.
Intangible assets with finite useful lives are amortized over their useful lives and reviewed for impairment
whenever there is an indication that the asset may be impaired. The amortization period and the
amortization method for an intangible asset are reviewed at least at each year end.
Intangible assets with indefinite useful lives are not systematically amortized and are tested for
impairment annually, or whenever there is an indication that the intangible asset may be impaired. The
useful life of these assets is reviewed annually to determine whether their indefinite life assessment
continues to be supportable. If the events and circumstances do not continue to support the assessment,
the change in the useful life assessment from indefinite to finite life is accounted for prospectively as a
change in accounting estimate and on that date the asset is tested for impairment. Commencing from
that date, the asset is amortized systematically over its useful life.
The useful lives of intangible assets are as follows:
Useful life
Amortization method
In-house development or purchase
Patents
20 years
Straight-line
Purchase
Page 9
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Impairment of non-financial assets
The Company evaluates the need to record an impairment of non-financial assets whenever events or
changes in circumstances indicate that the carrying amount is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced
to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and
value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax
discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does
not generate independent cash flows is determined for the cash generating unit (“CGU”) to which the
asset belongs. Impairment losses are recognized in profit or loss.
An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the
estimates used to determine the asset's recoverable amount since the last impairment loss was
recognized. Reversal of an impairment loss, as above, shall not be increased above the lower of the
carrying amount that would have been determined (net of depreciation or amortization) had no
impairment loss been recognized for the asset in prior years and its recoverable amount. The reversal of
impairment loss of an asset presented at cost is recognized in profit or loss.
Research and Development
Research and development costs are expensed as incurred.
Financial Instruments
In July 2014, the IASB published IFRS 9 which replaces IAS 39, "Financial Instruments: Recognition and
Measurement". IFRS 9 introduces improvements which include a logical model for classification and
measurement of financial instruments, a single, forward-looking "expected credit loss" impairment model
and a substantially reformed approach to hedge accounting. IFRS 9 was effective for annual reporting
periods beginning on or after January 1, 2018.
The Company has adopted IFRS 9 on August 1, 2018 and has elected not to restate the comparative
information for prior periods with respect to classification and measurement (including impairment)
requirements. Therefore, comparative periods have not been restated. There were no differences in the
carrying amounts of financial assets and financial liabilities from adoption of IFRS 9. Accordingly, the
information presented for July 31, 2018 does not generally reflect the requirements of IFRS 9 but rather
those of IAS 39. The adoption of IFRS 9 resulted in changes in classification which are described below.
Page 10
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Financial Instruments (continued)
a) Classification
In implementing IFRS 9, the Company updated the financial instruments classification within its
accounting policy. The following table shows the original classification under IAS 39 and the new
classification under IFRS 9:
Financial asset/liability
Classification under
Classification under
IAS 39
IFRS 9
Cash and cash equivalents
Loans and receivables
Amortized cost
Short-term investments
Loans and receivables
Amortized cost
Accounts receivable
Loans and receivables
Amortized cost
Accounts payable and accrued
liabilities
Other financial liabilities
Amortized cost
Convertible debt
Other financial liabilities
FVTPL
The Company determines the classification of financial instruments at initial recognition. The
classification of its instruments is driven by the Company’s business model for managing the financial
assets and their contractual cash flow characteristics. Equity instruments that are held for trading
(including all equity derivative instruments) are classified as fair value through profit and loss (“FVTPL”).
For other equity instruments, on the day of acquisition, the Company can make an irrevocable election
(on an instrument-by-instrument basis) to designate them at fair value through other comprehensive
income (“FVTOCI”). Financial liabilities are measured at amortized cost, unless they are required to be
measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to
measure them at FVTPL.
Page 11
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Financial Instruments (continued)
b) Measurement
Financial assets and liabilities:
Financial instruments carried at FVTPL are initially recorded at fair value and transaction costs are
expensed in the consolidated statements of operations and comprehensive. Realized and unrealized
gains and losses arising from changes in the fair value of the financial assets held at FVTPL are included
in the statements of operation and comprehensive loss in the period in which they arise. Where the
Company has opted to recognize a financial liability at FVTPL, any changes associated with the
Company’s own credit risk will be recognized in other comprehensive income (loss).
Financial instruments carried at FVTOCI for other equity instruments, on the day of acquisition the
Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them at
fair value through other comprehensive income.
Financial instruments carried at amortized cost are initially recognized at fair value plus or minus
transaction costs, respectively, and subsequently carried at amortized cost less any impairment.
c) Impairment of financial assets at amortized cost
The Company recognizes a loss allowance for expected credit losses on financial assets that are
measured at amortized cost. At each reporting date, the Company measures the loss allowance for the
financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial
asset has increased significantly since initial recognition. If at the reporting date, the financial asset has
not increased significantly since initial recognition, the Company measures the loss allowance for the
financial asset at an amount equal to twelve month expected credit losses. The Company recognizes an
impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the
loss allowance at the reporting date to the amount that is required to be recognized.
Page 12
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Share-based Payments
Equity-settled share-based payments for directors, officers and employees are measured at fair value at
the date of grant and recorded as compensation expense over the vesting period with a corresponding
increase to share-based payment reserve in the consolidated financial statements.
The fair value determined at the grant date of equity-settled share-based payments is expensed using
the graded vesting method over the vesting period based on the Company’s estimate of payments that
will eventually vest. Upon exercise of the stock options, consideration paid by the option holder together
with the amount previously recognized in share-based payment reserve is recorded as an increase to
share capital. Upon expiry, the amounts recorded for share-based compensation are transferred to the
deficit from the share-based payment reserve. Shares are issued from treasury upon the exercise of
equity-settled share-based instruments.
Compensation expense on stock options granted to non-employees is measured at the earlier of the
completion of performance and the date the options are vested using the fair value method and is
recorded as an expense in the same period as if the Company had paid cash for the goods or services
received.
When the value of goods or services received in exchange for the share-based payment cannot be
reliably estimated, the fair value is measured by use of a Black-Scholes valuation model. The expected
life used in the model is adjusted, based on management’s best estimate, for the effects of non-
transferability, exercise restrictions, and behavioral considerations.
Share Capital
Common shares are classified as equity. Proceeds from unit placements are allocated between shares
and warrants issued using the relative fair value method. Costs directly identifiable with share capital
financing are charged against share capital. Share issuance costs incurred in advance of share
subscriptions are recorded as non-current deferred assets. Share issuance costs related to uncompleted
share subscriptions are charged to operations in the period they are incurred.
Warrant Reserve
The fair value of warrants is determined upon their issuance either as part of unit private placements or
in settlement of share issuance costs and finders’ fees, using the Black-Scholes model. All such warrants
are classified in a warrant reserve within equity. If the warrants are converted, the value attributable to
the warrants is transferred to common share capital. Upon expiry, the amounts recorded for expired
warrants is transferred to the deficit from the warrant reserve. Shares are issued from treasury upon the
exercise of share purchase warrants.
Page 13
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Income Taxes
Income tax expense consists of current and deferred tax expense. Current and deferred taxes are
recognized in profit or loss except to the extent they relate to items recognized directly in equity or other
comprehensive income.
Current tax is recognized and measured at the amount expected to be recovered from or payable to the
taxation authorities based on the income tax rates enacted or substantively enacted at the end of the
reporting period and includes any adjustment to taxes payable in respect of previous years.
Deferred tax is recognized on any temporary differences between the carrying amounts of assets and
liabilities in the consolidated financial statements and the corresponding tax bases used in the
computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the period when the asset is realized and the liability is settled. The effect of a change
in the enacted or substantively enacted tax rates is recognized in profit or loss and comprehensive income
(loss) or equity depending on the item to which the adjustment relates.
Deferred tax assets are recognized to the extent future recovery is probable. At the end of each reporting
period, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable
earnings will be available to allow all of part of the asset to be recovered.
Basic and Diluted Loss per Share
Basic loss per share is computed by dividing the loss for the year by the weighted average number of
common shares outstanding during the year. Diluted earnings per share reflect the potential dilution that
could occur if potentially dilutive securities were exercised or converted to common stock.
The dilutive effect of options and warrants and their equivalent is computed by application of the treasury
stock method. Diluted amounts are not presented when the effect of the computations is anti-dilutive.
Accordingly, at present, there is no difference in the amounts presented for basic and diluted loss per
share.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation.
These reclassifications had no effect on the reported results of operations. An adjustment has been made
to research and development cost note 13 for fiscal year ended July 31, 2018, to identify the wages and
salaries and clinical trial and investigational drug cost of research costs. $527,206 was reclassified from
clinical trial and investigational drug cost to wages and salaries. This change in classification does not
affect previously reported total research and development cost reported in the consolidated statements
of operations and comprehensive loss.
Page 14
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
3. Significant Accounting Policies (continued)
Significant Accounting Judgments and Estimates
The preparation of these consolidated financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated
financial statements and reported amounts of expenses during the reporting period. Actual outcomes
could differ from these estimates. The consolidated financial statements include estimates which, by
their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated
financial statements, and may require accounting adjustments based on future occurrences. Revisions
to accounting estimates are recognized in the period in which the estimate is revised and also in future
periods when the revision affects both current and future periods.
The critical judgments and significant estimates in applying accounting policies that have the most
significant effect on the amounts recognized in the consolidated financial statements are:
• The series of loans made to the subsidiary company are considered part of the parent company’s
net investment in a foreign operation as the Company does not plan to settle these balances in the
foreseeable future. As a result of this assessment, the unrealized foreign exchange gains and losses
on the intercompany loans are recorded through compressive loss. If the Company determined that
settlement of these amounts was planned or likely in the foreseeable future, the resultant foreign
exchange gains and losses would be recorded through profit or loss.
• The change in the fair value of the unsecured convertible loan is based on an estimate determined
by the Black-Scholes Model.
• Preparation of the consolidated financial statement on going concern basis, which contemplates the
realization of assets and payments of liabilities in the ordinary course of business. Should the
Company be unable to continue as a going concern, it may be unable to realize the carrying value
of its assets and to meet its liabilities as they become due.
Page 15
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
4. Standards Issued but Not Yet Effective
Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for future accounting
periods. Many are not applicable to or are not expected to have a significant impact on BriaCell and have
been excluded from the list below. The following have not yet been adopted and are being evaluated to
determine their impact on BriaCell.
IFRS 16 - Leases (“IFRS 16”) replaces IAS 17, Leases (“IAS 17”). The new model requires the
recognition of almost all lease contracts on a lessee’s statement of financial position as a lease liability
reflecting future lease payments and a ‘right-of-use asset’ with exceptions for certain short-term leases
and leases of low-value assets. In addition, the lease payments are required to be presented on the
statement of cash flow within operating and financing activities for the interest and principal portions,
respectively. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with early
adoption permitted if IFRS 15, Revenue from Contracts with Customers, is also applied.
Based on the information currently available, the Company estimates that it will recognize a lease liability
and right to use asset as at August 1, 2019. The Company is on track to complete its implementation of
IFRS 16 effective August 1, 2019.
Page 16
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
5. Intellectual Property
On July 24, 2017, the Company entered into a definitive share exchange agreement (the “Share
Exchange Agreement”) through its wholly-owned subsidiary, BTC with Sapientia and all the shareholders
of Sapientia. Sapientia, is a biotechnology company based in Havertown, PA, that is developing novel
targeted therapeutics for multiple indications including several cancers and fibrotic diseases.
The attributable intellectual property relates to Sapientia’s various patents, which the Company is
amortizing over 20 years, consistent with its accounting policy. During the year ended July 31, 2019, the
Company recorded $18,743 in amortization on intellectual property (2018 - $16,894).
Cost
As at July 31, 2017
Additions
As at July 31, 2018
Additions
As at July 31, 2019
Accumulated Amortization
As at July 31, 2017
Amortization
As at July 31, 2018
Amortization
As at July 31, 2019
Net Book Value
As at July 31, 2018
As at July 31, 2019
Sapientia
$
-
374,852
374,852
-
374,852
$
-
$
16,894
16,894
18,743
35,637
357,958
339,215
$
Page 17
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
6. Unsecured convertible loan
On March 16, 2018, concurrent with the non-brokered unit offering, the Company completed a non-
brokered private placement for the purchase of 5.0% unsecured convertible notes (each, a "Convertible
Note") in the principal amount of US$885,000. Under the terms of securities purchase agreements
between the Company and the purchasers of Convertible Notes (the “Noteholders”), each Convertible
Note is convertible, at the option of the holder, into (i) common shares of BriaCell for so long as the
Convertible Note is outstanding, at a fixed conversion price of $0.10 per common share, for a period of
nine months from the date of issuance, which may be extended by the applicable holder and (ii) for each
common share issued as a result of conversion, one warrant. The warrants are valid for 36 months from
their issuance date and each warrant is exercisable for one common share at an exercise price of $0.14.
On April 23, 2019, the Company revised the exercise price of these warrants from $0.14 to $0.12.
The original repayment date of the Convertible Notes was September 16, 2018. On September 17, 2018,
the Company and the Noteholders agreed to extend the repayment date of the Convertible Notes to
March 20, 2019 and on March 8, 2019, the Company and the Noteholders agreed to extend the
repayment date of the Convertible Notes, to September 7, 2019. See note 16 for details of the repayment
subsequent to July 31, 2019.
During the year ended July 31, 2018, the Noteholders converted $106,843 of Convertible Notes into
1,068,426 shares and 1,068,426 warrants.
During the year ended July 31, 2019, an additional $674,645 of Convertible Notes were converted and
as such, the Company issued 6,746,458 shares and 6,746,458 warrants on conversion (see also note
7b(xii)).
The Convertible Notes are denominated in US dollars and convertible into common shares and warrants
based on the principal and interest balance translated to Canadian dollars. Management determined that
the Convertible Notes represent a combined instrument that contains an embedded derivative, being the
conversion option. As a result of the foreign exchange impact on the conversion factor, the conversion
option does not meet the fixed for fixed criteria and therefore represents a derivative liability. In
accordance with IFRS 9, the Company has designated the entire Unsecured Convertible Loan at fair
value through profit or loss. The Unsecured Convertible Loan was initially recorded at fair value and re-
valued at each reporting date with changes in fair value being charged to interest expenses in the
consolidated statements of operations and comprehensive loss.
Fair value determination
The fair value of the Convertible Notes, including any adjustments thereto, has been determined using a
combination of the Black
Scholes option pricing model for the equity conversion portion and the
discounted cash flow method for the loan portion.
‐
Page 18
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
6. Unsecured convertible loan (continued)
The following assumptions were used to determine the fair value of the Convertible Notes :
‐
Risk
free interest rate
Expected volatility
Share price
Expected dividend yield
Annual loan interest rate
CAD/USD rate
July 31, 2019
(at year end)
2.03%
76%
$0.065
0%
5%
1.3148
July 31, 2018
(at year end)
1.88%
88%
$0.14
0%
5%
1.3017
As at July 31, 2019, the fair value of the amount owed to the Noteholders, including accrued interest was
$396,224. Total interest expense and gain (loss) due to the change in fair value for the year ended July
31, 2019, charged to the consolidated statements of operations and comprehensive loss were $31,317
and $420,585 respectively (year ended July 31, 2018: $20,364 and loss of $407,709 respectively).
7. Share Capital and Warrant Reserve
a) Authorized share capital
The authorized share capital consists of an unlimited number of common shares with no par
value.
b) Issued share capital
During the years ended July 31,2017, 2018 and 2019, the Company issued shares as follows:
i) On August 19, 2016, the Company completed a non-brokered private placement resulting in
gross proceeds of $1,700,000. The non-brokered private placement involved the sale of
8,500,000 units at a price of $0.20 per unit (the “August 2016 Non-Brokered Units”). Each
August 2016 Non-Brokered Unit comprised one Common Share and one common share
purchase warrant (the “August 2016 Non-Brokered Warrants”). Each August 2016 Non-
Brokered Warrant entitles the holder thereof to acquire one additional Common Share for an
initial period of 12 months from August 19, 2016 at an exercise price of $0.30 and at an
exercise price of $0.35 during the subsequent 24 months.
Certain finders received a cash commission of $115,500 plus 595,000 compensation warrants
(the “August 2016 Compensation Warrants”) exercisable into one Non-Brokered Unit at any
time until August 19, 2019 at an exercise price of $0.35.
Page 19
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
b) Issued share capital (continued)
The total fair value of each August 2016 Non-Brokered Warrants and August 2016
Compensation Warrants was $472,305 and $65,198, respectively and was determined using
the Black-Scholes option pricing model and the following assumptions: August 2016 Non-
Brokered Warrants - share price - $0.22; exercise price - $0.35; expected life - 3 years;
annualized volatility - 95.43%; dividend yield - 0%; risk free rate - 0.64%. August 2016
Compensation Warrants - share price - $0.20; exercise price - $0.20; expected life - 3 years;
annualized volatility - 95.43%; dividend yield - 0%; risk free rate - 0.64%.
ii) On October 7, 2016, 192,140 Compensation Warrants were exercised into 192,140 common
shares and 192,140 warrants for a total consideration of $34,585. The fair value of the
warrants was determined using the Black-Scholes option pricing model and the following
assumptions: - share price - $0.21; exercise price - $0.35; expected life – 1.15 years;
annualized volatility – 90.07%; dividend yield – 0%; risk free rate – 0.64%. Gross proceeds,
less issuance costs paid in cash and less the total fair value of the warrants was charged
against Share Capital in the statement of changes in shareholders’ equity.
iii) On November 30, 2016, 116,963 Compensation Warrants were exercised into 116,963
common shares and 116,963 warrants for a total consideration of $21,055. The fair value of
the warrants was determined using the Black-Scholes option pricing model and the following
assumptions: - share price - $0.20; exercise price - $0.35; expected life - 1.01 years;
annualized volatility - 94.09%; dividend yield - 0%; risk free rate - 0.64%. Gross proceeds,
less issuance costs paid in cash and less the total fair value of the warrants was charged
against Share Capital in the statement of changes in shareholders’ equity.
iv) On March 9, 2017 the Company and the Company’s President and CEO, completed a non-
brokered private placement financing (the "March 2017 Offering") of 5,612,083 units (the
"March 2017 Units") for aggregate gross proceeds to the Company in the amount of
$1,346,900.
Under the March 2017 Offering, each Unit consisted of one common share in the capital of
the Company and one-half of one Common Share purchase warrant (a "March 2017
Warrant"). The fair value of the March 2017 Warrants was determined using the Black-
Scholes option pricing model and the following assumptions: - share price - $0.20; annualized
volatility – 120.63%; dividend yield - 0%; risk free rate – 0.78%. Each March 2017 Warrant
will be exercisable for one common share at an exercise price of $0.30 if exercised 12 months
following the date of closing of the March 2017 Offering and $0.35 if exercised 24 months
following the date of closing of the March 2017 Offering.
Page 20
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
b) Issued share capital (continued)
v) On March 7, 2017, 144,006 Compensation Warrants were exercised into 144,006 common
shares and 144,006 warrants for a total consideration of $25,921. The fair value of the
Compensation Warrants was determined using the Black-Scholes option pricing model and
the following assumptions: - share price - $0.18; exercise price - $0.35; expected life - 11
months; annualized volatility - 152.57%; dividend yield - 0%; risk free rate - 0.64%. Gross
proceeds, less issuance costs paid in cash and less the total fair value of the warrants, were
charged against Share Capital in the statement of changes in shareholders’ equity.
vi) On April 24, 2017, 37,000 Finders’ Options were exercised into 37,000 common shares and
18,500 warrants for a total consideration of $7,400. The fair value of the warrants was
determined using the Black-Scholes option pricing model and the following assumptions: -
share price - $0.19; exercise price - $0.35; expected life - 24 months; annualized volatility -
117.96%; dividend yield - 0%; risk free rate - 0.64%. Gross proceeds, less issuance costs
paid in cash and less the total fair value of the warrants, were charged against Shares Capital
in the consolidated statement of changes in shareholders’ equity. The shares were issued on
May 1, 2017.
vii) On August 2, 2017, the Company and the Company’s President and CEO completed a non-
brokered private placement resulting in gross proceeds of $631,785. The non-brokered
private placement involved the sale of 4,058,441 shares at a price of $0.16 per unit.
viii) On September 5, 2017, the Company issued 2,500,002 common shares to the Sapientia
shareholders as consideration for the acquisition of all outstanding shares in the capital of
Sapientia.
Page 21
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
b) Issued share capital (continued)
ix) On October 13, 2017, the Company introduced a warrant exercise incentive program (the
“Warrant Incentive Program”) designed to encourage the early exercise of up to approximately
26 million outstanding common share purchase warrants (the “Warrants”).Under the terms of
the Incentive Program, the Company offered the following inducements: (i) a temporary
reduction in the respective exercise prices of the Warrants to $0.14, consistent with the current
trading value of BriaCell’s shares, for each Warrant that is exercised on or before November
30, 2017 (the “Early Exercise Period“); and (ii) for each Warrant exercised during the Early
Exercise Period, the holder will receive, at no additional cost, one-half of one newly issued
common share purchase warrant (each an “Incentive Warrant“), with each whole Incentive
Warrant exercisable into one common share for a period of 24 months from the issue date at
an exercise price of $0.20. Any Warrants that are not exercised prior to the expiry of the Early
Exercise Period will remain outstanding in accordance with their original terms, and in
particular, will no longer be eligible for the reduced exercise price or issuance of Incentive
Warrants. In total, 2,043,000 warrants were exercised in connection with the Warrant Incentive
Program at an exercise price of $0.14 for aggregate gross proceeds of $286,020. In addition,
a total of 1,021,500 Incentive Warrants were granted in connection with the Warrant Incentive
Program, with each Incentive Warrant entitling the holder to purchase one additional common
share of the Company at an exercise price of $0.20, expiring December 21, 2019. The fair
value of the warrants was $61,629. The fair value was estimated using the Black-Scholes
option pricing model and the following weighted average assumptions: share price - $0.16;
exercise price - $0.20; expected life - 24 months; annualized volatility - 114.68%; dividend
yield - 0%; risk free rate - 1.66%.
Page 22
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
b) Issued share capital (continued)
x) On March 27, 2018, the Company completed a brokered private placement (the "March 2018
Brokered Unit Offering") of 43,322,322 units of the Company (the "March 2018 Units") at a
price of $0.10 per March 2018 Unit for aggregate gross proceeds of $4,332,232. Under the
Brokered Unit Offering, each March 2018 Unit consists of one common share and one
common share purchase warrant (each, a "March 2018 Warrant"). The March 2018 Warrants
are valid for 36 months following the closing of the Brokered Unit Offering and each March
2018 Warrant is exercisable for one Common Share at an exercise price of $0.14. In
connection with the March 2018 Brokered Unit Offering and the Note Offering (together, the
"Offerings"), the Company paid commissions to certain participating dealers on a portion of
funds raised. In respect of the March 2018 Brokered Unit Offering, aggregate cash
commissions of $235,215 and an aggregate 2,613,350 broker warrants (the “March 2018
Broker Warrants”) were paid. The March 2018 Broker Warrants issued in connection with the
Offerings are exercisable into one Common Share at an exercise price of $0.14 for a period
of 36 months from the issue date. The fair value of March 2018 Warrants and March 2018
Broker Warrants was $1,479,028 and $208,545, respectively, and was determined using the
Black-Scholes option pricing model and the following assumptions: share price - $0.13;
exercise price - $0.14; expected life - 36 months; annualized volatility - 100.61%; dividend
yield - 0%; risk free rate - 1.99%. Officers and members of the Company’s Board of Directors,
including BriaCell’s Chief Executive Officer, Chief Financial Officer and the Board’s Chairman
(the "Related Parties"), participated in the Brokered Unit Offering, which participation
constitutes a "related party transaction" as defined under Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special Transactions ("MI 61-101") and TSX Venture
Exchange policy 5.9. Such related party transaction is exempt from the formal valuation and
minority shareholder approval requirements of MI 61-101 as neither the fair market value of
securities being issued to the related parties nor the consideration being paid by the related
parties exceeded 25% of the Company's market capitalization.
xi) During July 2018, the Company issued 1,068,426 shares at $0.10 per share in respect of the
partial conversion of certain Convertible Notes (Note 6). Upon exercise of these Convertible
Notes, the Noteholders received 1,068,426 warrants with an exercise price of $0.14, expiring
in July 31, 2021. The fair value of the warrants was $40,435. The fair value was estimated
using the Black-Scholes option pricing model and the following weighted average
assumptions: share price - $0.14; exercise price - $0.14; expected life - 36 months; annualized
volatility - 100.41%; dividend yield - 0%; risk free rate - 2.12%.
Page 23
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
b) Issued share capital (continued)
xii) During the year ended July 31, 2019, 6,746,458 shares were issued at $0.10 per share in
respect of the partial conversion of certain Convertible Notes (Note 6). Upon exercise of these
Convertible Notes, the Noteholders received 6,746,458 warrants with an exercise price of
$0.14, expiring within three years. The fair value of the warrants was $266,526. The fair value
was estimated using the Black-Scholes option pricing model and the following weighted
average assumptions: share price - $0.105-$0.135; exercise price - $0.14; expected life - 36
months; annualized volatility - 100.7%-70.6%; dividend yield - 0%; risk free rate - 1.6%.-2.3%.
xiii) On September 28, 2018, 1,000,000 shares were issued in respect of 1,000,000 warrants that
were exercised at an exercise price of $0.14 for gross proceeds of $140,000. The fair value
of the warrants in the amount of $34,140 were released from the Warrant reserve to Share
Capital.
xiv) On March 25, 2019 and April 1, 2019, the Company completed a non brokered private
placement (the "April 2019 Private Placement") of 29,735,240 shares of the Company at a
price of $0.10 per share for aggregate gross proceeds of $2,973,524 (net proceeds:
$2,855,784). Included in the April 2019 Private Placement were $500,000 from Mr. Jamieson
Bondarenko, an insider of the Company, and his participation in the April 2019 Private
Placement is considered a “related party transaction” pursuant to Multilateral Instrument 61-
101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The
Company is exempt from the requirements to obtain a formal valuation or minority shareholder
approval in connection with the insiders’ participation in the Private Placement in reliance of
sections 5.5(a) and 5.7(1)(a) of MI 61-101.
Page 24
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
c) Share Purchase Warrants
A summary of changes in share purchase warrants for the years ending July 31, 2019, 2018 and
2017 is presented below:
Balance, July 31, 2016
Number
Weighted Average
Exercise Price
18,396,434
$
0.27
Granted on brokered private placement (Note 7(b)(i))
Granted on non-brokered private placement (Note 7(b)(iv))
Granted from the exercise of Compensation Warrants and
Finders’ Options
8,500,000
2,806,041
471,609
0.35
0.35
0.35
Balance, July 31, 2017
30,174,084
$
0.30
Exercised on Warrant Incentive Program (Note 7(b)(ix))
Granted on Warrant Incentive Program (Note 7(b)(ix))
Granted on Brokered Unit Offering (Note 7(b)(x))
Granted from conversion of Notes (Note 7(b)(xi))
Expired during the year (i)
Balance, July 31, 2018
Granted from conversion of Convertible Notes (Note 7(b)(xii))
Exercised Brokered Unit Offering (Note 7(b)(xiii))
Expired during the year (ii)
(2,043,000)
1,021,500
43,322,322
1,068,426
(13,094,887)
60,448,445
6,746,458
(1,000,000)
(3,115,144)
$
Balance, July 31, 2019
63,079,759
$
0.14
0.20
0.14
0.14
(0.26)
0.19
0.14
0.14
0.35
0.18
i. During the year ended July 31, 2018, 13,094,887 warrants with a fair value of $694,458
expired and the Company recorded a charge to the warrant reserve with a corresponding
credit to accumulated deficit.
ii. During the year ended July 31, 2019, 3,115,144 warrants with a fair value of $269,282
expired and the Company recorded a charge to the warrant reserve with a corresponding
credit to accumulated deficit.
Page 25
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
c) Share Purchase Warrants (continued)
As at July 31, 2019, warrants outstanding were as follows:
Number
of
Warrants
3,421,053
8,500,000
1,021,500
42,322,322
7,814,884
63,079,759
Exercise
Price
$ 0.30
$ 0.35
$ 0.20
$ 0.14
$ 0.12
Exercisable
At
July 31, 2019
Expiry
Date
3,421,053
8,500,000
1,021,500
April 26, 2021
August 19, 2019
December 21, 2019
42,322,322 March 27, 2021
7,814,884
63,079,759
October 2020-July 2021
d). Compensation Warrants
A summary of changes in compensation warrants for the years ended July 31, 2019, 2018 and
2017 is presented below:
Balance, July 31, 2016
1,483,813
$
0.19
Granted on brokered private placement (Note 7(b)(i))
Expiration of compensation warrants (i)
Exercised (Note 7(b)(ii)(iii)(v)(vi))
Balance, July 31, 2017
Grant on brokered private placement (Note 7(b)(iv))
Grant from placement of Convertible Notes (Note 6)
Expired during 2018 (ii)
Balance, July 31, 2018 and 2019
595,000
(581,019)
(490,109)
1,007,685
2,613,350
1,250,000
139,000
)
4,732,035
(
$
$
0.20
(0.18)
(0.20)
0.20
0.14
0.14
(0.20)
0.15
(i)
During the year ended July 31, 2017, 581,019 compensation warrants with a fair value of
$44,076 expired and the Company recorded a charge to the warrant reserve with a corresponding
credit to accumulated deficit.
(ii)
During the year ended July 31, 2018, 139,000 compensation warrants with a fair value of
$15,418 expired and the Company recorded a charge to the warrant reserve with a corresponding
credit to accumulated deficit.
Page 26
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
7. Share Capital and Warrant Reserve (continued)
d) Compensation Warrants (continued)
As at July 31, 2019, compensation warrants outstanding were as follows:
Number Of
Compensation
Warrants
273,685
595,000
1,250,000
2,613,350
4,732,035
Exercise
Price
Exercisable at
July 31, 2019
$
$
$
$
0.30
0.20
0.14
0.14
273,685
595,000
1,250,000
2,613,350
4,732,035
Expiry Date
April 26, 2021 (i)
August 19, 2019 (ii)
March 27, 2021 (iii)
March 27, 2021 (iii)
i. Each compensation warrant can be exercised at $0.30 into one unit of BriaCell comprising one
common share and one share purchase warrant. Each resultant share purchase warrant acquired
can be exercised into an additional common share of BriaCell at $0.35 if exercised by April 26,
2021.
ii. Each compensation warrant can be exercised at $0.20 into one unit of BriaCell comprising one
common share and one share purchase warrant. Each resultant share purchase warrant acquired
can be exercised into an additional common share of BriaCell an exercise price of $0.30 through
to August 19, 2019 and $0.35 for the 24 months thereafter.
iii. Each compensation warrant can be exercised at $0.14 into one common share of BriaCell for a
period of 36 months.
Page 27
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
8. Share-Based Compensation and Share-Based Payment Reserve
The Company has adopted a stock option plan (the “Plan") under which it is authorized to grant options
to officers, directors, employees and consultants enabling them to acquire up to 10% of the issued and
outstanding common stock of the Company. The options can be granted for a maximum of 5 years and
vest as determined by the Board of Directors. The exercise price of each option granted may not be less
than the fair market value of the common shares at the time of grant.
A summary of changes in stock options for the years ended July 31, 2019, 2018 and 2017 is presented
below:
Balance, July 31, 2016
Granted (i)
Cancelled
Balance, July 31, 2017
Granted (ii)
Cancelled
Expired (iii)
Number of options
outstanding
Weighted average
exercise price
6,968,000
$ 0.24
1,882,000
(2,768,000)
6,082,000
6,165,600
(175,000)
(2,650,000)
0.25
(0.24)
$ 0.24
0.15
(0.30)
(0.23)
Balance, July 31, 2018
9,422,600
$ 0.18
Expired (iv)
Cancelled
(650,000)
(1,800,000)
(0.37)
(0.18)
Balance, July 31, 2019
6,972,600
$ 0.17
Page 28
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
8. Share-Based Compensation and Share-Based Payment Reserve
(continued)
i. During the year ended July 31, 2017, the Company issued a total of 1,882,000 options, as
follows:
a. On October 3, 2016, the Company issued 800,000 stock options to consultants, of which
25% vested immediately, and 25% vest every 90 days thereafter. The fair value of the
stock options was $88,061. The fair value was estimated using the Black-Scholes option
pricing model and the following weighted average assumptions: share price - $0.20;
exercise price - $0.25; expected life - 3 years; annualized volatility - 95%; dividend yield -
0%; risk free rate - 0.59%
b. On November 1, 2016, a total of 632,000 stock options were issued to the Company’s
CEO, which vested immediately. The fair value of the stock options was $84,981. The
fair value was estimated using the Black-Scholes option pricing model and the following
weighted average assumptions: share price - $0.19; exercise price - $0.21; expected life
- 3 years; annualized volatility - 124%; dividend yield - 0%; risk free rate - 0.75%
c.
On February 14, 2017, a total of 250,000 stock options were issued to a consultant, of
which 25% vested immediately, and 25% vest every 90 days thereafter. The fair value of
the stock options was $34,290. The fair value was estimated using the Black-Scholes
option pricing model and the following weighted average assumptions: share price - $0.2;
exercise price - $0.2; expected life - 3 years; annualized volatility – 115%; dividend yield
– 0%; risk free rate – 0.76%
d. On March 20, 2017, a total of 50,000 stock options were issued to a consultant of which
25% vested immediately, and 25% vest every 90 days thereafter. The fair value of the
stock options was $7,041. The fair value was estimated using the Black-Scholes option
pricing model and the following weighted average assumptions: share price - $0.22;
exercise price - $0.21; expected life – 3 years; annualized volatility – 103%; dividend yield
– 0%; risk free rate – 0.67%
e. On March 22, 2017, a total of 150,000 stock options were issued to an employee of the
Company of which 25% vested immediately, and 25% vest every 90 days thereafter. The
fair value of the stock options was $21,122. The fair value was estimated using the Black-
Scholes option pricing model and the following weighted average assumptions: share
price - $0.22; exercise price - $0.21; expected life - 3 years; annualized volatility - 103%;
dividend yield - 0%; risk free rate - 0.67%
Page 29
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
8. Share-Based Compensation and Share-Based Payment Reserve
(continued)
ii. During the year ended July 31, 2018, the Company issued a total of 6,165,000 options, as
follows:
a. On May 1, 2018, the Company issued 2,515,600 stock options to two consultants of which
25% vested immediately, and 25% vest every 90 days thereafter.
The fair value of the 2,000,000 stock options was $126,579. The fair value was estimated
using the Black-Scholes option pricing model with the following weighted average
assumptions: share price - $0.10; exercise price - $0.14; expected life - 36 months;
annualized volatility - 99.64%; dividend yield - 0%; risk free rate - 1.88%.
The fair value of the 500,000 stock options was $30,165. The fair value was estimated
using the Black-Scholes option pricing model with the following weighted average
assumptions: share price - $0.10; exercise price - $0.20; expected life - 45 months;
annualized volatility - 99.22%; dividend yield - 0%; risk free rate - 1.88%.
The fair value of the 15,600 stock options was $988. The fair value was estimated using
the Black-Scholes option pricing model with the following weighted average assumptions:
share price - $0.10; exercise price - $0.14; expected life - 36 months; annualized volatility
- 99.64%; dividend yield - 0%; risk free rate - 1.88%.
b. On March 1, 2018, the Company issued 3,400,000 stock options to directors, officers,
employees and consultants of the Company, which vested immediately. The fair value of
the stock options was $239,119. The fair value was estimated using the Black-Scholes
option pricing model with the following weighted average assumptions: share price - $0.10;
exercise price - $0.15; expected life - 36 months; annualized volatility - 101.08%; dividend
yield - 0%; risk free rate - 1.99%.
c. On July 1, 2018, the Company issued 250,000 stock options to a consultant of the
Company, which vest in in four grants of 62,500 options each three months. The fair value
of the stock options was $18,916. The fair value was estimated using the Black-Scholes
option pricing model with the following weighted average assumptions: share price - $0.15;
exercise price - $0.17; expected life - 5 years; annualized volatility - 99.74%; dividend yield
- 0%; risk free rate - 2.04%.
Page 30
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
8. Share-Based Compensation and Share-Based Payment Reserve
(continued)
iii. 650,000 options with a fair value of $88,754 expired and the Company recorded a charge to the share
based payment reserve with a corresponding credit to accumulated deficit.
iv. The Company recognized stock based compensation expense of $60,586 for the year ended July 31,
2019, (year ended July 31, 2018 - $476,211, year ended July 31 2017 - $272,014) in relation to the
vesting of options issued in previous years.
v. As at July 31, 2019, stock options were outstanding for the purchase of common shares as follows:
Number
Of
Options
200,000
575,000
150,000
632,000
250,000
2,400,000
500,000
2,015,600
250,000
6,972,600
Exercise
Price
$
$
$
$
$
$
$
$
$
0.255
0.255
0.210
0.250
0.200
0.150
0.200
0.140
0.140
Exercisable At
July 31,
2019
200,000
512,500
150,000
632,000
250,000
2,400,000
500,000
2,015,600
250,000
6,910,100
Expiry
Date
November 4, 2025
November 4, 2020
March 22, 2020
November 1, 2019
February 14, 2020
Mar 1, 2021
March 10, 2022
May 1, 2021
July 1, 2023
As at July 31, 2019, stock options outstanding have a weighted average remaining contractual life of
1.74 years (July 31, 2018 – 2.9 years).
Page 31
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
9. Income Taxes
The provision for taxes differs from the amount obtained by applying the combined Canadian Federal and
Provincial statutory income tax rate of 27% (2018 - 26%) to the effective tax rate is as follows:
Net loss before recovery of income taxes
Expected tax recovery based on statutory Canadian
combined federal and provincial tax rates
Differences in foreign tax rates
Tax rate changes and other adjustments
Share based compensation and non-deductible expenses
Share issuance cost booked directly to equity
Expiry of warrants
Change in deferred tax assets not recognized
Year Ended
Year Ended
July 31, 2019
July 31, 2018
$
$
(5,789,662) $
(5,412,663)
$
(1,563,209)
(52,740)
7,240
16,982
(31,736)
-
1,623,463
(1,407,290)
(212,540)
36,770
474,840
-
90,280
1,017,940
Income tax (recovery) expense
$
-
$
-
Deferred Tax
The following table summarizes the components of deferred tax:
July 31, 2019
July 31, 2018
Deferred Tax Assets
Non-capital losses carried forward - Canada
101,510
Deferred tax liabilities
Property, plant and equipment - Canada
Convertible debentures
(98,033)
(3,477)
$
- $
-
Unrecognized Deferred Tax Assets
Deferred taxes are provided as a result of temporary differences that arise due to the differences between the
income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been
recognized in respect of the following deductible temporary differences because it is not probable that the
future taxable profit will be available against which the Company can utilize the benefits:
Page 32
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
9. Income Taxes (continued)
The following table summarizes the components of the unrecognized deductible temporary
differences:
Deferred Tax Assets
Non-capital losses carried forward - USA
Non-capital losses carried forward - Canada
Share issuance costs
Marketable securities
Property, plant and equipment - Canada
Property, plant and equipment - USA
July 31, 2019
July 31, 2018
$ 11,148,719 $
4,219,013
570,483
106,998
3,327
-
7,221,900
2,602,990
737,090
107,000
3,330
2,120
$ 16,048,540 $ 10,674,430
The Canadian and U.S. Losses expire as noted in the table below. Share issuance and financing
costs will be fully amortized in 2023. The remaining deductible temporary differences may be carried
forward indefinitely. Deferred tax assets have not been recognized in respect of these items because
it is not probable that future taxable profit will be available against which the group can utilize the
benefits therefrom.
The Company has Canadian tax loss carry forwards which expire as noted in the below table.
2034
2035
2036
2037
2038
2039
$
$
103,961
767,444
467,982
573,271
1,250,137
1,069,094
4,231,889
The Company has U.S. tax loss carry forwards which expire as noted in the below table.
2033 $
2034
2035
2036
2037
2038
1,240
631,660
1,134,120
2,546,090
2,908,790
3,926,819
$ 11,148,719
Page 33
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
10. Related Party Transactions and Balances
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other
party or exercise significant influence over the other party in making operating and financial decisions.
This would include the Company's senior management, who are considered to be key management
personnel by the Company. Parties are also related if they are subject to common control or significant
influence. Related parties may be individuals or corporate entities. A transaction is considered to be a
related party transaction when there is a transfer of resources or obligations between related parties.
As at July 31, 2019, included in accounts payable and accrued liabilities are amounts owing to a company
controlled by an officer in the amount of $7,000 (July 31, 2018 – $Nil) for consulting fees and amounts
owing to directors of $26,200 (July 31, 2018– $8,548) for director’s fees.
During the years ended July 31, 2019, 2018 and 2017, the Company incurred the following expenses
charged by directors and key management personnel or companies controlled by these individuals:
Year ended
July 31,
2018
2019
2017
fees to a company
a) Paid or accrued professional
controlled by an officer of the Company
b) Paid or accrued consulting fees to companies controlled
by individual directors.
c) Paid or accrued wages and consulting fees to directors
d) Share based compensation to directors and officers
$ 48,700
$ 42,000
$ 48,950
121,112
126,000
134,500
280,938
-
263,365
207,471
277,621
84,981
11. Capital Management
The Company's capital comprises share capital, share-based payment reserve, warrant reserve, and
accumulated other comprehensive income (loss). The Company manages its capital structure, and
makes adjustments to it, based on the funds available to the Company in order to support the Company’s
business activities. The Board of Directors does not establish quantitative return on capital criteria for
management; it relies on the expertise of the Company's management to sustain future development of
the business.
The intellectual property in which the Company currently has an interest is in the development stage; as
such, the Company is dependent on external financing to fund its activities. In order to carry out the
planned research and development and pay for administrative costs, the Company intends to raise
additional amounts as needed.
Page 34
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
12. Financial Risk Factors
The Company's risk exposures and the impact on the Company's financial instruments are summarized
below:
a)
Credit risk
The Company has no significant concentration of credit risk arising from operations. Management
believes that the credit risk concentration with respect to financial instruments is remote.
b)
Liquidity risk
The Company's approach to managing liquidity risk is to ensure that it will have sufficient
liquidity to meet liabilities as they come due. As at July 31, 2019, the Company has a negative
working capital balance of $1,185,354 (July 31, 2018 – positive working capital of $700,350,
July 31, 2017 positive working capital of $343,606), the Company has not yet achieved
profitable operations and expects to incur further losses in the development of its products;
these factors cast significant doubt about the Company’s ability to continue as a going
concern. See note 16(b) and (d) for financings completed subsequent to July 31, 2019.
c)
Market Risk
i.
Interest rate risk
As the Company has cash and short-term investment balances and no interest-bearing
debt, interest rate risk is remote.
ii.
Price risk
As the Company has no revenues, price risk is remote.
iii.
Exchange risk
The Company is exposed to foreign exchange risk as A portion of the Company’s
transactions occur in a foreign currency (mainly its research operations which are
conducted primarily in the United States of America in US dollars) and, therefore, the
Company is exposed to foreign currency risk at the end of the reporting period through its
U.S. denominated accounts payable and cash. As at July 2019, a 5% depreciation or
appreciation of the U.S. dollar against the Canadian dollar would have resulted in an
approximate $45,000 (2018 - $55,000) decrease or increase, respectively, in total loss
and comprehensive loss.
Page 35
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
13. Research and Development Costs
Years ended
July 31,
2018
2019
2017
$ 855,864
3,605,738
51,316
241,990
25,715
5,012
131,652
$ 4,917,287
$ 558,114
2,194,327
69,871
34,967
81,915
5,596
167,789
$ 3,112,579
$ 518,192
1,460,569
31,051
96,309
19,820
-
-
$ 2,125,941
Wages and Salaries
Clinical Trials and Investigational drug costs
Office Rent
Licensing
Supplies
Insurance
Patents
14. General and Administration Costs
Consulting (Note 10)
Conferences
Insurance
Amortization of intangible assets (Note 5)
General and Administrative
Professional fees (Note 10)
Regulatory, filing and transfer agent fees
Rent (Note 15)
Shareholder communications
Travel
Wages and salaries, net of recoveries (Note 10)
Years ended
July 31,
2018
2019
$ 342,940
12,772
16,000
18,743
41,130
289,720
52,879
15,576
338,241
48,103
68,367
$ 515,960
10,781
20,867
16,894
32,588
244,131
85,496
15,081
289,208
46,251
110,456
2017
$ 289,005
14,256
15,358
290
30,448
198,171
30,166
12,171
119,120
35,057
76,239
$ 1,244,471
$ 1,387,713
$ 820,281
15. Commitments and Contingencies
The Company’s lease arrangement for office space in Berkeley, California ends in August 2020 and the
annual lease commitment is approximately $42,000 plus common area maintenance charges.
Page 36
BriaCell Therapeutics Corp
Notes to the Consolidated Financial Statements
For the Years Ended July 31, 2019 and 2018
(Expressed in Canadian Dollars)
16. Events After the Reporting Period
a)
b)
c)
d)
On August 19, 2019, 8,500,000 warrants and 595,000 compensation warrants expired.
On September 9, 2019, the Company completed a non brokered private placement of 12,090,007
common shares at a price of C$0.07 per common share for gross proceeds of $846,300.
On September 10, 2019, the Company repaid the balance of the Convertible Notes in the total
amount of $477,216 (US$ 362,819).
On October 15, 2019, the Company completed non brokered private placement of 8,120,633
common shares at a price of $0.07 per common share for gross proceeds of $568,444.
Page 37