Company: EDSA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001171843-25-005236
Chunk: 15

Company: Edesa Biotech, Inc.
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 15
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ancial covenants and other obligations in relation to the Project. Pursuant to the 2023 SIF Agreement, certain customary events of default, such as the Company’s or Edesa Biotech Research’s breach of their covenants and obligations under the 2023 SIF Agreement, their insolvency, winding up or dissolution, and other similar events, may permit the Government of Canada to declare an event of default under the 2023 SIF Agreement. Upon an event of default, subject to applicable cure, the Government of Canada may exercise a number of remedies, including suspending or terminating funding under the 2023 SIF Agreement, demanding repayment of funding previously received and/or terminating the 2023 SIF Agreement.

The funding and any associated conditional repayments are not secured by any assets of Edesa Biotech Research or the Company.

The Agreement will expire on the later of December 31, 2042 or the date of the last repayment, unless earlier terminated, subject to certain provisions that extend three (3) years beyond the term or early termination of the 2023 SIF Agreement.

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Under the October 2023 SIF Agreement the Company recorded grant income of $0.2 million and $0.2 million for the three months ended June 30, 2025 and June 30, 2024, respectively, and $0.5 million and $0.7 million for the nine months ended June 30, 2025 and June 30, 2024, respectively, bringing the total recorded under the agreement to $1.8 million.

8. 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.

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:

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			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.