Company: EDSA
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001171843-25-000866
Chunk: 8

Company: Edesa Biotech, Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Part I, Item 8
Chunk 8
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 December 31, 2024.

On March 27, 2023, the Company entered into an equity distribution agreement with Canaccord Genuity LLC (Canaccord), pursuant to which the Company was able to offer and sell, from time to time, common shares through an at-the-market equity offering program for up to $20 million in gross proceeds, subject to certain offering limitations that currently allow the Company to offer and sell common shares having an aggregate gross sales price of up to $8.4 million (Canaccord ATM). During the three months ended December 31, 2024, there were no sales of common shares pursuant to the agreement. During the three months ended December 31, 2023, the Company sold a total of 89,249 common shares pursuant to the agreement for gross proceeds of approximately $0.3 million after deducting sales agent commissions of $9,000. The Canaccord ATM was terminated on October 3, 2024.

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.

11

Warrants

A summary of the Company’s warrant activity is as follows:

			Number of Warrant Shares (#)

			Weighted Average Exercise Price

			Three Months Ended December 31, 2024

			Balance - September 30, 2024

			609,717

			$
			21.74

			Issued

			326,560

			3.45

			Balance - December