Document:

EX-4.2

 Exhibit 4.2 
  

 
 IMMUNOPRECISE ANTIBODIES LTD. 

CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE YEARS ENDED APRIL 30, 2020 AND 2019 

(Expressed in Canadian Dollars) 

			
	

	  	 Crowe MacKay LLP
  

1100 -1177 West Hastings St.

Vancouver, BC V6E 4T5
  

Main +1 (604) 687-4511

Fax   +1 (604) 687-5805
  

www.crowemackay.ca

 Independent Auditor’s Report 

To the Shareholders of ImmunoPrecise Antibodies Ltd. 

Opinion 
 We have audited the consolidated financial
statements of ImmunoPrecise Antibodies Ltd. (“the Group”), which comprise the consolidated statements of financial position as at April 30, 2020 and April 30, 2019 and the consolidated statements of loss and comprehensive loss,
changes in shareholders’ equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. 

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group
as at April 30, 2020 and April 30, 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards. 

Basis for Opinion 
 We conducted our audit in accordance
with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are
independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 
 Material Uncertainty Related to
Going Concern 
 We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. 
 Other Information 

Management is responsible for the other information. The other information comprises: 
  

	•	 	 Management’s Discussion and Analysis 

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so,
consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. 

We obtained the other information prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we
conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard. 

 Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements 
 Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. 

Those charged with governance are responsible for overseeing the Group’s financial reporting process. 

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing
standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements. 
 As part of an audit in accordance with Canadian generally accepted auditing
standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: 
  

	•	 	 Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 

 

	•	 	 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 

  

	•	 	 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management. 

  

	•	 	 Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. 

  

	•	 	 Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 

  

	•	 	 Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

  
 - 2 - 

 We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 
 We also
provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards. 
 The engagement partner on the audit resulting in this independent auditor’s report is Keith
L. Gagnon. 
 “Crowe MacKay LLP” 

Chartered Professional Accountants 
 Vancouver, Canada

 August 28, 2020 

  
 - 3 - 

 IMMUNOPRECISE ANTIBODIES LTD. 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 

(Expressed in Canadian Dollars) 
  

 

											
	 	  	Note	  	April 30,
2020
$	 	 	April 30,
2019
$	 
	 ASSETS
	  		  				 			
	 Current assets
	  		  				 			
	 Cash
	  		  	 	2,605,706	 	 	 	5,471,650	 
	 Amounts receivable
	  		  	 	2,491,636	 	 	 	1,558,354	 
	 Taxes receivable
	  		  	 	88,549	 	 	 	—  	 
	 Inventory
	  		  	 	818,643	 	 	 	799,542	 
	 Unbilled revenue
	  		  	 	1,168,317	 	 	 	393,451	 
	 Prepaid expenses
	  		  	 	526,591	 	 	 	333,702	 
		  		  	  
	  
	 	 	  
	  
	 
		  		  	 	7,699,442	 	 	 	8,556,699	 
	 Restricted cash
	  		  	 	85,129	 	 	 	67,450	 
	 Deposit on equipment
	  		  	 	87,847	 	 	 	—  	 
	 Investment
	  	8	  	 	118,896	 	 	 	90,404	 
	 Property and equipment
	  	9	  	 	3,077,762	 	 	 	1,638,549	 
	 Intangible assets
	  	6, 7, 10	  	 	8,285,392	 	 	 	10,226,749	 
	 Goodwill
	  	6, 7	  	 	7,908,653	 	 	 	7,883,047	 
		  		  	  
	  
	 	 	  
	  
	 
	 Total assets
	  		  	 	27,263,121	 	 	 	28,462,898	 
		  		  	  
	  
	 	 	  
	  
	 
	 LIABILITIES
	  		  				 			
	 Current liabilities
	  		  				 			
	 Accounts payable and accrued liabilities
	  		  	 	1,766,058	 	 	 	1,594,062	 
	 Taxes payable
	  		  	 	—  	 	 	 	27,268	 
	 Deferred revenue
	  		  	 	1,474,750	 	 	 	724,693	 
	 Debentures
	  	11	  	 	2,000,000	 	 	 	2,708,334	 
	 Loans payable
	  	12	  	 	121,833	 	 	 	82,953	 
	 Leases
	  	13	  	 	752,306	 	 	 	35,757	 
	 Deferred acquisition payments
	  	6, 7	  	 	1,814,820	 	 	 	2,031,237	 
		  		  	  
	  
	 	 	  
	  
	 
		  		  	 	7,929,767	 	 	 	7,204,304	 
	 Debenture subscriptions received
	  	22	  	 	313,268	 	 	 	—  	 
	 Loans payable
	  	12	  	 	190,306	 	 	 	28,717	 
	 Leases
	  	13	  	 	1,131,744	 	 	 	71,320	 
	 Deferred acquisition payments
	  	6, 7	  	 	1,010,620	 	 	 	1,032,744	 
	 Deferred income tax liability
	  	21	  	 	1,601,577	 	 	 	2,056,738	 
		  		  	  
	  
	 	 	  
	  
	 
		  		  	 	12,177,282	 	 	 	10,393,823	 
		  		  	  
	  
	 	 	  
	  
	 
	 SHAREHOLDERS’ EQUITY
	  		  				 			
	 Share capital
	  	14	  	 	34,086,942	 	 	 	32,699,425	 
	 Contributed surplus
	  	14	  	 	3,777,771	 	 	 	3,074,192	 
	 Accumulated other comprehensive income (loss)
	  		  	 	(300,222	) 	 	 	(228,060	) 
	 Deficit
	  		  	 	(22,478,652	) 	 	 	(17,476,482	) 
		  		  	  
	  
	 	 	  
	  
	 
		  		  	 	15,085,839	 	 	 	18,069,075	 
		  		  	  
	  
	 	 	  
	  
	 
	 Total liabilities and shareholders’ equity
	  		  	 	27,263,121	 	 	 	28,462,898	 
		  		  	  
	  
	 	 	  
	  
	 

 Nature of operations (Note 1) 

Commitments (Note 18) 
 Subsequent events (Notes 14 and 22) 

Approved and authorized on behalf of the Board of Directors on August 26, 2020 
  

									
	
            “James Kuo” 
           
	 	 Director
	  	
            “Greg Smith” 
           
	 	 Director
	  	

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

  
 5 

 IMMUNOPRECISE ANTIBODIES LTD. 

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

													
	 	  	Note	 	  	2020
$	 	 	2019
$	 
	 REVENUE
	  				  	 	14,057,927	 	 	 	10,926,268	 
	 COST OF SALES
	  				  	 	6,023,943	 	 	 	5,631,634	 
		  				  	  
	  
	 	 	  
	  
	 
	 GROSS PROFIT
	  				  	 	8,033,984	 	 	 	5,294,634	 
		  				  	  
	  
	 	 	  
	  
	 
	 EXPENSES
	  				  				 			
	 Advertising
	  				  	 	377,728	 	 	 	819,250	 
	 Amortization and depreciation
	  	 	9, 10	 	  	 	2,573,009	 	 	 	1,875,907	 
	 Bad debt
	  				  	 	48,433	 	 	 	1,837	 
	 Consulting fees
	  	 	15	 	  	 	227,036	 	 	 	452,196	 
	 Foreign exchange gain
	  				  	 	(78,148	) 	 	 	(117,506	) 
	 Insurance
	  				  	 	135,444	 	 	 	185,099	 
	 Interest and bank charges
	  				  	 	536,499	 	 	 	413,590	 
	 Management fees
	  	 	15	 	  	 	653,154	 	 	 	650,574	 
	 Office and general
	  				  	 	871,436	 	 	 	716,601	 
	 Professional fees
	  	 	15	 	  	 	883,623	 	 	 	985,557	 
	 Rent
	  				  	 	127,633	 	 	 	324,396	 
	 Repairs and maintenance
	  				  	 	80,303	 	 	 	38,803	 
	 Research and development
	  				  	 	446,280	 	 	 	485,845	 
	 Salaries and benefits
	  	 	15	 	  	 	4,619,189	 	 	 	3,503,259	 
	 Share-based payments
	  	 	14, 15	 	  	 	739,011	 	 	 	1,114,112	 
	 Telephone and utilities
	  				  	 	50,410	 	 	 	47,775	 
	 Travel
	  				  	 	296,342	 	 	 	320,293	 
		  				  	  
	  
	 	 	  
	  
	 
		  				  	 	12,587,382	 	 	 	11,817,588	 
		  				  	  
	  
	 	 	  
	  
	 
	 Loss before other income (expense) and income taxes
	  				  	 	(4,553,398	) 	 	 	(6,522,954	) 
		  				  	  
	  
	 	 	  
	  
	 
	 OTHER INCOME (EXPENSE)
	  				  				 			
	 Accretion
	  	 	6, 7, 11	 	  	 	(899,731	) 	 	 	(904,925	) 
	 Interest and other income
	  	 	22	 	  	 	272,006	 	 	 	30,085	 
	 Loss on settlement
	  	 	11, 14	 	  	 	(112,031	) 	 	 	(214,885	) 
		  				  	  
	  
	 	 	  
	  
	 
		  				  	 	(739,756	) 	 	 	(1,089,725	) 
		  				  	  
	  
	 	 	  
	  
	 
	 Loss before income taxes
	  				  	 	(5,293,154	) 	 	 	(7,612,679	) 
	 Income taxes recovery (expense)
	  	 	21	 	  	 	345,728	 	 	 	(4,788	) 
		  				  	  
	  
	 	 	  
	  
	 
	 NET LOSS FOR THE YEAR
	  				  	 	(4,947,426	) 	 	 	(7,617,467	) 
				
	 ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO LOSS
	  				  				 			
	 Exchange difference on translating foreign operations
	  				  	 	(72,162	) 	 	 	(505,150	) 
		  				  	  
	  
	 	 	  
	  
	 
	 COMPREHENSIVE LOSS FOR THE YEAR
	  				  	 	(5,019,588	) 	 	 	(8,122,617	) 
		  				  	  
	  
	 	 	  
	  
	 
	 LOSS PER SHARE – BASIC AND DILUTED
	  				  	 	(0.07	) 	 	 	(0.12	) 
		  				  	  
	  
	 	 	  
	  
	 
	 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
	  				  	 	68,144,478	 	 	 	62,710,530	 
		  				  	  
	  
	 	 	  
	  
	 

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

  
 6 

 IMMUNOPRECISE ANTIBODIES LTD. 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 

(Expressed in Canadian dollars, except for share figures) 

 
  

																									
	 	  	Number of
Shares	 	  	Share
Capital
$	 	 	Contributed
Surplus
$	 	 	Accumulated
Other
Comprehensive
(Loss) Income
$	 	 	Deficit
$	 	 	Total
$	 
	 Balance, April 30, 2018
	  	 	55,474,178	 	  	 	20,455,112	 	 	 	1,707,738	 	 	 	277,090	 	 	 	(9,859,015	) 	 	 	12,580,925	 
	 Shares issued pursuant to private placements
	  	 	9,977,500	 	  	 	9,802,500	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	9,802,500	 
	 Cash issue costs and finders’ fees
	  	 	182,460	 	  	 	(288,504	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(288,504	) 
	 Adjustment to value of shares issued pursuant to acquisition of IPA Europe and Immulease
	  	 	—  	 	  	 	975,045	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	975,045	 
	 Shares issued pursuant to settlement of Debentures
	  	 	1,377,000	 	  	 	1,115,370	 	 	 	283,000	 	 	 	—  	 	 	 	—  	 	 	 	1,398,370	 
	 Shares issued pursuant to Crossbeta settlement
	  	 	78,514	 	  	 	61,241	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	61,241	 
	 Shares issued pursuant to deferred acquisition payment to IPA Europe
	  	 	714,793	 	  	 	507,503	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	507,503	 
	 Shares issued pursuant to option exercise
	  	 	135,000	 	  	 	71,158	 	 	 	(30,658	) 	 	 	—  	 	 	 	—  	 	 	 	40,500	 
	 Share-based payments
	  	 	—  	 	  	 	—  	 	 	 	1,114,112	 	 	 	—  	 	 	 	—  	 	 	 	1,114,112	 
	 Comprehensive loss for the year
	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(505,150	) 	 	 	(7,617,467	) 	 	 	(8,122,617	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2019
	  	 	67,939,445	 	  	 	32,699,425	 	 	 	3,074,192	 	 	 	(228,060	) 	 	 	(17,476,482	) 	 	 	18,069,075	 
	 Adoption of IFRS 16 (Note 4)
	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(54,744	) 	 	 	(54,744	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, May 1, 2019
	  	 	67,939,445	 	  	 	32,699,425	 	 	 	3,074,192	 	 	 	(228,060	) 	 	 	(17,531,226	) 	 	 	18,014,331	 
	 Shares issued pursuant to settlement of Debentures and accrued interest
	  	 	1,244,792	 	  	 	858,906	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	858,906	 
	 Shares issued pursuant to option exercise
	  	 	55,000	 	  	 	28,990	 	 	 	(12,490	) 	 	 	—  	 	 	 	—  	 	 	 	16,500	 
	 Shares issued pursuant to warrant exercise
	  	 	680,971	 	  	 	499,621	 	 	 	(22,942	) 	 	 	—  	 	 	 	—  	 	 	 	476,679	 
	 Share-based payments
	  	 	—  	 	  	 	—  	 	 	 	739,011	 	 	 	—  	 	 	 	—  	 	 	 	739,011	 
	 Comprehensive loss for the year
	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(72,162	) 	 	 	(4,947,426	) 	 	 	(5,019,588	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2020
	  	 	69,920,208	 	  	 	34,086,942	 	 	 	3,777,771	 	 	 	(300,222	) 	 	 	(22,478,652	) 	 	 	15,085,839	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

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

  
 7 

 IMMUNOPRECISE ANTIBODIES LTD. 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

									
	 	  	2020
$	 	 	2019
$	 
	 Operating activities:
	  				 			
	 Net loss for the year
	  	 	(4,947,426	) 	 	 	(7,617,467	) 
	 Items not affecting cash:
	  				 			
	 Amortization and depreciation
	  	 	3,408,347	 	 	 	2,263,284	 
	 Deferred income taxes
	  	 	(455,161	) 	 	 	(578,969	) 
	 Accretion
	  	 	899,731	 	 	 	922,575	 
	 Interest expense settled in shares
	  	 	46,875	 	 	 	—  	 
	 Foreign exchange
	  	 	(48,018	) 	 	 	(105,656	) 
	 Change in fair value of investment
	  	 	(28,492	) 	 	 	—  	 
	 Loss on settlement
	  	 	112,031	 	 	 	214,885	 
	 Share-based payments
	  	 	739,011	 	 	 	1,114,112	 
		  	  
	  
	 	 	  
	  
	 
		  	 	(273,102	) 	 	 	(3,787,236	) 
	 Changes in non-cash working capital related to
operations:
	  				 			
	 Amounts receivable
	  	 	(933,282	) 	 	 	102,114	 
	 Inventory
	  	 	(23,392	) 	 	 	289,524	 
	 Unbilled revenue
	  	 	(774,866	) 	 	 	167,319	 
	 Prepaid expenses
	  	 	(192,889	) 	 	 	8,934	 
	 Accounts payable and accrued liabilities
	  	 	171,996	 	 	 	(421,673	) 
	 Taxes payable and receivable
	  	 	(115,817	) 	 	 	27,268	 
	 Deferred revenue
	  	 	750,057	 	 	 	407,154	 
		  	  
	  
	 	 	  
	  
	 
	 Net cash used in operating activities
	  	 	(1,391,295	) 	 	 	(3,206,596	) 
		  	  
	  
	 	 	  
	  
	 
	 Investing activities:
	  				 			
	 Purchase of equipment
	  	 	(373,753	) 	 	 	(645,058	) 
	 Deposit on equipment
	  	 	(87,847	) 	 	 	—  	 
	 Internally generated development costs
	  	 	(114,042	) 	 	 	—  	 
	 Deferred acquisition payment
	  	 	(1,007,435	) 	 	 	(1,556,754	) 
		  	  
	  
	 	 	  
	  
	 
	 Net cash used in investing activities
	  	 	(1,583,077	) 	 	 	(2,201,812	) 
		  	  
	  
	 	 	  
	  
	 
	 Financing activities:
	  				 			
	 Proceeds on share issuance
	  	 	493,179	 	 	 	9,843,000	 
	 Share issuance costs
	  	 	—  	 	 	 	(288,504	) 
	 Debenture subscriptions received
	  	 	313,268	 	 	 	—  	 
	 Repayment of leases
	  	 	(657,215	) 	 	 	(23,912	) 
	 Proceeds from loans
	  	 	283,328	 	 	 	200,000	 
	 Loan repayments
	  	 	(82,859	) 	 	 	(378,775	) 
	 Repayment of debentures
	  	 	(175,000	) 	 	 	—  	 
		  	  
	  
	 	 	  
	  
	 
	 Net cash provided by financing activities
	  	 	174,701	 	 	 	9,351,809	 
		  	  
	  
	 	 	  
	  
	 
	 (Decrease) increase in cash during the year
	  	 	(2,799,671	) 	 	 	3,943,401	 
	 Foreign exchange
	  	 	(48,594	) 	 	 	(210,434	) 
	 Cash – beginning of the year
	  	 	5,539,100	 	 	 	1,806,133	 
		  	  
	  
	 	 	  
	  
	 
	 Cash – end of the year
	  	 	2,690,835	 	 	 	5,539,100	 
		  	  
	  
	 	 	  
	  
	 
	 Cash is comprised of:
	  				 			
	 Cash
	  	 	2,605,706	 	 	 	5,471,650	 
	 Restricted cash
	  	 	85,129	 	 	 	67,450	 
		  	  
	  
	 	 	  
	  
	 
		  	 	2,690,835	 	 	 	5,539,100	 
		  	  
	  
	 	 	  
	  
	 
	 Cash paid for interest
	  	 	300,868	 	 	 	371,262	 
	 Cash paid for income tax
	  	 	238,426	 	 	 	415,144	 
		  	  
	  
	 	 	  
	  
	 
	 Supplemental cash flow information (Note 20)
	  				 			

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

  
 8 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	1.	 NATURE OF OPERATIONS 

ImmunoPrecise Antibodies Ltd. (the “Company” or “IPA”) was incorporated under the laws of Alberta on November 22,
1983. The Company is listed on the TSX Venture Exchange (the “Exchange”) as a Tier 2 life science issuer under the trading symbol “IPA”. The Company’s OTC symbol is “IPATF”. The Company is a supplier of custom
hybridoma development services. The address of the Company’s corporate office is 3204 – 4464 Markham Street, Victoria, BC, Canada V8Z 7X8. 

The consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern. This assumes the
Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its obligations in the normal course of operations. The Company has incurred operating losses since inception, including $4,947,426
for the year ended April 30, 2020 and has accumulated a deficit of $22,478,652 as at April 30, 2020. The Company may need to raise additional funds in order to continue on as a going concern and there can be no assurances that sufficient
funding, including adequate financing, will be available. The ability of the Company to arrange additional financing in the future depends in part, on the prevailing capital market conditions and profitability of its operations. 

In March 2020, there was a global pandemic outbreak of COVID-19. The actual and threatened spread of
the virus globally has had a material adverse effect on the global economy and specifically, the regional economies in which the Company operates. The pandemic could result in delays in the course of business and could have a negative impact on the
Company’s ability to raise new capital. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations at this time. These
material uncertainties may cast significant doubt on the Company’s ability to continue as a going concern. Accordingly, the consolidated financial statements do not give effect to adjustments that would be necessary should the Company be unable
to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities, contingent obligations and commitments other than in the normal course of business and at amounts different from those in the consolidated
financial statements. 
  

	2.	 BASIS OF PRESENTATION 

(a) 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”), and include the significant accounting policies as described in Note 3. 

These consolidated financial statements were approved by the Board of Directors for issue on August 26, 2020. 

(b) Basis of measurement 

These consolidated financial statements have been prepared on the historical cost basis. In addition, these consolidated financial statements
have been prepared using the accrual basis of accounting, except for cashflow information. 

  
 9 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 (c) Basis of consolidation 

These consolidated financial statements include the financial statements of the Company and the following subsidiaries which are wholly owned
and subject to control by the Company: 
  

											
	 Name of Subsidiary
	  	% Equity
Interest - 2020	 	 	% Equity
Interest - 2019	 	 	Country of
Incorporation
	 ImmunoPrecise Antibodies (Canada) Ltd.
	  	 	100	% 	 	 	100	% 	 	Canada
	 ImmunoPrecise Antibodies (USA) Ltd., incorporated in Nevada, USA
	  	 	0	% 	 	 	100	% 	 	USA
	 ImmunoPrecise Antibodies (USA) Ltd., incorporated in Delaware, USA
	  	 	100	% 	 	 	0	% 	 	USA
	 ImmunoPrecise Antibodies (N.D.) Ltd.
	  	 	100	% 	 	 	100	% 	 	USA
	 ImmunoPrecise Antibodies (MA) LLC
	  	 	100	% 	 	 	100	% 	 	USA
	 Talem Therapeutics LLC
	  	 	100	% 	 	 	100	% 	 	USA
	 U-Protein Express B.V.
(“U-Protein”)
	  	 	100	% 	 	 	100	% 	 	Netherlands
	 ImmunoPrecise Netherlands B.V.
	  	 	100	% 	 	 	100	% 	 	Netherlands
	 ImmunoPrecise Antibodies (Europe) B.V. (“IPA Europe”, formerly ModiQuest Research
B.V.)
	  	 	100	% 	 	 	100	% 	 	Netherlands
	 Immulease B.V. (“Immulease”)
	  	 	100	% 	 	 	100	% 	 	Netherlands

 Control is achieved when the Company has the power to, directly or indirectly, govern the financial and
operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is obtained and continue to be consolidated until the date that such control ceases. Intercompany
balances, transactions and unrealized intercompany gains and losses are eliminated upon consolidation. 
 The Company incorporated a new
subsidiary, ImmunoPrecise Antibodies (USA) Ltd. in Delaware, USA on September 11, 2019. ImmunoPrecise Antibodies (USA) Ltd., incorporated in Nevada, USA, was dissolved on November 4, 2019. 

(d) Functional and presentation currency 

The functional currency of a company is the currency of the primary economic environment in which the company operates. The presentation
currency for a company is the currency in which the company chooses to present its financial statements. 
 The functional currency of the
Company and ImmunoPrecise Antibodies (Canada) Ltd. is the Canadian dollar. The functional currency of ImmunoPrecise Antibodies (USA) Ltd., ImmunoPrecise Antibodies (N.D.) Ltd., ImmunoPrecise Antibodies (MA) LLC and Talem Therapeutics LLC is the US
dollar. The functional currency of U-Protein, ImmunoPrecise Netherlands BV, IPA Europe and Immulease is the Euro. The presentation currency of the Company is the Canadian dollar. 

Entities whose functional currencies differ from the presentation currency are translated into Canadian dollars as follows: assets and
liabilities – at the closing rate as at the reporting date, and income and expenses – at the average rate of the period. All resulting changes are recognized in other comprehensive income as cumulative translation differences. 

Transactions in foreign currencies are translated into the functional currency at exchange rates at the date of the transactions. Foreign
currency monetary assets and liabilities are translated at the functional currency exchange rate at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the
fair value is determined. All gains and losses on translation of these foreign currency transactions are included in profit or loss. 

  
 10 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 When the Company disposes of its entire interest in a foreign operation, or loses control,
joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an
interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary are reallocated between controlling and non-controlling interests. 
  

	3.	 SIGNIFICANT ACCOUNTING POLICIES 

Business combination 

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured
at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interests issued by the Company in
exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred. 
 At the acquisition
date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the acquisition date. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase
gain. 
 When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from a
contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent
consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. 

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments
depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration
that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, Financial Instruments: Recognition and Measurement or IAS 37, Provisions, Contingent Liabilities and Contingent
Assets, as appropriate, with the corresponding gain or loss being recognized in profit or loss. 
 Revenue recognition 

The Company recognizes revenue from sale of antibodies and service agreements. 

Sale of antibodies: 
 Revenue from
sale of antibodies is recognized when the terms of a contract with a customer have been satisfied. This occurs when: 
  

	 	•	 	 The control over the product has been transferred to the customer; and 

 

	 	•	 	 The product is received by the customer or transfer of title to the customer occurs upon shipment.

  
 11 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Following delivery, the customer bears the risks of obsolescence and loss in relation to the
goods. Revenue is recognized based on the price specified in the contract, net of estimated sales discounts and returns. 
 Contract
revenue: 
 Revenues from contracted services are generally recognized as the performance obligations are satisfied over time, and the
related expenditures are incurred pursuant to the terms of the agreement. Contract revenue is recognized on a percentage of completion basis when the key milestones contained within the contract are satisfied and there is an enforceable right to
payment for performance completed to date. For contracts with no enforceable right to payment when the contract is incomplete, contract revenue is recognized on a completed contract basis when the customers are satisfied with the service at the end
of the contract. 
 Unbilled revenue and deferred revenue: 

Amounts recognized as revenue in excess of billings are classified as unbilled revenue. Amounts received in advance of the performance of
services are classified as deferred revenue. 
 Cost of sales: 

Cost of sales includes materials, direct labour, and allocation of overhead including depreciation of lab equipment. 

Financial instruments 

Recognition and Classification 

The Company recognizes a financial asset or financial liability on the statement of financial position when it becomes party to the contractual
provisions of the financial instrument. 
 The Company classifies its financial instruments in the following categories: at fair value
through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification
of debt 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 are classified as 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 as at 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 if the Company has opted to measure them at FVTPL. 

Measurement 
 Financial
assets and liabilities at FVTPL: 
 Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction
costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in the period in which they arise. Where
management 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 assets at FVTOCI: 

Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are
measured at fair value, with gains and losses recognized in other comprehensive income (loss). 

  
 12 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Financial assets and liabilities at amortized cost: 

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and
subsequently carried at amortized cost less any impairment. 
 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 the twelve month expected credit losses. The Company shall recognize in profit
or loss, as 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. 

Derecognition 
 Financial
assets: 
 The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when
it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of
financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss). 
 Financial liabilities: 

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired.
Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets, is recognized in profit or loss. 

Government assistance 

The Company periodically applies for financial assistance under available government incentive programs. Government assistance relating to
capital expenditures is reflected as a reduction of the cost of such assets. Government assistance relating to research and development expenditures is recorded as a reduction of current year’s expenses when the related expenditures are
incurred. 
 Inventory 

Inventory consists of supplies, parts and antibodies and is valued at the lower of average cost and net realizable value. Costs include
acquisition, freight and other directly attributable costs. 
 Equipment and leasehold improvements 

Equipment and leasehold improvements are stated at cost, less accumulated depreciation. Depreciation is provided using the straight-line method
over the following terms: 
  

							
	 Asset
	  	Basis	 	  	 Term

	 Lab equipment
	  	 	Straight line	 	  	5 years
	 Furniture and equipment
	  	 	Straight line	 	  	5 years
	 Computer hardware
	  	 	Straight line	 	  	2 years
	 Computer software
	  	 	Straight line	 	  	1 year
	 Building
	  	 	Straight line	 	  	Remaining term of the property lease
	 Automobile
	  	 	Straight line	 	  	4 years
	 Leasehold improvements
	  	 	Straight line	 	  	Remaining term of the lease plus the first renewal option

  
 13 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Intangible assets 

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business
combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Internally generated intangibles, excluding
capitalized development costs, are not capitalized and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. 

The useful lives of intangible assets are assessed as either finite or indefinite. 

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible
assets with finite lives is recognized in profit or loss in the expense category that is consistent with the function of the intangible assets. 

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the
cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. 

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognized in profit or loss when the asset is derecognised. 
 Goodwill 

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets
acquired. Goodwill is not subject to amortization and an impairment test is performed annually or as events occur that could indicate impairment. Goodwill is reported at cost less any impairment. 

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(“CGU”s). To test for impairment, goodwill is allocated to each of the Company’s CGUs, groups of CGUs, or an operating segment expected to benefit from the acquisition. Goodwill is tested by combining the carrying amounts of equipment
and leasehold improvements, intangible assets and goodwill and comparing this to the recoverable amount. Fair value less costs of disposal is price to be received in an orderly transaction between market participants. Value in use is assessed using
the present value of the expected future cash flows. Any excess of the carrying amount over the recoverable amount is recorded as impairment. Impairment charges, which are not tax affected, are recognized in in profit or loss and are not reversed.

 Impairment of long-lived assets 

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured by comparison of their carrying amount to the recoverable amount. The recoverable amount is the higher of the fair value less selling costs or the value in use. Value
in use is determined by the present value of the future cash flows from the asset. If the recoverable amount is less than the carrying amount, then there is impairment. Where an impairment loss exists, the portion of the carrying amount exceeding
the recoverable amount is recorded as an expense immediately. Assets that have been impaired in prior periods are tested for possible reversal of impairment whenever events or changes in circumstance indicate that the impairment has

  
 14 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 
reversed. If the impairment has reversed, the carrying amount of the asset is increased to its recoverable amount but not beyond the carrying amount that would have been determined had no
impairment loss been recognized for the asset in prior periods. The reversal is recognized in profit or loss immediately. 
 Income
taxes 
 Income taxes are recognized in the statement of comprehensive income (loss), except where they relate to items recognized
directly in equity, in which case the related taxes are recognized in equity. 
 Deferred tax assets and liabilities are recognized based on
the difference between the tax and accounting values of assets and liabilities and are calculated using enacted or substantively enacted tax rates for the periods in which the differences are expected to reverse. The effect of tax rate changes is
recognized in profit or loss or equity, as applicable, in the period of substantive enactment. 
 Current taxes receivable or payable are
estimated on taxable income for the current year at the statutory tax rates enacted or substantively enacted. 
 Deferred tax assets are
recognized only to the extent that it is probable that future taxable profits of the relevant entity or group of entities, in a particular jurisdiction, will be available against which the assets can be utilized. As an exception, deferred tax assets
and liabilities are not recognized if the temporary differences arise from the initial recognition of goodwill or an asset or liability in a transaction (other than in a business combination) that affects neither accounting profit nor taxable
profit. 
 Investment tax credits (“ITCs”) are accounted for as a reduction in the cost of the expense when there is reasonable
assurance that such credits will be realized. These ITCs are used to reduce current income taxes payable. 
 Leases 

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 
 Leases of right-of-use assets are recognized at the lease commencement date at the present value of the lease payments that are not paid at that date. The lease payments are discounted
using the interest rate implicit in the lease, if that rate can be readily determined, and otherwise at the Company’s incremental borrowing rate. At the commencement date, a
right-of-use asset is measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any decommissioning and restoration costs, less any lease incentives received. 
 Each lease payment is allocated
between repayment of the lease principal and interest. Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease liability. Except where
the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included in the measurement of a lease liability in the
period in which the event or condition that triggers those payments occurs. The Company subsequently measures the right-of-use asset at cost less any accumulated
depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability. Right-of-use assets are depreciated over the shorter of
the asset’s useful life and the lease term, except where the lease contains a bargain purchase option a right-of-use asset is depreciated over the asset’s
useful life. 
 Share capital 

Equity instruments are contracts that give a residual interest in the net assets of the Company. The Company’s common shares are
classified as equity instruments. 

  
 15 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Proceeds from unit placements are allocated between common shares and warrants issued based
on the residual value method, with the common shares being valued first. 
 Share issuance costs 

Costs directly identifiable with the raising of share capital financing are charged against share capital. Share issuance costs incurred in
advance of share subscriptions are recorded as deferred assets. Share issuance costs related to uncompleted share subscriptions are charged to operations. 

Share-based payments 

Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss
over the vesting period. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is
based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are
satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting
condition is not satisfied. 
 Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. 

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods
or services received in profit or loss, unless they are related to the issuance of shares. Amounts related to the issuance of shares are recorded as a reduction of share capital. 

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 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 behavioural
considerations. 
 All equity-settled share-based payments are reflected in contributed surplus, until exercised. Upon exercise, shares are
issued from treasury and the amount reflected in contributed surplus is credited to share capital, adjusted for any consideration paid. 

Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied,
the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee
on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense. 

Earnings (loss) per share 

Basic earnings (loss) per share is calculated by dividing the net income (loss) available to common shareholders by the weighted average number
of common shares outstanding during the period. Dilutive earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. In periods where a net loss is incurred, potentially dilutive common shares are
excluded from the loss per share calculation as the effect would be anti-dilutive and basic and diluted loss per common share is the same. In a profit year, under the treasury stock method, the weighted average number of common shares outstanding
used for the calculation of diluted earnings per share assumes that the proceeds to be received on the exercise of dilutive stock options and warrants are used to repurchase common shares at the average price during the year. 

  
 16 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	4.	 ADOPTION OF NEW ACCOUNTING STANDARDS 

The Company has adopted the following new standards, along with any consequential amendments, effective May 1, 2019. These changes were
made in accordance with the applicable transitional provisions. 
 The Company adopted all of the requirements of IFRS 16, Leases
(“IFRS 16”) as of May 1, 2019. IFRS 16 replaces IAS 17, Leases (“IAS 17”). IFRS 16 provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease
term is 12 months or less or the underlying asset has a low value. The Company has adopted IFRS 16 using the modified retrospective application method, where the 2019 comparatives are not restated and a cumulative catch up adjustment is recorded on
May 1, 2019 for any differences identified, including adjustments to opening deficit balance. 
 The Company analyzed its contracts to
identify whether they contain a lease arrangement for the application of IFRS 16. The following is the Company’s new accounting policy for leases under IFRS 16: 

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 
 Leases of right-of-use assets are recognized at the lease commencement date at the present value of the lease payments that are not paid at that date. The lease payments are discounted
using the interest rate implicit in the lease, if that rate can be readily determined, and otherwise at the Company’s incremental borrowing rate. At the commencement date, a
right-of-use asset is measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the
commencement date, plus any decommissioning and restoration costs, less any lease incentives received. 
 Each lease payment is allocated
between repayment of the lease principal and interest. Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease liability. Except where
the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included in the measurement of a lease liability in the
period in which the event or condition that triggers those payments occurs. The Company subsequently measures a right-of-use asset at cost less any accumulated
depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability. Right-of-use assets are depreciated over the shorter of
the asset’s useful life and the lease term, except where the lease contains a bargain purchase option a right-of-use asset is depreciated over the asset’s
useful life. 
 On the date of transition, the Company recorded a
right-of-use asset of $1,668,533 related to the office rent in property and equipment, and the lease obligation of $1,723,277 was recorded as at May 1, 2019,
discounted using the Company’s incremental borrowing rate of 8%, and measured at an amount equal to the lease obligation as if IFRS 16 had been applied since the commencement date. The net difference between
right-of-use assets and lease liabilities on the date of transition was recognized as a deficit adjustment of $54,744 on May 1, 2019. 

 

	5.	 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 

The preparation of the consolidated financial statements in conformity with IFRS required estimates and judgments that affect the amounts
reported in the financial statements. Actual results could differ from these estimates and judgments. Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised.
Significant areas requiring the use of estimates and judgments are as follows: 
 Functional currency 

The Company has used judgment in determining the currency of the primary economic environment in which the entity operates. 

  
 17 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Amounts receivable 

The Company monitors the financial stability of its customers and the environment in which they operate to make estimates regarding the
likelihood that the individual trade receivable balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses, if required. 

Property and equipment 

The Company has used estimates in the determination of the expected useful lives of property and equipment. 

Revenue recognition 
 The percentage-of-completion method requires the use of estimates to determine the stage of completion which is used to determine the recorded amount of revenue, unbilled revenue
and deferred revenue on uncompleted contracts. The determination of anticipated revenues includes the contractually agreed revenue and may also involve estimates of future revenues if such additional revenues can be reliably estimated and it is
considered probable that they will be recovered. The determination of anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors, including the cost of materials, labour, and sub-contractors. The determination of estimates is based on the Company’s business practices as well as its historical experience. 

Impairments 
 For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (“CGU”s). Each asset or CGU is evaluated every reporting period to determine whether there are any indicators
of impairment. If any such indicators exist, which is often judgment-based, a formal estimate of recoverable amount is performed and an impairment charge is recognized to the extent that the carrying amount exceeds the recoverable amount. The
recoverable amount of an asset or CGU of assets is measured at the higher of fair value less costs of disposal or value in use. These determinations and their individual assumptions require that management make a decision based on the best available
information at each reporting period. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the
assets. In such circumstances, some or all of the carrying value of the assets may be further impaired or the impairment charge reversed with the impact recorded in profit or loss. 

The Company performs a goodwill impairment test annually and when circumstances indicate that the carrying value may not be recoverable. For
the purposes of impairment testing, goodwill acquired through business combinations has been allocated to two different CGUs. The recoverable amount of each CGU was based on value in use, determined by discounting the future cash flows to be
generated from the continuing use of the CGU. The cash flows were projected over a five-year period based on past experience and actual operating results. 

The Company performed its annual goodwill impairment test in April 2020 and no impairment was indicated for the period tested. The values
assigned to the key assumptions represented management’s assessment of future trends in the industry and were based on hgarristorical data from both internal and external sources. Weighted average costs of capital of 16.33% and 12.26%,
respectively, was used in the assessments of the two CGUs. 
 Determination of segments 

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. All
operating segments’ results are reviewed by the Company’s management in order to make decisions regarding the allocation of resources to the segment. Segment results include items directly attributable to a segment as those that can be
allocated on a reasonable basis. 

  
 18 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 As the Company provides antibody production and related services in one distinct category,
there is only one category to report revenues by production site. 
 Life of intangible assets 

Intangible assets are amortized based on estimated useful life less their estimated residual value. Significant assumptions are involved in the
determination of useful life and residual values and no assurance can be given that actual useful lives and residual values will not differ significantly from current assumptions. Actual useful life and residual values may vary depending on a number
of factors including internal technical evaluation, attributes of the assets and experience with similar assets. Changes to these estimates may affect the carrying value of assets, net income (loss) and comprehensive income (loss) in future periods.

 Purchase price allocation 

The acquisition of U-Protein on August 22, 2017 and the acquisition of IPA Europe and Immulease on
April 5, 2018 were accounted for as business combinations at fair value in accordance with IFRS 3, Business Combinations. The acquired assets and assumed liabilities were adjusted to their fair values assigned through completion of a
purchase price allocation, as described below. 
 The purchase price allocation process resulting from a business combination required
management to estimate the fair value of identifiable assets acquired including intangible assets and liabilities assumed including the deferred acquisition payment obligations. The Company used valuation techniques, which were based on forecasted
future net cash flows discounted to present value, and also relied on work performed by third-party valuation specialists. These valuations were closely linked to the assumptions used by management on the future performance of the related assets and
the discount rates applied. 
  

	6.	 ACQUISITION OF U-PROTEIN 

On August 22, 2017, the Company completed the acquisition of U-Protein whereby the Company
acquired all of the issued and outstanding shares of U-Protein for €6,830,000 on terms as follows: 
  

	 	•	 	 €2,734,732 (CAD$4,062,607) was paid in cash on closing; 

 

	 	•	 	 3,030,503 common shares of the Company were issued on closing; and 

 

	 	•	 	 €2,047,634 in deferred payments over a three-year period. The deferred payments can be made in cash or
common shares of the Company at the election of U-Protein shareholders. 

 The
transaction was accounted for as a business combination, as the operations of U-Protein meet the definition of a business. As the transaction was accounted for as a business combination, transaction costs of
$17,717 were expensed. The goodwill resulting from the allocation of the purchase price to the total fair value of net assets represented the sales and growth potential of U-Protein. Goodwill recorded is
allocated in its entirety to U-Protein. The fair value of the 3,030,503 common shares issued ($3,022,308) was determined based on the Canadian dollar equivalent of the consideration required of €2,047,634
pursuant to the share purchase agreement. The Company has allocated the purchase price as follows: 

  
 19 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

					
	 	  	$	 
	 Cash
	  	 	4,062,607	 
	 3,030,503 common shares of the Company
	  	 	3,022,308	 
	 Fair value of deferred payments
	  	 	2,134,410	 
		  	  
	  
	 
	 Fair value of consideration
	  	 	9,219,325	 
		  	  
	  
	 
	 Cash
	  	 	797,276	 
	 Amounts receivable
	  	 	370,530	 
	 Unbilled revenue
	  	 	112,815	 
	 Inventory
	  	 	36,900	 
	 Investment
	  	 	90,404	 
	 Equipment, net of accumulated amortization
	  	 	216,161	 
	 Intellectual property (not deductible for tax purposes)
	  	 	4,064,000	 
	 Goodwill (not deductible for tax purposes)
	  	 	4,655,893	 
	 Accounts payable and accrued liabilities
	  	 	(269,657	) 
	 Income taxes payable
	  	 	(44,197	) 
	 Deferred income tax liability
	  	 	(810,800	) 
		  	  
	  
	 
		  	 	9,219,325	 
		  	  
	  
	 

 The deferred payments of €2,047,634 over a three-year period was
fair valued on the date of acquisition using a discounted cash flow model. A discount rate of 16.2% was used. The changes in the value of the deferred payments during the years ended April 30, 2020 and 2019 are as follows: 

 

					
	 	  	$	 
	 Balance, April 30, 2018
	  	 	2,408,205	 
	 Accretion expense
	  	 	244,915	 
	 Payment
	  	 	(1,049,754	) 
	 Foreign exchange
	  	 	(40,670	) 
		  	  
	  
	 
	 Balance, April 30, 2019
	  	 	1,562,696	 
	 Accretion expense
	  	 	350,137	 
	 Payment
	  	 	(1,007,435	) 
	 Foreign exchange
	  	 	26,130	 
		  	  
	  
	 
	 Balance, April 30, 2020
	  	 	931,528	 
		  	  
	  
	 

  

	7.	 ACQUISITION OF IPA EUROPE AND IMMULEASE 

On April 5, 2018, the Company acquired all of the issued and outstanding shares of IPA Europe and its sister entity, Immulease, for an
aggregate purchase price of €7,000,000 on terms as follows: 
  

	 	•	 	 €2,500,000 (CAD$3,988,132) was paid in cash on closing; 

 

	 	•	 	 6,600,399 common shares of the Company were issued on closing; and 

 

	 	•	 	 €2,000,000 in deferred payments over a three-year period. The deferred payments are made in three equal
installments of cash and equity totaling €666,666 and prorated if the EBITDA of IPA Europe for the fiscal year preceding the date of payment is less than its average EBITDA over the previous two fiscal years. During the year ended
April 30, 2019, the Company and the seller entered into an Amendment, Termination and Settlement Agreement whereby the deferred payments shall no longer be subject to an adjustment and will be paid in equal installments of cash and equity
totaling €666,666. 

 The transaction was accounted for as a business combination, as the operations of IPA Europe and
Immulease meet the definition of a business. As the transaction was accounted for as a business combination, transaction costs of $36,821 were expensed. The goodwill resulting from the allocation of the purchase price to the total

  
 20 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 
fair value of net assets represented the sales and growth potential of IPA Europe. Goodwill recorded is allocated in its entirety to IPA Europe. The fair value of the 6,600,399 common shares
issued ($4,884,295) was determined to be $0.74 per share based on the fair value of the Company’s shares immediately prior to the completion of the acquisition. The Company has allocated the purchase price as follows: 

 

					
	 	  	$	 
	 Cash
	  	 	3,988,132	 
	 6,600,399 common shares of the Company
	  	 	4,884,295	 
	 Fair value of deferred payments
	  	 	2,353,708	 
		  	  
	  
	 
	 Fair value of consideration
	  	 	11,226,135	 
		  	  
	  
	 
	 Cash
	  	 	270,339	 
	 Amounts receivable
	  	 	572,427	 
	 Unbilled revenue
	  	 	90,052	 
	 Inventory
	  	 	2,286,995	 
	 Equipment, net of accumulated amortization
	  	 	568,221	 
	 Software
	  	 	30,974	 
	 Intangible assets (not deductible for tax purposes)
	  	 	6,304,863	 
	 Goodwill (not deductible for tax purposes)
	  	 	3,640,671	 
	 Accounts payable and accrued liabilities
	  	 	(580,339	) 
	 Deferred revenue
	  	 	(22,897	) 
	 Loans
	  	 	(298,979	) 
	 Deferred income tax liability
	  	 	(1,636,192	) 
		  	  
	  
	 
		  	 	11,226,135	 
		  	  
	  
	 

 The deferred payments of €2,000,000 over a three-year period was fair valued on the date of acquisition
using a discounted cash flow model. A discount rate of 14% was used. The changes in the value of the deferred payments during the years ended April 30, 2020 and 2019 are as follows: 

 

					
	 	  	$	 
	 Balance, April 30, 2018
	  	 	2,403,954	 
	 Change in estimate of fair value
	  	 	(34,258	) 
	 Accretion expense
	  	 	232,418	 
	 Payment
	  	 	(1,014,503	) 
	 Foreign exchange
	  	 	(86,326	) 
		  	  
	  
	 
	 Balance, April 30, 2019
	  	 	1,501,285	 
	 Accretion expense
	  	 	382,928	 
	 Foreign exchange
	  	 	9,699	 
		  	  
	  
	 
	 Balance, April 30, 2020
	  	 	1,893,912	 
		  	  
	  
	 

  

	8.	 INVESTMENT 

Investment consists of a 29% (2019 – 29%) interest in QVQ Holding B.V. (“QVQ”), which is recorded using the equity method, being
the best approximation of the investment’s fair value, resulting in a change in fair value of $28,492 recognized in other income. Judgment is required as to the extent of influence that the Company has over QVQ. The Company considered the
extent of voting power over the entity, the power to participate in financial and operating policy decisions of the entity, representation on the board of directors, material transactions between the entities, interchange of management personnel,
and provision of essential technical information. The Company has determined that the Company is not considered to have significant influence over QVQ, as the Company does not have the power to participate in financial and operating policy
decisions, does not have representation on the Board of Directors of QVQ, and the majority of the common shares are held by QVQ management. 

  
 21 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	9.	 PROPERTY AND EQUIPMENT 

 

																																	
	 	  	Computer
Hardware	 	 	Furniture &
Equipment	 	 	Computer
Software	 	 	Building	 	 	Automobile	 	  	Leasehold
Improvements	 	 	Lab
Equipment	 	 	Total	 
	 	  	$	 	 	$	 	 	$	 	 	$	 	 	$	 	  	$	 	 	$	 	 	$	 
	 Cost:
	  				 				 				 				 				  				 				 			
	 Balance, April 30, 2018
	  	 	93,813	 	 	 	98,527	 	 	 	12,373	 	 	 	—  	 	 	 	—  	 	  	 	393,421	 	 	 	2,787,105	 	 	 	3,385,239	 
	 Acquired on acquisition of IPA Europe
	  	 	—  	 	 	 	—  	 	 	 	30,974	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	30,974	 
	 Additions
	  	 	17,184	 	 	 	12,538	 	 	 	87,821	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	612,046	 	 	 	729,589	 
	 Foreign exchange
	  	 	—  	 	 	 	—  	 	 	 	(1,153	) 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	(30,141	) 	 	 	(31,294	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2019
	  	 	110,997	 	 	 	111,065	 	 	 	130,015	 	 	 	—  	 	 	 	—  	 	  	 	393,421	 	 	 	3,369,010	 	 	 	4,114,508	 
	 IFRS 16 transition adjustment
	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1,668,533	 	 	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	1,668,533	 
	 Additions
	  	 	16,999	 	 	 	—  	 	 	 	—  	 	 	 	905,225	 	 	 	48,997	 	  	 	6,495	 	 	 	350,260	 	 	 	1,327,976	 
	 Disposals
	  	 	(73,697	) 	 	 	(75,052	) 	 	 	(80,193	) 	 	 	(196,325	) 	 	 	—  	 	  	 	(49,221	) 	 	 	(633,152	) 	 	 	(1,107,640	) 
	 Foreign exchange
	  	 	—  	 	 	 	—  	 	 	 	97	 	 	 	6,166	 	 	 	972	 	  	 	—  	 	 	 	12,367	 	 	 	19,602	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2020
	  	 	54,299	 	 	 	36,013	 	 	 	49,919	 	 	 	2,383,599	 	 	 	49,969	 	  	 	350,695	 	 	 	3,098,485	 	 	 	6,022,979	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Accumulated Depreciation:
	  				 				 				 				 				  				 				 			
	 Balance, April 30, 2018
	  	 	70,883	 	 	 	70,218	 	 	 	8,299	 	 	 	—  	 	 	 	—  	 	  	 	102,052	 	 	 	1,552,418	 	 	 	1,803,870	 
	 Depreciation
	  	 	17,252	 	 	 	15,418	 	 	 	40,533	 	 	 	—  	 	 	 	—  	 	  	 	103,764	 	 	 	500,194	 	 	 	677,161	 
	 Foreign exchange
	  	 	—  	 	 	 	—  	 	 	 	(43	) 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	(5,029	) 	 	 	(5,072	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2019
	  	 	88,135	 	 	 	85,636	 	 	 	48,789	 	 	 	—  	 	 	 	—  	 	  	 	205,816	 	 	 	2,047,583	 	 	 	2,475,959	 
	 Depreciation
	  	 	23,016	 	 	 	7,194	 	 	 	66,198	 	 	 	696,948	 	 	 	7,145	 	  	 	69,273	 	 	 	497,409	 	 	 	1,367,183	 
	 Disposals
	  	 	(73,697	) 	 	 	(75,052	) 	 	 	(80,193	) 	 	 	—  	 	 	 	—  	 	  	 	(49,221	) 	 	 	(633,152	) 	 	 	(911,315	) 
	 Foreign exchange
	  	 	—  	 	 	 	—  	 	 	 	170	 	 	 	3,366	 	 	 	142	 	  	 	—  	 	 	 	9,712	 	 	 	13,390	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2020
	  	 	37,454	 	 	 	17,778	 	 	 	34,964	 	 	 	700,314	 	 	 	7,287	 	  	 	225,868	 	 	 	1,921,552	 	 	 	2,945,217	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net Book Value:
	  				 				 				 				 				  				 				 			
	 April 30, 2019
	  	 	22,862	 	 	 	25,429	 	 	 	81,226	 	 	 	—  	 	 	 	—  	 	  	 	187,605	 	 	 	1,321,427	 	 	 	1,638,549	 
	 April 30, 2020
	  	 	16,845	 	 	 	18,235	 	 	 	14,955	 	 	 	1,683,285	 	 	 	42,682	 	  	 	124,827	 	 	 	1,176,933	 	 	 	3,077,762	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	10.	 INTANGIBLE ASSETS 

The intangible assets were acquired as a result of the acquisitions of U-Protein and IPA Europe and are
amortized using the straight-line method over their useful lives. The intellectual property has a useful life of 10 years, and the proprietary processes have a useful life of 5 years. The internally generated development costs will commence
amortizing once the development process is ready to be used. The changes in the value of the intangible assets during the years ended April 30, 2020 and 2019 are as follows: 

 

																					
	 	  	Internally
Generated
Development
Costs	 	  	Intellectual
Property	 	 	Proprietary
Processes	 	 	Certifications	 	 	Total	 
	 	  	$	 	  	$	 	 	$	 	 	$	 	 	$	 
	 Cost:
	  				  				 				 				 			
	 Balance, April 30, 2018
	  	 	—  	 	  	 	4,270,229	 	 	 	—  	 	 	 	—  	 	 	 	4,270,229	 
	 Acquired on acquisition of
	  				  				 				 				 			
	 IPA Europe
	  	 	—  	 	  	 	—  	 	 	 	6,159,755	 	 	 	145,108	 	 	 	6,304,863	 
	 Reclassification adjustment
	  	 	—  	 	  	 	—  	 	 	 	1,809,518	 	 	 	—  	 	 	 	1,809,518	 
	 Foreign exchange
	  	 	—  	 	  	 	(125,004	) 	 	 	(229,263	) 	 	 	(5,401	) 	 	 	(359,668	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2019
	  	 	—  	 	  	 	4,145,225	 	 	 	7,740,010	 	 	 	139,707	 	 	 	12,024,942	 
	 Additions
	  	 	114,042	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	114,042	 
	 Foreign exchange
	  	 	533	 	  	 	13,464	 	 	 	25,140	 	 	 	454	 	 	 	39,591	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Balance, April 30, 2020
	  	 	114,575	 	  	 	4,158,689	 	 	 	7,765,150	 	 	 	140,161	 	 	 	12,178,575	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  
 22 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

																					
	 Accumulated Amortization:
	  				  				 				 				  			
	 Balance, April 30, 2018
	  	 	—  	 	  	 	227,746	 	 	 	—  	 	 	 	—  	 	  	 	227,746	 
	 Amortization
	  	 	—  	 	  	 	416,890	 	 	 	1,169,233	 	 	 	—  	 	  	 	1,586,123	 
	 Foreign exchange
	  	 	—  	 	  	 	(9,035	) 	 	 	(6,641	) 	 	 	—  	 	  	 	(15,676	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2019
	  	 	—  	 	  	 	635,601	 	 	 	1,162,592	 	 	 	—  	 	  	 	1,798,193	 
	 Amortization
	  	 	—  	 	  	 	406,334	 	 	 	1,634,830	 	 	 	—  	 	  	 	2,041,164	 
	 Foreign exchange
	  	 	—  	 	  	 	11,600	 	 	 	42,226	 	 	 	—  	 	  	 	53,826	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2020
	  	 	—  	 	  	 	1,053,535	 	 	 	2,839,648	 	 	 	—  	 	  	 	3,893,183	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Net Book Value:
	  				  				 				 				  			
	 April 30, 2019
	  	 	—  	 	  	 	3,509,624	 	 	 	6,577,418	 	 	 	139,707	 	  	 	10,226,749	 
	 April 30, 2020
	  	 	114,575	 	  	 	3,105,154	 	 	 	4,925,502	 	 	 	140,161	 	  	 	8,285,392	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 

 During fiscal year 2020, the Company reviewed the cost of the acquired phage libraries and identified the need
to create an additional human phage library. This resulted in bifurcating the cost of the phage library into the costs to develop the proprietary process to create a phage library and the cost of the phage library acquired (Inventory). Accordingly,
a reclassification was made between Inventory and Proprietary Processes resulting in an increase in the cost of the Proprietary Processes by $1,809,518. 
  

	11.	 DEBENTURES 

On April 5, 2018, the Company completed a nonconvertible debenture (the “Debentures”) financing in the principal amount of
$4,252,000 (the “Offering”). The Debentures were unsecured, bore interest at a rate of 10% per annum, payable semi-annually, and were due eighteen months from the date of issue. Under the Offering, a holder of a Debenture received 37,500
detachable share purchase warrants (the “Warrants”) for every $25,000 of Debentures subscribed for by the holder. The Warrants are exercisable at $0.70 per share for a period of four years from the date of issue. The fair value of the
Debentures at the time of issue was calculated as the discounted cash flows assuming a 15% effective interest rate. The fair value of the Warrants was determined at the time of issue as the difference between the face value and the fair value of the
Debentures. On initial recognition, the Company bifurcated $4,003,125 to the carrying value of the Debentures and $248,875 to the Warrants. 

Under the Offering, the Company paid the following finder’s fees: $10,300 in cash, 580,320 shares of the Company with a fair value of
$383,010, and 415,942 finder’s warrants valued at $187,627. The fair value of the finder’s warrants was estimated on the date of issue using the Black-Scholes option valuation model with the following weighted average assumptions: dividend
yield of $nil, risk free interest rate of 1.60%, expected life of 4 years and expected volatility based on the historical volatility of similar companies of 100%. The total fair value of the finder’s fees was allocated pro-rata based on the carrying values of the Debentures and Warrants, with $546,934 allocated to the Debentures and $34,003 allocated to the Warrants. 

On October 25, 2018, the Company settled $1,377,000 of the Debentures by issuing 1,377,000 units at a price of $1.00 per unit. Each unit
consisted of one common share of the Company and one share purchase warrant, with each warrant entitling the holder to purchase an additional share at $1.25 for two years. The fair value of the 1,377,000 common shares issued was determined to be
$1,115,370. The fair value of the warrants issued was determined to be $283,000 and estimated on the date of issue using the Black-Scholes option valuation model with the following weighted average assumptions: dividend yield of $nil, risk free
interest rate of 1.58%, expected life of 2 years and expected volatility based on the historical volatility of similar companies of 68.7%. The settlement resulted in a loss of $189,715. 

  
 23 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 On September 26, 2019, the Company modified the terms of $2,750,000 Debentures to extend
the due date by 6 months to March 26, 2020, with the ability to pay earlier with no penalty, and increased the interest rate to 12.5%. The remaining debentures of $125,000 were paid on maturity. 

On March 26, 2020, the Company settled $700,000 of the Debentures plus accrued interest of $46,875 by issuing 1,244,792 common shares. The
fair value of the 1,244,792 common shares issued was determined to be $858,906. The settlement resulted in a loss of $112,031. $50,000 of the Debentures were paid on maturity. The maturity date of the remaining Debentures of $2,000,000 was extended
to September 26, 2020. The Company repaid the remaining balance of $2,000,000 plus interest subsequent to year-end. 

During the year ended April 30, 2020, the Company recorded accretion expense of $166,666 (2019 – $427,592). The changes in the value
of the Debentures during the years ended April 30, 2020 and 2019 are as follows: 
  

					
	 	  	$	 
	 Balance, April 30, 2018
	  	 	3,489,397	 
	 Accretion expense
	  	 	427,592	 
	 Settlement of debentures
	  	 	(1,208,655	) 
		  	  
	  
	 
	 Balance, April 30, 2019
	  	 	2,708,334	 
	 Accretion expense
	  	 	166,666	 
	 Repayment
	  	 	(175,000	) 
	 Settlement of debentures
	  	 	(700,000	) 
		  	  
	  
	 
	 Balance, April 30, 2020
	  	 	2,000,000	 
		  	  
	  
	 

  

	12.	 LOANS PAYABLE 

On April 5, 2018, the Company assumed loans payable of €60,750 (CAD$94,995) as a result of the acquisition of IPA Europe. On
July 7, 2015, IPA Europe entered into a loan agreement in the principal amount of €165,000, maturing on July 31, 2020. The loan is secured by certain equipment, bears an interest rate of 4% per annum and is repayable in monthly
installments of €2,250. The interest is owed per month in arrears. The principal outstanding at April 30, 2020 is €4,500 (CAD$6,797) (2019 – €31,500 (CAD$47,423)). 

On April 5, 2018, the Company assumed loans payable of €56,450 (CAD$88,271) as a result of the acquisition of IPA Europe. On
February 1, 2016, IPA Europe entered into a loan agreement in the principal amount of €100,000, maturing on February 28, 2021. The loan is secured by certain equipment, bears an interest rate of 3% per annum and is repayable in
monthly installments of €1,675. The interest is owed per month in arrears. The principal outstanding at April 30, 2020 is €14,575 (CAD$22,014) (2019 – €34,675 (CAD$52,203)). 

On April 5, 2018, the Company assumed loans payable of €74,000 (CAD$115,713) as a result of the acquisition of Immulease. On
May 18, 2016, Immulease entered into a credit facility agreement pursuant to which the lender provided a facility amount of up to €200,000. The credit facility was unsecured, bore an interest rate of 3% per annum and was repayable on
demand. The interest was owed per month in arrears. The principal outstanding at April 30, 2020 is €nil (CAD$nil) (2019 – €8,000 (CAD$12,044)). 

On May 23, 2018, the Company entered into a loan agreement with a Director of the Company and his spouse and issued a promissory note in
the principal amount of $200,000. The note was unsecured and bore an interest rate of 5.45% per annum. The principal of the note plus accrued interest of $3,972 was repaid in full during the year ended April 30, 2019. 

  
 24 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 On April 15, 2020, the Company was approved for a US$209,000 loan under the Payroll
Protection Program (“PPP”) administered by the U.S. Small Business Administration. The PPP is a US$349 billion loan program that originated from the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act. The PPP loan has a
term of two years, is unsecured, and is guaranteed by the U.S. Small Business Administration. The loan will be forgiven if the proceeds are used by the Company to cover payroll costs (including benefits), with up to 25% allowed for rent and
utilities, during the eight-week period following the loan origination date. The Company expects to meet the requirements for full loan forgiveness. 
  

					
	 	  	$	 
	 Balance, April 30, 2018
	  	 	290,445	 
	 Loan proceeds
	  	 	200,000	 
	 Loan repayments and foreign exchange
	  	 	(378,775	) 
		  	  
	  
	 
	 Balance, April 30, 2019
	  	 	111,670	 
	 Loan proceeds
	  	 	283,328	 
	 Loan repayments and foreign exchange
	  	 	(82,859	) 
		  	  
	  
	 
	 Balance, April 30, 2020
	  	 	312,139	 
	 Current portion
	  	 	(121,833	) 
		  	  
	  
	 
	 Non-current portion
	  	 	190,306	 
		  	  
	  
	 

  

	13.	 LEASES 

The Company entered into certain equipment and automobile leases expiring between 2021 and 2023 with interest rates of between 8% and 17% per
annum. The Company’s obligations under these finance leases are secured by the lessor’s title to the leased assets. The Company also entered into office leases in January 2018 and May 2018. With the adoption of IFRS 16, Leases (see
Note 4), the Company recognized a lease obligation with regard to the office leases. The terms and the outstanding balances as at April 30, 2020 and 2019 are as follows: 
  

									
	 	  	April 30,
2020
$	 	  	April 30,
2019
$	 
	 Equipment under lease in monthly instalments of $1,228 with interests of between 13% and 17% per
annum. Due dates are between May 2021 and March 2023.
	  	 	71,222	 	  	 	107,077	 
	 Automobile under lease in monthly instalments of $1,155 with an interest rate of 8% per annum and
an end date of September 2023.
	  	 	43,330	 	  	 	—  	 
	 Right-of-use asset
from office lease repayable in monthly instalments of $9,602 and an interest rate of 8% per annum and an end date of May 2021. The obligation includes an early termination fee of $15,981.
	  	 	135,230	 	  	 	—  	 
	 Right-of-use asset
from office lease repayable in monthly instalments of $16,445 and an interest rate of 8% per annum and an end date of December 2022.
	  	 	475,727	 	  	 	—  	 
	 Right-of-use asset
from office lease repayable in monthly instalments of $23,236 and an interest rate of 8% per annum and an end date of December 2022.
	  	 	673,235	 	  	 	—  	 
	 Right-of-use asset
from office lease repayable in monthly instalments of $13,891 to $21,015 and an interest rate of 8% per annum and an end date of April 2023.
	  	 	485,307	 	  	 	—  	 
	 Current portion
	  	 	(752,306	) 	  	 	(35,757	) 
		  	  
	  
	 	  	  
	  
	 
	 Non-current portion
	  	 	1,131,744	 	  	 	71,320	 
		  	  
	  
	 	  	  
	  
	 

  

  
 25 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 As at April 30, 2020, the Company’s lab equipment and automobile include a net
carrying amount of $77,285 (2019 – $104,014) for the leased equipment and $42,682 (2019 – $nil) for the leased automobile. The net carrying amount of the
right-of-use assets from office lease obligation is $1,683,285 (2019 – $nil). 

The following is a schedule of the Company’s future minimum lease payments related to the equipment under finance lease and the office
lease obligation: 
  

					
	 	  	$	 
	 2021
	  	 	849,255	 
	 2022
	  	 	714,898	 
	 2023
	  	 	513,051	 
	 2024
	  	 	5,774	 
		  	  
	  
	 
	 Total minimum lease payments
	  	 	2,082,978	 
	 Less: imputed interest
	  	 	(198,928	) 
		  	  
	  
	 
	 Total present value of minimum lease payments
	  	 	1,884,050	 
	 Less: Current portion
	  	 	(752,306	) 
		  	  
	  
	 
	 Non-current portion
	  	 	1,131,744	 
		  	  
	  
	 

  

	14.	 SHARE CAPITAL 

a) Authorized: 
 Unlimited
common shares without par value. 
 b) Share capital transactions: 

2019 Transactions 
 On
June 19, 2018, the Company closed a non-brokered private placement financing by issuing a total of 875,000 units of the Company at a price of $0.80 per unit for gross proceeds of $700,000. Each unit
consisted of one common share of the Company and one share purchase warrant, with each warrant entitling the holder to purchase an additional share at a price of $1.00 for a period of one year from the date of issue. The Company has the right to
accelerate the expiry date of the warrants provided that the volume weighted average price trades at a price equal to or greater than $1.50 for a period of 20 consecutive days. All of the proceeds have been allocated to the common shares issued with
a $nil value assigned to the warrants issued. The Company paid finders cash fees totaling $3,000 and incurred $7,926 of cash issue costs. 

On September 24, 2018, the Company closed a non-brokered private placement financing by issuing a
total of 9,102,500 units of the Company at a price of $1.00 per unit for gross proceeds of $9,102,500. Each unit consisted of one common share of the Company and one share purchase warrant, with each warrant entitling the holder to purchase an
additional share at a price of $1.25 for a period of two years from the date of issue. The Company has the right to accelerate the expiry date of the warrants provided that the volume weighted average price trades at a price equal to or greater than
$1.75 for a period of 20 consecutive days. All of the 

  
 26 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 
proceeds have been allocated to the common shares issued with a $nil value assigned to the warrants issued. The Company paid finders cash fees totaling $201,540 and issued 182,460 finder’s
shares. The Company also incurred $76,038 of cash issue costs. 
 On December 22, 2017, the Company announced that it had signed a
binding letter of intent with Crossbeta Biosciences B.V. (“Crossbeta”) whereby the Company had agreed to acquire all of the issued and outstanding shares of Crossbeta. The proposed transaction was terminated and settled on October 23,
2018. In consideration of the settlement, the Company paid €37,000 ($55,969) and issued 78,514 shares valued at $61,241. The Company accrued a settlement liability of $92,040 as at April 30, 2018. As such, the remaining loss on settlement
of $25,170 was recognized in the year ended April 30, 2019. 
 On October 25, 2018, the Company settled $1,377,000 of the
Debentures by issuing 1,377,000 units at a price of $1.00 per unit (Note 11). Each unit consisted of one common share of the Company and one share purchase warrant, with each warrant entitling the holder to purchase an additional share at $1.25 for
two years. The fair value of the 1,377,000 common shares issued was determined to be $1,115,370. The fair value of the warrants issued was determined to be $283,000 and estimated on the date of issue using the Black-Scholes option valuation model
with the following weighted average assumptions: dividend yield of $nil, risk free interest rate of 1.58%, expected life of 2 years and expected volatility based on the historical volatility of similar companies of 68.7%. The settlement resulted in
a loss of $189,715. 
 On March 27, 2019, the Company issued 714,793 common shares pursuant to the second deferred payment to IPA Europe
(Note 7). The common shares were valued at $507,503. 
 During the year ended April 30, 2019, the Company issued 135,000 common shares
pursuant to exercise of stock options for total gross proceeds of $40,500. A value of $30,658 was transferred from contributed surplus to share capital as a result. The weighted average share price at dates the stock options were exercised was
$1.05. 
 2020 Transactions 

On March 26, 2020, the Company settled $700,000 of the Debentures plus accrued interest of $46,875 by issuing 1,244,792 common shares
(Note 11). The fair value of the 1,244,792 common shares issued was determined to be $858,906. The settlement resulted in a loss of $112,031. 

During the year ended April 30, 2020, the Company issued 55,000 common shares pursuant to exercise of stock options for total gross
proceeds of $16,500. A value of $12,490 was transferred from contributed surplus to share capital as a result. The weighted average share price at dates the stock options were exercised was $0.69. 

During the year ended April 30, 2020, the Company issued 680,971 common shares pursuant to exercise of warrants and finder’s warrants
for total gross proceeds of $476,679. A value of $22,942 was transferred from contributed surplus to share capital as a result. 
 c)
Options 
 The Company has an incentive Stock Option Plan (“the Plan”) under which
non-transferable options to purchase common shares of the Company may be granted to directors, officers, employees or service providers of the Company. The terms of the plan provide that the Directors have the
right to grant options to acquire common shares of the Company at not less than the closing market price of the shares on the day preceding the grant at terms of up to five years. The maximum number of options outstanding under the Plan shall not
result, at any time, in more than 10% of the issued and outstanding common shares. 

  
 27 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 On September 24, 2018, the Company granted 95,000 stock options, exercisable at $0.95
per option, to employees of the Company. The options are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant
date and one-third 18 months after grant date. The fair value of these options was estimated to be $67,402 using the Black-Scholes option pricing model and the following assumptions: dividend yield of 0%,
expected volatility of 100%, a risk-free interest rate of 1.60%, and an expected life of 5 years. 
 On November 7, 2018, the Company
granted 300,000 stock options, exercisable at $0.82 per option, to employees of the Company. The options are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date and one-third 18 months after grant date. The fair value of these options was estimated to be $184,658 using the Black-Scholes option
pricing model and the following assumptions: dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 2.20%, and an expected life of 5 years. 

On December 31, 2018, the Company granted 1,250,000 stock options, exercisable at $1.00 per option, to officers and directors of the
Company. The options are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date and one-third 18 months after grant date. The fair value of these options was estimated to be $625,485 using the Black-Scholes option pricing model and the following assumptions: dividend yield of 0%, expected
volatility of 100%, a risk-free interest rate of 2.20%, and an expected life of 5 years. 
 On January 11, 2019, the Company granted
415,000 stock options, exercisable at $1.00 per option, to officers and an employee of the Company. The options are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date and one-third 18 months after grant date. The fair value of these options was estimated to be $228,801 using the Black-Scholes option
pricing model and the following assumptions: dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 2.20%, and an expected life of 5 years. 

On October 3 2019, the Company granted 250,000 stock options, exercisable at $0.475 per option, to an officer of the Company. The options
are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date and
one-third 18 months after grant date. The fair value of these options was estimated to be $86,395 using the Black-Scholes option pricing model and the following assumptions: share price on grant date of $0.48,
dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 1.46%, and an expected life of 5 years. 
 On October 3,
2019, the Company granted 200,000 stock options, exercisable at $1.00 per option, to a consultant of the Company. The options vested immediately upon grant. The fair value of these options was estimated to be $32,096 using the Black-Scholes option
pricing model and the following assumptions: share price on grant date of $0.48, dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 1.56%, and an expected life of 2 years. 

On October 3, 2019, the Company granted 150,000 stock options, exercisable at $0.50 per option, to a director of the Company. The options
are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date and
one-third 18 months after grant date. The fair value of these options was estimated to be $53,326 using the Black-Scholes option pricing model and the following assumptions: share price on grant date of $0.48,
dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 1.46%, and an expected life of 5 years. 
 On October 3,
2019, the Company granted 65,000 stock options, exercisable at $1.01 per option, to employees of the Company. The options vested immediately upon grant. The fair value of these options was estimated to be $14,627 using the Black-Scholes option
pricing model and the following assumptions: share price on grant date of $0.48, dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 1.54%, and an expected life of 2.96 years. 

  
 28 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 On April 3, 2020, the Company granted 55,000 stock options, exercisable at $1.01 per
option, to employees of the Company. The options are subject to vesting conditions as follows: one-third 6 months after grant date; one-third 12 months after grant date
and one-third 18 months after grant date. The fair value of these options was estimated to be $20,582 using the Black-Scholes option pricing model and the following assumptions: share price on grant date of
$0.69, dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 0.75%, and an expected life of 3 years. 
 On
April 29, 2020, the Company granted 250,000 stock options, exercisable at $0.76 per option, to an officer of the Company. The options are subject to vesting conditions as follows: one-third 6 months after
grant date; one-third 12 months after grant date and one-third 18 months after grant date. The fair value of these options was estimated to be $129,340 using the
Black-Scholes option pricing model and the following assumptions: share price on grant date of $0.76, dividend yield of 0%, expected volatility of 100%, a risk-free interest rate of 0.38%, and an expected life of 3.93 years. 

Expected volatility was based on the historical volatility of similar companies. 

During the year ended April 30, 2020 the Company has recorded $739,011 (2019 - $1,114,112) of share-based payments expense. 

The changes in the stock options for the years ended April 30, 2020 and 2019 are as follows: 

 

													
	 	  	Number of
options
#	 	  	Weighted
average
exercise price
$	 	  	Weighted
average life
remaining
(years)	 
	 Balance, April 30, 2018 (outstanding)
	  	 	4,871,666	 	  	 	0.68	 	  	 	4.20	 
	 Granted
	  	 	2,060,000	 	  	 	0.97	 	  	 	—  	 
	 Exercised
	  	 	(135,000	) 	  	 	0.30	 	  	 	—  	 
	 Expired
	  	 	(200,000	) 	  	 	1.24	 	  	 	—  	 
	 Forfeited
	  	 	(1,293,333	) 	  	 	0.71	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2019 (outstanding)
	  	 	5,303,333	 	  	 	0.78	 	  	 	3.87	 
	 Granted
	  	 	970,000	 	  	 	0.73	 	  	 	—  	 
	 Exercised
	  	 	(55,000	) 	  	 	0.30	 	  	 	—  	 
	 Forfeited
	  	 	(903,333	) 	  	 	0.73	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2020 (outstanding)
	  	 	5,315,000	 	  	 	0.77	 	  	 	3.03	 
	 Unvested
	  	 	(1,193,333	) 	  	 	0.76	 	  	 	3.85	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Exercisable, April 30, 2020
	  	 	4,121,667	 	  	 	0.80	 	  	 	2.79	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  
 29 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Details of the options outstanding as at April 30, 2020 are as follows: 

 

																					
	 Expiry Date
	  	Exercise
price
$	 	  	Remaining
life
(year)	 	  	Options
outstanding	 	 	Unvested	 	  	Vested	 
	 October 1, 2021
	  	 	1.00	 	  	 	1.42	 	  	 	200,000	 	 	 	—  	 	  	 	200,000	 
	 December 20, 2021
	  	 	0.30	 	  	 	1.64	 	  	 	550,000	(1) 	 	 	—  	 	  	 	550,000	 
	 September 18, 2022
	  	 	1.01	 	  	 	2.39	 	  	 	950,000	(2) 	 	 	—  	 	  	 	950,000	 
	 January 3, 2023
	  	 	0.65	 	  	 	2.68	 	  	 	250,000	 	 	 	—  	 	  	 	250,000	 
	 February 7, 2023
	  	 	0.47	 	  	 	2.78	 	  	 	700,000	 	 	 	—  	 	  	 	700,000	 
	 April 3, 2023
	  	 	1.01	 	  	 	2.93	 	  	 	55,000	 	 	 	55,000	 	  	 	—  	 
	 September 24, 2023
	  	 	0.95	 	  	 	3.40	 	  	 	95,000	 	 	 	—  	 	  	 	95,000	 
	 November 7, 2023
	  	 	0.82	 	  	 	3.52	 	  	 	300,000	(3) 	 	 	100,000	 	  	 	200,000	 
	 December 31, 2023
	  	 	1.00	 	  	 	3.67	 	  	 	1,250,000	 	 	 	416,666	 	  	 	833,334	 
	 January 7, 2024
	  	 	0.76	 	  	 	3.69	 	  	 	300,000	(4) 	 	 	100,000	 	  	 	200,000	 
	 January 11, 2024
	  	 	1.00	 	  	 	3.70	 	  	 	15,000	 	 	 	5,000	 	  	 	10,000	 
	 April 1, 2024
	  	 	0.76	 	  	 	3.92	 	  	 	250,000	 	 	 	250,000	 	  	 	—  	 
	 October 1, 2024
	  	 	0.475	 	  	 	4.42	 	  	 	250,000	 	 	 	166,667	 	  	 	83,333	 
	 October 3, 2024
	  	 	0.50	 	  	 	4.43	 	  	 	150,000	 	 	 	100,000	 	  	 	50,000	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
		  	 	0.77	 	  	 	3.03	 	  	 	5,315,000	 	 	 	1,193,333	 	  	 	4,121,667	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	  	  
	  
	 

  

	(1) 	 65,000 of these stock options have been exercised subsequent to April 30, 2020. 

	(2) 	 62,500 of these stock options have been exercised subsequent to April 30, 2020. 

	(3) 	 200,000 of these stock options have been exercised subsequent to April 30, 2020. 

	(4) 	 These options were amended during the year from an exercise price of $1.00 to $0.76. 

d) Warrants 
 The changes
in the warrants for the years ended April 30, 2020 and 2019 are as follows: 
  

													
	 	  	Number of
warrants
#	 	  	Weighted average
exercise price
$	 	  	Weighted average
life remaining
(years)	 
	 Balance, April 30, 2018
	  	 	6,378,000	 	  	 	0.70	 	  	 	3.93	 
	 Issued
	  	 	11,354,500	 	  	 	1.23	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2019
	  	 	17,732,500	 	  	 	1.04	 	  	 	1.90	 
	 Exercised
	  	 	(675,000	) 	  	 	0.70	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2020
	  	 	17,057,500	 	  	 	1.05	 	  	 	0.91	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

 Details of the warrants outstanding as at April 30, 2020 are as follows: 

 

													
	 Expiry Date
	  	Exercise price
$	 	  	Remaining
life
(year)	 	  	Warrants
outstanding	 
	 March 26, 2022
	  	 	0.70	 	  	 	1.90	 	  	 	5,703,000	(1) 
	 June 18, 2020
	  	 	1.00	 	  	 	0.13	 	  	 	875,000	(2) 
	 September 24, 2020
	  	 	1.25	 	  	 	0.40	 	  	 	9,102,500	(3) 
	 October 25, 2020
	  	 	1.25	 	  	 	0.49	 	  	 	1,377,000	(4) 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
		  	 	1.04	 	  	 	0.91	 	  	 	17,057,500	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1) 	 705,000 of these warrants have been exercised subsequent to April 30, 2020. 

	(2) 	 During the year ended April 30, 2020, the expiry date of these warrants was extended from June 18,
2019 to June 18, 2020. All of these warrants have been exercised subsequent to April 30, 2020. 

	(3) 	 1,721,000 of these warrants have been exercised subsequent to April 30, 2020. 

	(4) 	 115,000 of these warrants have been exercised subsequent to April 30, 2020. 

  
 30 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	 	e)	 Finder’s Warrants 

The changes in the finder’s warrants for the years ended April 30, 2020 and 2019 are as follows: 

 

													
	 	  	Number of
warrants
#	 	 	Weighted average
exercise price
$	 	  	Weighted average
life remaining
(years)	 
	 Balance, April 30, 2018 and 2019
	  	 	415,942	 	 	 	0.70	 	  	 	2.91	 
	 Exercised
	  	 	(5,971	) 	 	 	0.70	 	  	 	—  	 
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 
	 Balance, April 30, 2020
	  	 	409,971	(1) 	 	 	0.70	 	  	 	1.90	 
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 

  

	(1) 	 22,000 of these warrants have been exercised subsequent to April 30, 2020. 

As at April 30, 2020, the Company has 409,971 finder’s warrants outstanding. The warrants have an exercise price of $0.70 per share
and expire on March 26, 2022. 
  

	15.	 RELATED PARTY TRANSACTIONS 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
Company. Key management consists of Dr. Jennifer Bath, President and CEO; Lisa Helbling, CFO; Dr. Stefan Lang, Chief Business Officer; Dr. Yasmina Abdiche, Chief Scientific Officer; Charles Wheelock, former Chief Technology Officer;
Natasha Tsai, former CFO; Reginald Beniac, former Chief Operating Officer; Oren Beske, former President of ImmunoPrecise Antibodies (USA) Ltd.; Martin Hessing, a former Director of U-Protein; Jos Raats, former
President and CEO of IPA Europe; and Directors of the Company. During the years ended April 30, 2020 and 2019, the compensation for key management is as follows: 
  

									
	 	  	2020
$	 	  	2019
$	 
	 Consulting fees
	  	 	—  	 	  	 	7,292	 
	 Management fees
	  	 	178,863	 	  	 	394,126	 
	 Professional fees
	  	 	—  	 	  	 	59,263	 
	 Salaries and other short-term benefits
	  	 	2,052,465	 	  	 	995,855	 
	 Severance
	  	 	—  	 	  	 	87,500	 
	 Share-based payments
	  	 	632,279	 	  	 	770,928	 
		  	  
	  
	 	  	  
	  
	 
		  	 	2,863,607	 	  	 	2,314,964	 
		  	  
	  
	 	  	  
	  
	 

 At April 30, 2020, included in accounts payable and accrued liabilities is $412,188 (2019 - $nil) due to
related parties. 
 During the year ended April 30, 2020, the spouse of a former Director provided administrative services for $nil
(2019 – $54,225). 
 During the year ended April, 30, 2020, a company controlled by Martin Hessing, a former Director of U-Protein, sold certain equipment to U-Protein for a cash consideration of €25,000. 

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 the related parties, unless otherwise noted. 

  
 31 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	16.	 CAPITAL MANAGEMENT 

The Company’s objectives when managing capital are to ensure sufficient liquidity for operations and adequate funding for growth and
capital expenditures while maintaining an efficient balance between debt and equity. The capital structure of the Company consists of credit facilities and shareholders’ equity. 

The Company makes adjustments to its capital structure upon approval from its Board of Directors, in light of economic conditions and the
Company’s working capital requirements. There were no changes in the Company’s approach to capital management during the year. The Company is not subject to any externally imposed capital requirements. 

 

	17.	 FINANCIAL INSTRUMENTS 

The Company’s financial instruments include cash, amounts receivable, restricted cash, investment, accounts payable and accrued
liabilities, debentures, loans payable, leases and deferred acquisition payments. 
 Fair value 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 fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value, by
reference to the reliability of the inputs used to estimate the fair values. 
 Level 1 - applies to assets or liabilities for which there
are quoted prices in active markets for identical assets or liabilities. 
 Level 2 - applies to assets or liabilities for which there are
inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or
infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 

Level 3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. 
 The fair value of investment is determined based on “Level 2”
inputs as its value under the equity method was the best approximation of its fair value. As at April 30, 2020, the Company believes that the carrying values of cash, amounts receivable, restricted cash, accounts payable and accrued
liabilities, debentures, loans payable, leases and deferred acquisition payments approximate their fair values because of their nature and relatively short maturity dates or durations. 

Concentration of risk: 

Industry 
 The Company
operates in the contract research organization sector and is affected by general economic trends. A decline in economic conditions, research spending or other adverse conditions could lead to reduced revenue. 

Concentrations of credit risk 

Credit risk relates to cash, restricted cash and amounts receivable and arises from the possibility that counterparty to an instrument may fail
to perform. At April 30, 2020, all of the Company’s cash was held with tier one banks. The Company has evaluated amounts receivable and determined that there were no material allowances for doubtful accounts at April 30, 2020 and
2019. During the year ended April 30, 2020 the Company incurred bad debt expense of $48,433 (2019 - $1,837). 

  
 32 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Currency risk 

The Company operates in the US and Europe which gives rise to exposure to market risks from changes in foreign currency values. Most
significantly, the Company is exposed to potential currency fluctuations between US and Canadian dollars, which was translated at 1.3556 at April 30, 2020, and the Euro and Canadian dollar, which was translated at 1.51039 at April 30,
2020. Fluctuations in the exchange rate could impact profitability. 
 At April 30, 2020, the Company is exposed to currency risk
through the following assets and liabilities denominated in US dollars and Euros: 
  

									
	 	  	Euros
(€)	 	  	US Dollars
(US $)	 
	 Cash
	  	 	1,246,018	 	  	 	452,226	 
	 Amounts receivable
	  	 	752,224	 	  	 	906,428	 
	 Investment
	  	 	78,719	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
		  	 	2,076,961	 	  	 	1,358,654	 
		  	  
	  
	 	  	  
	  
	 
	 Accounts payable and accrued liabilities
	  	 	(642,781	) 	  	 	(570,253	) 
	 Loans payable
	  	 	(19,075	) 	  	 	(209,000	) 
	 Deferred acquisition payments
	  	 	(1,870,669	) 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
		  	 	(2,532,525	) 	  	 	(779,253	) 
		  	  
	  
	 	  	  
	  
	 
	 Net
	  	 	(455,564	) 	  	 	579,401	 
		  	  
	  
	 	  	  
	  
	 

 For the year ended April 30, 2020, a 5% increase in foreign exchange rates by the Canadian dollar relative
to the US dollar would have decreased other comprehensive income (loss) by approximately $39,000. 
 For the year ended April 30, 2020,
a 5% increase in foreign exchange rates by the Canadian dollar relative to the Euro would have decreased other comprehensive income (loss) by approximately $34,000. 

Liquidity risk: 
 The
Company’s approach to managing its obligations is to maintain sufficient resources to meet its obligations when due without undue risk to the Company. The Company monitors its cash requirements on an ongoing basis to ensure that there are
sufficient resources for operations as well as to fund anticipated leasing, capital and development expenditures. In addition, the Company manages its cash to meet its debt obligations and to fund general and administrative costs. 

Contractual cash flow requirements as at April 30, 2020 were as follows: 

 

																					
	 	  	< 1
year
$	 	  	1 – 2
years
$	 	  	2 – 5
years
$	 	  	>5
years
$	 	  	Total
$	 
	 Accounts payable and accrued liabilities
	  	 	1,766,058	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	1,766,058	 
	 Loans payable
	  	 	121,833	 	  	 	190,306	 	  	 	—  	 	  	 	—  	 	  	 	312,139	 
	 Deferred acquisition payments(1) 
	  	 	1,546,088	 	  	 	506,538	 	  	 	—  	 	  	 	—  	 	  	 	2,052,626	 
	 Leases
	  	 	849,255	 	  	 	714,898	 	  	 	518,825	 	  	 	—  	 	  	 	2,082,978	 
	 Debentures
	  	 	2,000,000	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	2,000,000	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total
	  	 	6,283,234	 	  	 	1,411,742	 	  	 	518,825	 	  	 	—  	 	  	 	8,213,801	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1) 	 $1,016,112 aggregate payments not included in this table are to be settled by issuance of
shares.     

  
 33 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

	18.	 COMMITMENTS 

The Company entered into a lease for a piece of equipment for its Victoria, BC, Canada laboratory space on April 29, 2020. The lease
commenced on May 15, 2020 with a 36 month term. The monthly lease payment is USD$15,829. The Company has a right to purchase the equipment at fair market value at the end of the lease term. 

 

	19.	 SEGMENTED INFORMATION AND ECONOMIC DEPENDENCE 

At April 30, 2020 and 2019, the Company has one reportable segment, being antibody production and related services. 

During the year ended April 30, 2020, the Company had sales to nil (2019 - nil) customer who in aggregate accounted for more than 10%
(2019 – 10%) of revenue. 
 The Company’s revenues are allocated to geographic segments for the years ended
April 30, 2020 and 2019 as follows: 
  

									
	 	  	2020
$	 	  	2019
$	 
	 United States of America
	  	 	5,949,014	 	  	 	3,849,814	 
	 Canada
	  	 	714,764	 	  	 	859,445	 
	 Europe
	  	 	6,114,674	 	  	 	5,796,501	 
	 Other
	  	 	1,279,475	 	  	 	420,508	 
		  	  
	  
	 	  	  
	  
	 
		  	 	14,057,927	 	  	 	10,926,268	 
		  	  
	  
	 	  	  
	  
	 

 The Company’s revenues are allocated according to revenue types for the years ended April 30, 2020
and 2019 as follows: 
  

									
	 	  	2020
$	 	  	2019
$	 
	 Project revenue
	  	 	13,195,074	 	  	 	10,497,257	 
	 Product sales revenue
	  	 	739,283	 	  	 	204,503	 
	 Cryo storage revenue
	  	 	123,570	 	  	 	224,508	 
		  	  
	  
	 	  	  
	  
	 
		  	 	14,057,927	 	  	 	10,926,268	 
		  	  
	  
	 	  	  
	  
	 

 The Company’s non-current assets are allocated to geographic
segments as at April 30, 2020 and 2019 as follows: 
  

									
	 	  	April 30,
2020
$	 	  	April 30,
2019
$	 
	 North America
	  	 	1,429,210	 	  	 	986,323	 
	 Netherlands
	  	 	18,134,469	 	  	 	18,919,876	 
		  	  
	  
	 	  	  
	  
	 
		  	 	19,563,679	 	  	 	19,906,199	 
		  	  
	  
	 	  	  
	  
	 

  
 34 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 Geographic segmentation of the Company’s net loss is as follows: 

 

									
	 	  	2020
$	 	  	2019
$	 
	 North America - Corporate
	  	 	(4,226,844	) 	  	 	(6,524,410	) 
	 North America
	  	 	(683,039	) 	  	 	(293,351	) 
	 Netherlands
	  	 	(37,543	) 	  	 	(799,706	) 
		  	  
	  
	 	  	  
	  
	 
		  	 	(4,947,426	) 	  	 	(7,617,467	) 
		  	  
	  
	 	  	  
	  
	 

 Geographic segmentation of the interest and accretion, and amortization and depreciation is as follows: 

 

									
	 Interest and accretion
	  	2020
$	 	  	2019
$	 
	 North America - Corporate
	  	 	856,872	 	  	 	1,278,144	 
	 North America
	  	 	85,942	 	  	 	31,565	 
	 Netherlands
	  	 	493,416	 	  	 	8,806	 
		  	  
	  
	 	  	  
	  
	 
		  	 	1,436,230	 	  	 	1,318,515	 
		  	  
	  
	 	  	  
	  
	 
			
	 Amortization and depreciation
	  	2020
$	 	  	2019
$	 
	 North America - Corporate
	  	 	125,300	 	  	 	28,385	 
	 North America
	  	 	498,595	 	  	 	330,408	 
	 Netherlands
	  	 	2,784,452	 	  	 	1,904,491	 
		  	  
	  
	 	  	  
	  
	 
		  	 	3,408,347	 	  	 	2,263,284	 
		  	  
	  
	 	  	  
	  
	 

  

	20.	 SUPPLEMENTAL CASH FLOW INFORMATION 

 

									
	 Non-cash investing and
financing transactions:
	  	April 30,
2020
$	 	  	April 30,
2019
$	 
	 Debt settlement by issuance of shares and warrants
	  	 	858,906	 	  	 	1,398,370	 
	 Crossbeta settlement by issuance of shares
	  	 	—  	 	  	 	61,241	 
	 Acquisition of building and equipment by capital lease
	  	 	2,622,756	 	  	 	84,531	 
	 Fair value of shares issued pursuant to acquisition of IPA Europe
	  	 	—  	 	  	 	975,045	 
	 Fair value of shares issued pursuant to deferred acquisition payment to IPA Europe
	  	 	—  	 	  	 	507,503	 

  
 35 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

 The following changes in liabilities arose from financing activities: 

 

																													
	 	  	 	 	  	 	 	 	Non-cash changes	 	 	 	 
	 	  	April 30,
2019
$	 	  	Cash Flows
$	 	 	Acquisition
$	 	 	Settlement
/ Disposal
$	 	 	Accretion
$	 	  	Foreign
exchange
movements
and
change in
estimates
$	 	 	April 30,
2020
$	 
	 Deferred acquisition payments
	  	 	3,063,981	 	  	 	(1,007,435	) 	 	 	—  	 	 	 	—  	 	 	 	733,065	 	  	 	35,829	 	 	 	2,825,440	 
	 Debentures
	  	 	2,708,334	 	  	 	(175,000	) 	 	 	—  	 	 	 	(700,000	) 	 	 	166,666	 	  	 	—  	 	 	 	2,000,000	 
	 Debenture subscriptions received
	  	 	—  	 	  	 	313,268	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	313,268	 
	 Loans payable
	  	 	111,670	 	  	 	200,469	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	312,139	 
	 Leases
	  	 	107,077	 	  	 	(657,215	) 	 	 	2,677,500	 	 	 	(196,325	) 	 	 	—  	 	  	 	(46,987	) 	 	 	1,884,050	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 Total
	  	 	5,991,062	 	  	 	(1,325,913	) 	 	 	2,677,500	 	 	 	(896,325	) 	 	 	899,731	 	  	 	(11,158	) 	 	 	7,334,897	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
					
	 	  	 	 	  	 	 	 	Non-cash changes	 	 	 	 
	 	  	April 30,
2018
$	 	  	Cash Flows
$	 	 	Settlement
by issuance
of shares
$	 	 	Acquisition
$	 	 	Accretion
$	 	  	Foreign
exchange
movements
and
change in
estimates
$	 	 	April 30,
2019
$	 
	 Deferred acquisition payments
	  	 	4,812,159	 	  	 	(1,556,754	) 	 	 	(507,503	) 	 	 	—  	 	 	 	477,333	 	  	 	(161,254	) 	 	 	3,063,981	 
	 Debentures
	  	 	3,489,397	 	  	 	—  	 	 	 	(1,208,655	) 	 	 	—  	 	 	 	427,592	 	  	 	—  	 	 	 	2,708,334	 
	 Loans payable
	  	 	290,445	 	  	 	(178,775	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	111,670	 
	 Leases
	  	 	46,458	 	  	 	(23,912	) 	 	 	—  	 	 	 	84,531	 	 	 	—  	 	  	 	—  	 	 	 	107,077	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 
	 Total
	  	 	8,638,459	 	  	 	(1,759,441	) 	 	 	(1,716,158	) 	 	 	84,531	 	 	 	904,925	 	  	 	(161,254	) 	 	 	5,991,062	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 

  

	21.	 INCOME TAXES 

Income tax expense differs from the amount that would be computed by applying the federal and provincial statutory tax rates of 27% (2019 -
27%) to the earnings before income taxes. The reasons for the differences and related tax effects are as follows: 
  

									
	 	  	2020
$	 	  	2019
$	 
	 Earnings (loss) before income taxes
	  	 	(5,293,154	) 	  	 	(7,612,679	) 
		  	  
	  
	 	  	  
	  
	 
	 Income taxes (recovery) on earnings before income taxes, at above basic rate
	  	 	(1,429,000	) 	  	 	(2,055,000	) 
	 Increase (decrease) in taxes resulting from:
	  				  			
	 Nondeductible expenses
	  	 	383,000	 	  	 	414,000	 
	 Effects of tax rate change and foreign exchange
	  	 	(64,000	) 	  	 	—  	 
	 Tax rate difference by jurisdiction
	  	 	55,000	 	  	 	12,000	 
	 Tax benefits not recognized
	  	 	709,000	 	  	 	1,634,000	 
		  	  
	  
	 	  	  
	  
	 
	 Income taxes (recovery)
	  	 	(346,000	) 	  	 	5,000	 
		  	  
	  
	 	  	  
	  
	 

  
 36 

 IMMUNOPRECISE ANTIBODIES LTD. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended April 30, 2020 and 2019 

(Expressed in Canadian Dollars) 
  

 

									
	 	  	2020
$	 	  	2019
$	 
	 Current income taxes
	  	 	109,000	 	  	 	476,000	 
	 Deferred income taxes (recovery)
	  	 	(455,000	) 	  	 	(471,000	) 
		  	  
	  
	 	  	  
	  
	 
	 Income taxes (recovery)
	  	 	(346,000	) 	  	 	5,000	 
		  	  
	  
	 	  	  
	  
	 

 Temporary differences give rise to the following deferred income tax assets and liabilities: 

 

									
	 	  	2020
$	 	  	2019
$	 
	 Non-capital losses carried forward (expire from 2026 to
2039)
	  	 	3,721,000	 	  	 	3,668,000	 
	 Other tax pools
	  	 	1,468,000	 	  	 	1,896,000	 
	 Capital losses carried forward
	  	 	148,000	 	  	 	129,000	 
	 Equipment and leasehold improvements
	  	 	66,000	 	  	 	(19,000	) 
	 Inventory and intangible assets
	  	 	(1,608,000	) 	  	 	(2,057,000	) 
	 Financing costs
	  	 	152,000	 	  	 	175,000	 
	 Less: unrecognized deferred income tax asset
	  	 	(5,549,000	) 	  	 	(5,849,000	) 
		  	  
	  
	 	  	  
	  
	 
	 Deferred income tax liability
	  	 	(1,602,000	) 	  	 	(2,057,000	) 
		  	  
	  
	 	  	  
	  
	 

  

	22.	 SUBSEQUENT EVENTS 

On May 15, 2020, the Company closed a non-brokered private placement financing by issuing 10%
convertible debentures (“New Debentures”) for total proceeds of $2,592,000. On May 27, 2020, the Company issued an additional $35,000 of the 10% New Debentures. In total, the Company issued $2,627,000 of the New Debentures. The New
Debentures are unsecured, bear interest at a rate of 10% per year and payable annually. The maturity date is May 15, 2022 for $2,592,000 of the New Debentures and May 22, 2022 for $35,000 of the New Debentures. The principal amount of the
New Debentures may be convertible, at the option of the holder, into units of the Company at a conversion price of $0.85 per share. The Company may force convert the principal amount of the New Debentures at $0.85 per share if the average closing
price is equal to or greater than $1.50 for 20 trading days. The Company paid finders cash commissions totalling $44,750. 
 In advance of
the closing of the New Debentures, the Company has received $313,268 of the proceeds as at April 30, 2020. 
 Subsequent to
April 30, 2020, ImmunoPrecise Antibodies (USA) Ltd. and its subsidiary Talem Therapeutics, LLC (Subgrantee), was awarded a grant of USD$1.5 million by the ND Department of Agriculture through the CARES Act ND Bioscience Group Program for
the development of antibody therapeutics against SARS-CoV- 2. The total grant project cost is USD$2M for which the Subgrantee’s must contribute an amount not less
than 25% of the grant project cost or USD$500,000. The amount earned for the year ended April 30, 2020 of approximately USD$158,000 has been accrued and recorded in other income. 

Subsequent to April 30, 2020, the Company made the second deferred payment pursuant to the acquisition of IPA Europe and Immulease, by
making a cash payment of €335,555 (CAD$518,533) and issuing 664,163 common shares of the Company with a fair value of $511,406. 

Subsequent to April 30, 2020, the Company granted 250,000 stock options at a price of $1.50 per share for a period of 3 years. The options
are subject to following vesting period: 25% at three months after the date of grant and 25% every three months thereafter. 

  
 37EX-4.3

 Exhibit 4.3 
  

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
 The following
Management’s Discussion and Analysis (“MD&A”), prepared as of August 28, 2020, should be read in conjunction with the audited consolidated financial statements of ImmunoPrecise Antibodies Ltd. (“the Company”,
“ImmunoPrecise” or “IPA”) for the year ended April 30, 2020. This MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors of IPA. 

The referenced, consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and
related IFRS Interpretations Committee (“IFRIC’s”) as issued by the International Accounting Standards Board (“IASB”). All financial amounts are stated in Canadian dollars unless stated otherwise. 

FORWARD-LOOKING STATEMENTS 
 This MD&A may contain
certain statements that constitute “forward-looking statements” within the meaning of National Instrument 51-102, Continuous Disclosure Obligations of the Canadian Securities Administrators. 

Forward-looking statements often, but not always, are identified by the use of words such as “seek”, “anticipate”, “believe”,
“plan”, “estimate”, “expect”, “targeting” and “intend” and statements that an event or result “may”, “will”, “should”, “could”, or “might” occur or
be achieved and other similar expressions. 
 In this MD&A, forward-looking statements include the Company’s future plans and expenditures, the
satisfaction of rights and performance of obligations under agreements to which the Company is a part, the ability of the Company to hire and retain employees and consultants and estimated administrative assessment and other expenses. The
forward-looking statements that are contained in this MD&A involve a number of risks and uncertainties. As a consequence, actual results might differ materially from results forecast or suggested in these forward-looking statements. Some of
these risks and uncertainties are identified under the heading “RISKS AND UNCERTAINTIES” in this MD&A. 
 Furthermore, forward-looking
statements contained herein are made as of the date of this MD&A and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no
assurance that forward- looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking
statements. 
 GENERAL 
 The Company was incorporated
under the laws of Alberta on November 22, 1983, and is listed on the TSX Venture Exchange (the “Exchange”) as a Tier 2 life science issuer under the trading symbol “IPA”. The Company’s OTC symbol is “IPATF”.
The address of the Company’s corporate office is 3204 – 4464 Markham Street, Victoria, BC V8Z 7X8. 
 OVERVIEW 

ImmunoPrecise is a leading, global, technology platform company with full service,
end-to-end solutions that empower pharmaceutical companies across the globe to discover, develop, optimize, engineer and manufacture treatments against any disease. The
Company’s experience, cutting-edge technologies and focus on intense scientific rigor enables unparalleled support of its partners in their quest to bring innovative treatments to the clinic. 

  
 1 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
With ImmunoPrecise’s industry-leading technologies, fully integrated project management team and software, and one-stop service offerings, the Company
dramatically reduces the time required for, and the inherent risk associated with, conventional multi-vendor product development. 
 The Company has gained
global recognition as a leader in antibody discovery and development. They have achieved organic growth through market penetration and service diversification, as well as accretive growth through strategic expansion, acquiring and integrating the
most innovative technologies from across the globe. ImmunoPrecise houses a streamlined and exceptionally comprehensive capabilities platform in biologics discovery, development and manufacturing to enable an unparalleled single-vendor approach. 

ImmunoPrecise boasts a highly experienced executive team which was further expanded this fiscal year, adding Dr. Stefan Lang (formerly of Aldevron and
Genovac) and Dr. Yasmina Abdiche (formerly of Carterra and Pfizer-Renat). 
 The Company has standardized and unified global activities, recognizing
cost synergies and centralizing oversight to maximize transparency and financial gains. The departments of marketing, sales, project management, business development, finance and IT are now centralized and uniformly serve all of the subsidiaries to
ensure consistent messaging, quality and accuracy of information. 
 Operations 

IPA’s services include, but are not limited to, custom antigen modeling, design and manufacturing; proprietary B cell sorting, screening and sequencing;
custom, immune and naïve phage display production and screening; hybridoma production with multiplexed, high-throughput screening and clone-picking; expertise with transgenic animals and multi-species antibody discovery; antibody
characterization studies such as affinity measurements, functional assays and epitope mapping and binning; bi-specific, tri-specific, VHH, and VNAR (shark) antibody
manufacturing; DNA synthesis and cloning, protein and antibody downstream processing with purification of protein in gram scale levels including characterization and validation; antibody engineering; transient and stable cell line generation;
antibody optimization and humanization; and cryopreservation. 
 The Company continues to expand on its approximate twelve years of expertise in single B
cell interrogation, offering full-service B cell screening, sorting and sequencing at IPA Canada. This service is available against all classes of targets including complex proteins, small molecules and various chemical groups. The Company’s
platforms enable antibody screening directly from B cells, facilitating the analysis of a more diverse set of antibodies, and for faster, deeper screening compared to traditional technologies. The Company announced an over 90% success rate on its B
cell technology, which is offered with a success guarantee. 
 IPA Canada and IPA Europe have both been designated as approved CROs for the world’s
leading, transgenic animal platforms producing human antibodies. Leveraging this opportunity, the Company made strategic investments in R&D activities to develop proprietary technologies enabling the application of their B cell SelectTM and DeepDisplayTM platforms to a broad range of transgenic animal species and strains. 

IPA Europe’s contribution in services and intellectual property to the Company are substantial. The integration of IPA Europe significantly expanded the
Company’s services portfolio including affinity maturation, humanization, functional assay design and development, naïve and diseased scFv libraries, and proprietary methods of immunization against conformational targets (e.g. ModiVaccTM lymphoid tumor immunization and DNA immunization technologies). Using the discovery technologies of ModiFuseTM (hybridoma electrofusion),
ModiSelectTM (B-cell selection) and ModiPhageTM (phage display) technologies, IPA Europe can
generate very large panels of monoclonal antibodies from various backgrounds including mouse, rat, rabbit, chicken, llama and human, as well as transgenic animals harboring the human antibody gene repertoire. Adding to their proprietary 

  
 2 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
services, IPA Europe developed and rolled-out the aforementioned DeepDisplay service for the discovery of fully human antibodies using transgenic animal
immunization and custom phage display. 
 U-Protein Express (UPE) has been a staple in the recombinant protein
community, operating for close to 20 years, and specializing in the manufacture of complex proteins and antibodies in a variety of formats and from a range of mammalian cell types. Their streamlined and efficient operations have enabled them to
successfully support over 5,000 different programs, with an over 90% success rate, for pharmaceutical and biotechnology industries as well as leading, academic institutions. In a seamless coordination, their operations also support the downstream
expression and purification of antibodies originating from the Company’s B cell Select programs, enabling validation of the platform’s outputs and comprehensive deliverables for clients. 

UPE holds a global, exclusive license from Stanford University for the marketing and sales of the novel protein, Wnt surrogate Fc, used as a growth factor for
organoid culture. In addition, they hold a non-exclusive distributor agreement for this protein with major players in the study of organoid biology. 

While the Company has strategically reduced overhead by eliminating much of its non-wet lab footprint, eliminating
substantial square footage dedicated to offices and gathering spaces, it has continued to invest significantly in ROI-generating capacity, committing to new laboratory build outs and equipment purchases to
support its continued, aggressive growth. In January 2020, UPE signed a long-term lease contract for a new multi-tenant building for life sciences at the Utrecht Science Park (Utrecht, The Netherlands) alongside important stakeholders such as Genmab
and Merus. Furthermore, along with SGI- DNA, Inc., IPA announced that UPE integrated SGI-DNA’s benchtop automated DNA printer, making IPA the first CRO in Europe to
integrate the BioXpTM 3200 System in its workflow as a part of the Company’s vision for adopting breakthrough technologies in the discovery and manufacturing of antibodies. IPA aims to
positively impact their manufacturing capacities by converting the antibody design-synthesis-screening timeline from weeks and months down to days, providing clear advantages to their partners. 

Talem Therapeutics 
 Talem Therapeutics
(“Talem”) oversees and houses the internal and partnered therapeutic pipeline for the Company. Talem offers strategic partnerships with pharma and biotech companies and is the only company to offer these services as a partnership in OmniAb® transgenic animals using their own license. The Company has leveraged several of its progressive technologies to discover novel therapeutics for its pipeline using Ligand’s OmniRat strains.

 Talem’s pipeline is indication agnostic and has expanded to include single monoclonal antibody therapeutics, combination antibody therapies and
vaccines. Their therapies target a variety of diseases within the areas of immuno-oncology, cancer, autoimmunity, inflammation and COVID. 
 The Company is
in a unique position to access the highly effective discovery platforms and end-to-end services that are used to successfully generate therapeutic pipelines for leading
biotech and pharmaceutical companies, at a fraction of the cost to the Company. Talem also has a distinct advantage in accessing the decades of experience in antibody therapeutic design, discovery and development at each of IPA’s subsidiaries,
while also drawing on the clinical and commercial experience of the executive management team, in a consolidated and focused effort. 
 Talem Therapeutics
entered into a research license agreement with Janssen Research & Development. The agreement, which provided Janssen exclusive access to a panel of novel, monoclonal antibodies, is anticipated to be the first of many out-licensing deals. The financial details of the transaction were not disclosed at the request of Janssen. 

  
 3 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 In February 2020, IPA announced its commitment to developing innovative vaccines and therapeutics against the
SARS- CoV-2 spike protein, using their proprietary discovery platforms in an exceptionally broad, global campaign. The Company’s objective was further clarified in March, when IPA defined their PolyTopeTM approach, utilizing highly characterized protein and antibody combinations targeting multiple epitopes and mechanisms of virus evasion. This approach is designed to provide maximum clinical benefit
against both current and future variants and strains of the virus by combining well-defined and fully characterized, protective antibodies (for therapeutics) and epitopes (for vaccines). The Company’s use of high- throughput binding assays,
computational optimization (ArtemisTM), and protein interaction analyses has yielded valuable data sets for informed preclinical lead selection. 

The aggressive advancement of Talem’s pipeline is a key priority for IPA, and the Company expects to complete multiple commercial deals in Talem
Therapeutics fiscal year 2021. 
 STRATEGY AND OUTLOOK 

Our management team has a passionate emphasis on initiatives designed to drive revenue, bolster internal assets and maximize shareholder value. We aim to
continue to build on revenue and asset generation through internal development and well-informed, strategic acquisitions and joint ventures. Our strategy also includes growth through alliances and partnerships, within both our research (Talem) and
service sectors, as well as potential new market sectors. 
 Operations 

Our objective is to continue to aggressively expand our market share as we assist our partners with building their pipelines, expanding the volume and size of
projects with our partners, and on-boarding new clients by actively introducing them to the benefits of extensive vendor consolidation, the routinely high success rates of our programs and fast turnaround
times. We continue to possess a competitive advantage with our integrated end-to-end platform, coupled with a strong, scientific
know-how, enabling us to navigate our partners through the process of discovery, development and manufacturing. Our ability to customize programs, yet maintain scientific rigor, enables our clients to
access our global portfolio of services with confidence. Our personable and responsible global project management team and unified software ensures that our clients have program details at their fingertips, at any minute, in any time zone,
with the security measures needed to ensure our clients’ peace of mind. 
 Talem Therapeutics 

Our strategy is supported by growing trends in pharma and finance. Global pharmaceutical companies are continuing to increase their share of reliance on
CRO’s to improve the efficiency and cost of development, increase turnaround time, and access advanced and integrated expertise. When analyzing pharmaceutical outsourcing trends, from October 2019, several major drivers of the CRO industry
growth were identified, including robust biopharmaceutical funding, accelerated drug approval rates, the growing number of clinical trials, and proliferation of biopharmaceutical companies without internal research and clinical capabilities1. 
 In an attempt to streamline, many large pharmaceutical companies are limiting the number of external
CRO vendors that can be contracted. This is particularly promising for those CROs that fill multiple niches in the discovery and manufacturing pipeline. In a recent estimate, the CRO industry alone was estimated to be $30 billion USD, and
“highly fragmented... relatively few of full scale and breadth of service”1. 

The key players serving the monoclonal antibodies market are Pfizer, GlaxoSmithKline, Novartis, Merck & Co., Amgen, Abbott Laboratories, AstraZeneca,
Eli Lilly and Company, Mylan, Daiichi Sankyo Company, 

  
 4 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
Bayer, Bristol Myers Squibb Co., Johnson & Johnson Services, Biogen, Thermo Fisher Scientific, Sanofi Genzyme, F. Hoffmann-La Roche, and Novo
Nordisk2. In 2016 alone, Novartis invested 9 billion USD and Pfizer invested 7.9 billion USD in R&D3. This is of little surprise
given the global monoclonal antibody market was valued at USD 85.4 billion in 2015 and is expected to reach a value of USD 138.6 billion by 20242. 

Ongoing, growing investments by pharma in R&D are expected to ramp up for antibodies given the rising prevalence of cancer and other chronic diseases4. In oncology, antibodies are viewed as the mainstay, as people move away from other types of therapies such as small molecules5. In recent years,
the success of key pipeline drugs in the immuno-oncology space have been a key component of the record high capital market funding for the biotechnology sector1. 

ACQUISITION OF U-PROTEIN EXPRESS 

On August 22, 2017, the Company completed the acquisition of U-Protein Express BV (“U-Protein”) whereby
the Company has acquired all the issued and outstanding shares of U-Protein for €6,830,000 on terms as follows: 
  

	 	•	 	 €2,734,732 (CAD$4,062,607) was paid in cash on closing; 

 

	 	•	 	 3,030,503 common shares of the Company were issued on closing; and 

 

	 	•	 	 €2,047,634 in deferred payments over a three-year period. The deferred payments can be made in cash or
common shares of the Company at the election of U-Protein shareholders. 

 The transaction was
accounted for as a business combination, as the operations of U-Protein meet the definition of a business. As a result, transaction costs of $17,717 were expensed. The goodwill resulting from the allocation of
the purchase price to the total fair value of net assets represented the sales and growth potential of U-Protein. Goodwill recorded is allocated in its entirety to
U-Protein. 
 The first deferred payment of €682,545 (CAD$1,049,754) has been made in cash during the year
ended April 30, 2019, and the second deferred payment of €682,545 (CAD$1,007,435) has been made in cash during the year ended April 30, 2020. 

The fair value of the 3,030,503 common shares issued ($3,022,308) was determined based on the Canadian dollar equivalent of the consideration required of
€2,047,634 pursuant to the share purchase agreement. The Company has allocated the purchase price as follows: 
  

	1 	 Healthcare Insights Life Sciences, CRO Sector Fundamentals Remain Hot for M&A Consolidation,
October 3, 2019. 

	2 	 Monoclonal Antibodies (mAbs) Market Size Worth $138.6 Billion By 2024, Nov. 2016 

	3 	 Monoclonal Antibody Market 2019-2025 Growth, Key Players, Size, Demands and Forecasts, April, 2019

	4 	 Research Antibodies Market Size, Share & Trends Analysis Report By Product, By Type (Monoclonal,
Polyclonal), By Technology, By Source, By Application (Oncology, Neurobiology), By End-use, And Segment Forecasts, 2018 – 2025, March, 2018 

	5 	 GEN, Antibody Discovery Looks Over the Horizon, Feb. 7, 2019. 

  
 5 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

					
	 	  	$	 
	 Cash
	  	 	4,062,607	 
	 3,030,503 common shares of the Company
	  	 	3,022,308	 
	 Fair value of deferred payments
	  	 	2,134,410	 
		  	  
	  
	 
	 Fair value of consideration
	  	 	9,219,325	 
		  	  
	  
	 
	 Cash
	  	 	797,276	 
	 Amounts receivable
	  	 	370,530	 
	 Unbilled revenue
	  	 	112,815	 
	 Inventory
	  	 	36,900	 
	 Investment
	  	 	90,404	 
	 Equipment, net of accumulated amortization
	  	 	216,161	 
	 Intellectual property (not deductible for tax purposes)
	  	 	4,064,000	 
	 Goodwill (not deductible for tax purposes)
	  	 	4,655,893	 
	 Accounts payable and accrued liabilities
	  	 	(269,657	) 
	 Income taxes payable
	  	 	(44,197	) 
	 Deferred income tax liability
	  	 	(810,800	) 
		  	  
	  
	 
		  	 	9,219,325	 
		  	  
	  
	 

 ACQUISITION OF IPA EUROPE AND IMMULEASE 

On April 5, 2018, the Company acquired all of the issued and outstanding shares of ImmunoPrecise Antibodies (Europe) B.V. (“IPA Europe”) and its
sister entity, Immulease B.V. (“Immulease”), for an aggregate purchase price of €7,000,000 on terms as follows: 
  

	 	•	 	 €2,500,000 (CAD$3,988,132) was paid in cash on closing; 

 

	 	•	 	 6,600,399 common shares of the Company were issued on closing; and 

 

	 	•	 	 €2,000,000 in deferred payments over a three-year period. The deferred payments were to be made in three
equal installments of cash and equity totaling €666,666 and prorated if the EBITDA of IPA Europe for the fiscal year preceding the date of payment is less than its average EBITDA over the previous two fiscal years. During the year ended
April 30, 2019, the Company and the seller entered into an Amendment, a Termination and Settlement Agreement whereby the deferred payments shall no longer be subject to an adjustment and will be paid in equal installments of cash and equity
totaling €666,666. 

 IPA Europe changed its name from ModiQuest Research B.V. in April 2019. 

The transaction was accounted for as a business combination, as the operations of IPA Europe and Immulease meet the definition of a business. As a result,
transaction costs of $36,821 were expensed. The goodwill resulting from the allocation of the purchase price to the total fair value of net assets represented the sales and growth potential of IPA Europe. Goodwill recorded is allocated in its
entirety to IPA Europe. 
 The first deferred payment of €666,666 (CAD$1,014,503), consisting of cash of €333,333 (CAD$507,000) and common shares
of the Company with a fair value of $507,503, has been made during the year ended April 30, 2019. The second deferred payment, consisting of cash of €335,555 (CAD$518,533) and common shares of the Company with a fair value of $511,406, has
been made subsequent to the year ended April 30, 2020. 
 The fair value of the 6,600,399 common shares issued ($4,884,295) was determined to be $0.74
per share based on the fair value of the Company’s shares immediately prior to the completion of the acquisition. The Company has allocated the purchase price as follows: 

  
 6 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

					
	 	  	$	 
	 Cash
	  	 	3,988,132	 
	 6,600,399 common shares of the Company
	  	 	4,884,295	 
	 Fair value of deferred payments
	  	 	2,353,708	 
		  	  
	  
	 
	 Fair value of consideration
	  	 	11,226,135	 
		  	  
	  
	 
	 Cash
	  	 	270,339	 
	 Amounts receivable
	  	 	572,427	 
	 Unbilled revenue
	  	 	90,052	 
	 Inventory
	  	 	2,286,995	 
	 Equipment, net of accumulated amortization
	  	 	568,221	 
	 Software
	  	 	30,974	 
	 Intangible assets (not deductible for tax purposes)
	  	 	6,304,863	 
	 Goodwill (not deductible for tax purposes)
	  	 	3,640,671	 
	 Accounts payable and accrued liabilities
	  	 	(580,339	) 
	 Deferred revenue
	  	 	(22,897	) 
	 Loans
	  	 	(298,979	) 
	 Deferred income tax liability
	  	 	(1,636,192	) 
		  	  
	  
	 
		  	 	11,226,135	 
		  	  
	  
	 

 During fiscal year 2020, the Company reviewed the cost of the acquired phage libraries and identified the need to create an
additional human phage library. This resulted in bifurcating the cost of the phage library into the costs to develop the proprietary process to create a phage library and the cost of the phage library acquired (Inventory). Accordingly, a
reclassification was made between Inventory and Proprietary Processes of $1,815,395. 
 SELECTED ANNUAL INFORMATION 

The following is a summary of certain selected financial information of the Company for the years ended April 30, 2020, 2019 and 2018. 

 

													
	 	  	2020	 	  	2019	 	  	2018	 
	 	  	$	 	  	$	 	  	$	 
	 Revenue
	  	 	14,057,927	 	  	 	10,926,268	 	  	 	5,441,349	 
	 Expenses
	  	 	(18,611,325	) 	  	 	(17,449,222	) 	  	 	(10,370,556	) 
	 Net (loss) earnings
	  	 	(4,947,426	) 	  	 	(7,617,467	) 	  	 	(5,171,103	) 
	 Total assets
	  	 	27,263,121	 	  	 	28,462,898	 	  	 	24,575,440	 
	 Total liabilities
	  	 	(12,177,282	) 	  	 	(10,393,823	) 	  	 	(11,872,490	) 
	 Dividends declared
	  	 	Nil	 	  	 	Nil	 	  	 	Nil	 
	 Earnings (loss) per share
	  	 	(0.07	) 	  	 	(0.12	) 	  	 	(0.11	) 

 During fiscal year 2020, the Company reviewed the cost of the acquired phage libraries and identified the need to create an
additional human phage library. This resulted in bifurcating the cost of the phage library into the costs to develop the proprietary process to create a phage library and the cost of the phage library acquired (Inventory). Accordingly, a
reclassification was made between Inventory and Proprietary Processes resulting in an increase in the cost of the Proprietary Processes by $1,809,518 as at April 30, 2019. 

  
 7 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 OVERALL PERFORMANCE 

The Company’s continued focus on identifying and onboarding new clients seeking the breadth and depth of the end- to-end services offered, combined with continued growth to core existing client business, led to increases in both volume and financial value of contracts during the year ended April 30, 2020. As a result,
revenues of $14,057,927 were achieved compared to revenues of $10,926,268 in the 2019 fiscal year, a 29% increase in revenue for the year. 
 Revenue
outlook remains positive for the first quarter of the 2021 fiscal year. 
 Adjusted EBITDA for the year ending April 30, 2020 was $52,311. This is a
significant improvement from the adjusted EBITDA of ($ 2,849,474) for the 2019 fiscal year. The improvement is a result of the increase in revenue and higher gross profit compared to the prior year. Adjusted EBITDA is a non-IFRS measure which is fully defined on page ten of this document. 
 To drive the execution of its strategic and
growth initiatives, the Company continues to focus on the recruitment of scientific and technical staff, development of new technical training programs and a commitment to integrate continuous improvement and quality management methodologies. 

To support management and the Board of Directors in exercising oversight, the Company is implementing information systems for marketing and sales automation
and customer relationship management, as well as accounting and financial reporting, resource planning and project management. Comprehensive operational and management reporting capabilities are being implemented with a view to effectively support a
geographically dispersed organization allowing managers access to company data globally. 
 With the aid of a third-party HR consulting firm, significant
effort was applied to strengthening and aligning the Company’s human resources by: 
  

	 	•	 	 Stabilizing staffing for sales growth going forward: Remuneration and incentive systems have been
aligned with targeted revenue and gross profit performance, and operational roles and responsibilities have been focused on managing demand. 

  

	 	•	 	 Leadership and operational alignment: The Company has made changes and updated job descriptions,
compensation plans, and other reward and recognition systems, and is implementing career planning and development mechanisms and job performance and quality measures. 

Future growth will provide opportunities for company personnel to develop new skills and abilities to tackle eventual challenges in a growing company. 

In the 2021 fiscal year, the goal of the organization is to grow sales revenue and expand our brand awareness. This focus is consistent with the ‘leading
with our scientists’ philosophy, which is resonating with our clients from both diagnostic and, in particular, the therapeutic market segment. The Company is also expanding its commitment to research and development initiatives aimed at
introducing new services through both internal development as well as through partnerships. To achieve the best results from its investments, the Company continues to add key scientific and management personnel to its team. 

RESULTS OF OPERATIONS 
 The Company achieved revenues of
$14,057,927 during the year ended April 30, 2020, compared to revenues of $10,926,268 in the 2019 fiscal year. This represents a 29% increase in revenue for the year. The increasing revenue trend is due to increases in both volume and financial
values of client contracts as a result of continued 

  
 8 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
focus on expanding the breadth and depth of services offered, new client onboarding including top pharma companies, and growing its core existing client business. 

During the year ended April 30, 2020, the Company achieved a gross profit of $8,033,984, compared to $5,294,634 in the 2019 fiscal year. In percentage
terms, the Company’s gross profit increased to 57% from 48% in 2019. The higher gross profit in 2020 was primarily a result of the Company implementing a new ERP system that tracks project costs in more detail than historical methods. 

The Company recorded a net loss of $4,947,426 during the year ended April 30, 2020, compared to net loss of $7,617,467 for the year ended April 30,
2019. Despite $2,739,350 higher gross profit as well as cost synergies resulting in lower spend, there was still a net loss in 2020 primarily due to increase in investments in research and development and
non-cash amortization of acquired companies’ intangible assets, depreciation of leased assets as a result of implementing IFRS 16, Leases. 

Variances of note in the Company’s expenses include: 
  

	 	•	 	 Advertising and promotion fees of $377,728 in 2020 (2019 - $819,250) were incurred to support the Company’s
initiatives focused on business development, marketing and branding programs. 

  

	 	•	 	 Amortization expense increased to $2,573,009 from $1,875,907 in 2019 due to the amortization of intangible assets
which were acquired as a result of the acquisitions of U-Protein and IPA Europe. 

  

	 	•	 	 Consulting fees of $227,036 in 2020 (2019 - $452,196) and professional fees of $883,623 (2019 - $985,557) were
lower because 2019 consultant and professional services were engaged to support one-time initiatives focused on operational efficiency training programs, systems implementation and integration of acquisitions.
The Company evaluated the use of consulting services vs employees and where appropriate added employees to the team. 

  

	 	•	 	 $493,278 of the management fees were attributed to the profit-sharing payout made to the former shareholders of U-Protein, as part of the acquisition agreement. The profit-sharing payout is a three-year, annual obligation, with declining percentage of profit sharing. After fiscal year 2021, the profit-sharing payout for U-Protein will cease and the Company will be under no further obligations to share profits with the former shareholders of U-Protein. 

 

	 	•	 	 Salaries and benefits expense increased to $4,619,189 from $3,503,259 in 2019, primarily due to the additions of
key employees to the team instead of utilizing consultants. 

  

	 	•	 	 The Company recorded a share-based payments expense of $739,011 (2019 - $1,114,112) as a result of the vesting of
the stock options granted during the current and previous fiscal years versus more stock options vested during the April 30, 2019 fiscal year. The option plan is aimed to align staff to the future company growth plans. 

FOURTH QUARTER 
 Three-month period ended April 30,
2020 compared to the three-month period ended April 30, 2019: 
 The Company had a net loss for the three-month period ended April 30, 2020 of
$954,016 compared to a net loss of $3,842,317 for the same period in 2019. The higher loss in the quarter ended April 30, 2019 resulted from the Company’s investment in growth enabling initiatives and
catch-up amortization recorded of intangible assets which were acquired as a result of the acquisitions of U-Protein and IPA Europe. 

  
 9 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 SUMMARY OF QUARTERLY RESULTS 

The following table sets out financial information for the past eight quarters: 
  

																	
	 	  	Three Months Ended ($)	 
	 	  	April 30,
2020	 	  	January 31,
2020	 	  	October 31,
2019	 	  	July 31,
2019	 
	 Total revenue
	  	 	4,145,023	 	  	 	4,034,440	 	  	 	3,162,365	 	  	 	2,716,099	 
	 Net loss
	  	 	(945,846	) 	  	 	(625,837	) 	  	 	(1,363,545	) 	  	 	(2,012,198	) 
	 Basic and diluted loss per share*
	  	 	(0.01	) 	  	 	(0.01	) 	  	 	(0.02	) 	  	 	(0.03	) 
		
	 	  	Three Months Ended ($)	 
	 	  	April 30,
2019	 	  	January 31,
2019	 	  	October 31,
2018	 	  	July 31,
2018	 
	 Total revenue
	  	 	2,641,109	 	  	 	2,695,583	 	  	 	2,716,791	 	  	 	2,872,785	 
	 Net (loss)
	  	 	(3,842,317	) 	  	 	(1,187,056	) 	  	 	(1,485,732	) 	  	 	(1,102,362	) 
	 Basic and diluted loss per share*
	  	 	(0.06	) 	  	 	(0.02	) 	  	 	(0.02	) 	  	 	(0.02	) 

  

	*	 The basic and fully diluted calculations result in the same value due to the anti-dilutive effect of
outstanding stock options and warrants. 

 NON-IFRS MEASURES 

The following are non-IFRS measures and investors are cautioned not to place undue reliance on them and are urged to
read all IFRS accounting disclosures present in the consolidated financial statements and accompanying notes for the consolidated financial statements for the year ended April 30, 2020. 

The Company uses certain non-IFRS financial measures as supplemental indicators of its financial and operating
performance. These non-IFRS financial measures include adjusted operating EBITDA and adjusted operating expenses. The Company believes these supplementary financial measures reflect the Company’s ongoing
business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in its business. These
non-IFRS measures do not have any standardized meaning prescribed under IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. 

The Company defines adjusted operating EBITDA as operating earnings before interest, taxes, depreciation, amortization, share-based compensation, and asset
impairment charges. Adjusted operating EBITDA is presented on a basis consistent with the Company’s internal management reports. The Company discloses adjusted operating EBITDA to capture the profitability of its business before the impact of
items not considered in management’s evaluation of operating unit performance. 
 The Company defines adjusted operating expenses as operating expenses
before share-based compensation, depreciation, amortization and asset impairment charges. Adjusted operating expenses are presented on a basis consistent with the Company’s internal management reports. The
non-IFRS measures are reconciled to reported IFRS figures in the tables below: 

  
 10 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

									
	 	  	April 30,
2020
$	 	  	April 30,
2019
$	 
	 Net loss
	  	 	(4,947,426	) 	  	 	(7,617,467	) 
	 Income taxes (recovery)
	  	 	(345,728	) 	  	 	4,788	 
	 Amortization and depreciation expense
	  	 	3,408,347	 	  	 	2,263,284	 
	 Accretion
	  	 	899,731	 	  	 	904,925	 
	 Foreign exchange loss (gain)
	  	 	(78,148	) 	  	 	(117,506	) 
	 Interest expense
	  	 	536,499	 	  	 	413,590	 
	 Interest and other income
	  	 	(272,006	) 	  	 	(30,085	) 
	 Loss on settlement
	  	 	112,031	 	  	 	214,885	 
	 Share-based payments
	  	 	739,011	 	  	 	1,114,112	 
		  	  
	  
	 	  	  
	  
	 
	 Adjusted EBITDA
	  	 	52,311	 	  	 	(2,849,474	) 
		  	  
	  
	 	  	  
	  
	 
			
	 	  	April 30,
2020
$	 	  	April 30,
2019
$	 
	 Operating expenses
	  	 	(12,587,382	) 	  	 	(11,817,588	) 
	 Amortization and depreciation expense
	  	 	2,573,009	 	  	 	2,263,284	 
	 Foreign exchange loss (gain)
	  	 	(78,148	) 	  	 	(117,506	) 
	 Interest expense
	  	 	536,499	 	  	 	413,590	 
	 Share-based payments
	  	 	739,011	 	  	 	1,114,112	 
		  	  
	  
	 	  	  
	  
	 
	 Adjusted Operating Expenses
	  	 	(8,817,011	) 	  	 	(8,144,108	) 
		  	  
	  
	 	  	  
	  
	 

 FINANCING ACTIVITIES 
 On
May 23, 2018, the Company entered into a loan agreement with a Director of the Company and his spouse and issued a promissory note in the principal amount of $200,000. The note was unsecured and bore an interest rate of 5.45% per annum. The
principal of the note plus accrued interest of $3,972 was repaid in full during the year ended April 30, 2019. 
 On June 19, 2018, the Company
closed a non- brokered private placement financing by issuing a total of 875,000 units of the Company at a price of $0.80 per unit for gross proceeds of $700,000. Each unit consists of one common share of the
Company and one share purchase warrant, with each warrant entitling the holder to purchase an additional Share at a price of $1.00 for a period of one year from the date of issue. The Company will have the right to accelerate the expiry date of the
warrants provided that the volume weighted average price trades at a price equal to or greater than $1.50 for a period of 20 consecutive days. In the event of acceleration, the expiry date will be accelerated to a date that is 30 days after the
Company issues a news release announcing that it has elected to exercise this acceleration right. The Company paid finders cash fees totaling $3,000 and incurred $7,926 of cash issue costs. The Company extended the warrants for an additional twelve
months from the original expiry. 
 On September 24, 2018, the Company closed a non-brokered private placement
financing by issuing a total of 9,102,500 units of the Company at a price of $1.00 per unit for gross proceeds of $9,102,500. Each unit consists of one common share of the Company and one share purchase warrant, with each warrant entitling the
holder to purchase an additional share at a price of $1.25 for a period of two years from the date of issue. The Company will have the right to accelerate the expiry date of the warrants provided that the volume weighted average price trades at a
price equal to or greater than $1.75 for a period of 20 consecutive days. In the event of acceleration, the expiry date will be accelerated to a date that is 30 days after the Company issues a news release announcing

  
 11 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
that it has elected to exercise this acceleration right. The Company also proceeded with a Debenture Settlement of $1,377,000 by issuing up to 1,377,000 Units at a price of $1.00 per Unit (the
“Debt Settlement”). Each Unit is on the same terms as the Financing. The Company paid finders cash fees totaling $201,540 and issued 182,460 finder’s shares. The Company also incurred $76,038 of cash issue costs. 

On December 22, 2017, the Company announced that it had signed a binding letter of intent with Crossbeta Biosciences B.V. (“Crossbeta”) whereby
the Company had agreed to acquire all the issued and outstanding shares of Crossbeta. The proposed transaction was terminated and settled on October 23, 2018. In consideration of the settlement, the Company paid €37,000 ($55,969) and
issued 78,514 shares valued at $61,241. The Company accrued a settlement liability of $92,040 as at April 30, 2018. As such, the remaining loss on settlement of $25,170 was recognized in fiscal year 2019. 

On March 27, 2019, the Company issued 714,793 common shares pursuant to the second deferred acquisition payment to IPA Europe. The common shares are
valued at $507,503. 
 During the year ended April 30, 2019, the Company issued 135,000 common shares pursuant to exercise of stock options for total
gross proceeds of $40,500. 
 On September 26, 2019, the Company modified the terms of $2,750,000 debentures to extend the due date by 6 months to
March 26, 2020, with the ability to pay earlier with no penalty, and increased the interest rate to 12.5%. The remaining debentures of $125,000 were paid on maturity. 

On March 26, 2020, the Company settled $700,000 of the $2,750,000 debentures plus accrued interest of $46,875 by issuing 1,244,792 common shares. The
fair value of the 1,244,792 common shares issued was determined to be $858,906. The settlement resulted in a loss of $112,031. $50,000 of the Debentures were paid on maturity. The maturity date of the remaining debentures of $2,000,000 was extended
to September 26, 2020. The Company repaid the remaining balance of $2,000,000 plus interest subsequent to year-end. 

On April 15, 2020, the Company was approved for a US$209,000 loan under the Payroll Protection Program (“PPP”) administered by the U.S. Small
Business Administration. The PPP is a US$349 billion loan program that originated from the U.S. Coronavirus Aid, Relief and Economic Security (CARES) Act. The PPP loan has a term of two years, is unsecured, and is guaranteed by the U.S. Small
Business Administration. The loan will be forgiven if the proceeds are used by the Company to cover payroll costs (including benefits), with up to 25% allowed for rent and utilities, during the eight-week period following the loan origination date.
The Company expects to meet the requirements for full loan forgiveness. 
 During the year ended April 30, 2020, the Company issued 55,000 common
shares pursuant to exercise of stock options for total gross proceeds of $16,500. 
 During the year ended April 30, 2020, the Company issued 680,971
common shares pursuant to exercise of warrants for total gross proceeds of $476,679. 
 On May 15, 2020, the Company closed a non-brokered private placement financing by issuing 10% convertible debentures (“New Debentures”) for total proceeds of $2,592,000. On May 27, 2020, the Company issued an additional $35,000 of the 10%
New Debentures. In total, the Company issued $2,627,000 of the New Debentures. The New Debentures are unsecured, bear interest at a rate of 10% per year and payable annually. The maturity date is May 15, 2022 for $2,592,000 of the New
Debentures and May 22, 2022 for $35,000 of the New Debentures. The principal amount of the New Debentures may be convertible, at the option of the holder, into units of the Company at a conversion price of $0.85 per share. The Company may force
convert the principal amount of the New Debentures at $0.85 per share if the average closing price is equal to or greater than $1.50 for 20 trading days. The Company paid finders cash commissions totaling $44,750.

  
 12 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
Subsequent to April 30, 2020, the Company issued 332,500 common shares pursuant to exercise of stock options for total gross proceeds of $252,725. 

Subsequent to April 30, 2020, the Company issued 3,428,000 common shares pursuant to exercise of warrants and finder’s warrants for total gross
proceeds of $3,666,400. 
 LIQUIDITY AND CAPITAL RESOURCES 

The Company’s objectives when managing capital are to ensure sufficient liquidity for operations and adequate funding for growth and capital expenditures
while maintaining an efficient balance between debt and equity. The capital structure of the Company consists of shareholders’ equity. 
 The Company
adjusts to its capital structure upon approval from its Board of Directors, considering economic conditions and the Company’s working capital requirements. There were no changes in the Company’s approach to capital management during the
year. The Company is not subject to any externally imposed capital requirements. 
 As at April 30, 2020, the Company held cash of $2,605,706 (2019
– $5,471,650) and had working capital deficiency of $230,325 (2019 – $2,673,667). During the year ended April 30, 2020, the Company used $1,391,295 in its operating activities. As part of the investing activities, the Company made
equipment purchases of $373,753, made a deposit of $87,847 towards equipment, incurred internally generated development costs of $114,042, and made a deferred acquisition payment of $1,007,435. As part of the financing activities, the Company
received $493,179 from exercise of stock options and warrants, received debenture subscriptions of $313,268 and loan proceeds of $283,328, offset by lease repayments of $657,215, loan repayments of $82,859 and debenture repayments of $175,000. 

The Company’s consolidated financial statements have been prepared based on accounting principles applicable to a going concern. This assumes the Company
will continue in operation for the foreseeable future and will be able to realize its assets and discharge its obligations in the normal course of operations. The Company has incurred operating losses since inception, including $4,947,426 for the
year ended April 30, 2020 and has accumulated a deficit of $22,478,652 as at April 30, 2020. The Company may need to raise additional funds in order to continue as a going concern and there can be no assurances that sufficient funding,
including adequate financing, will be available. The ability of the Company to arrange additional financing in the future depends in part, on the prevailing capital market conditions and profitability of its operations. 

In March 2020, there was a global pandemic outbreak of COVID-19. The actual and threatened spread of the virus
globally has had a material adverse effect on the global economy and specifically, the regional economies in which the Company operates. The pandemic could result in delays in the course of business and could have a negative impact on the
Company’s ability to raise new capital. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or results of operations at this time. These
material uncertainties may cast significant doubt on the Company’s ability to continue as a going concern. Accordingly, the consolidated financial statements do not give effect to adjustments that would be necessary should the Company be unable
to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities, contingent obligations and commitments other than in the normal course of business and at amounts different from those in the consolidated
financial statements. 
 As at April 30, 2020, the Company does not have any commitments for capital expenditures. 

  
 13 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 CAPITAL EXPENDITURES 

The Company made equipment purchases of $373,753 during the year ended April 30, 2020 (2019 - $645,058). During the year ended April 30, 2020, the
Company also incurred internally generated development costs of $114,042. 
 RELATED PARTY TRANSACTIONS 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. Key
management consists of Dr. Jennifer Bath, President and CEO; Lisa Helbling, CFO; Dr. Stefan Lang, CBO; Dr. Yasmina Abdiche, CSO; and Former Employees: Natasha Tsai, CFO; Charles Wheelock, CTO; Reginald Beniac, Chief Operating Officer;
Oren Beske, President of ImmunoPrecise Antibodies (USA) Ltd.; Martin Hessing, Director of U-Protein; Jos Raats, President and CEO of IPA Europe; and Directors of the Company. During the years ended
April 30, 2020 and 2019, the compensation for key management is as follows: 
  

									
	 	  	2020
$	 	  	2019
$	 
	 Consulting fees
	  	 	—  	 	  	 	7,292	 
	 Management fees(1) 
	  	 	178,863	 	  	 	394,126	 
	 Professional fees(2) 
	  	 	—  	 	  	 	59,263	 
	 Salaries and other short-term benefits(3)

	  	 	2,052,465	 	  	 	995,855	 
	 Severance(5) 
	  	 	—  	 	  	 	87,500	 
	 Share-based payments
	  	 	632,279	 	  	 	770,928	 
		  	  
	  
	 	  	  
	  
	 
		  	 	2,863,607	 	  	 	2,314,964	 
		  	  
	  
	 	  	  
	  
	 

  

	(1)	 The charge includes management fees paid to Dr. Martin Hessing, a former Director of U-Protein and Dr. Jos Raats, former President and CEO of IPA Europe. 

	(2)	 The charge includes professional fees paid to Malaspina Consultants Inc. in which Natasha Tsai was an associate
until October 31, 2018 and an owner thereafter. 

	(3)	 The charge includes salaries and benefits paid to current key management and former management that includes
Robert Beecroft, Dr. Oren Beske and Reginald Beniac. 

	(4)	 The charge includes severance paid to Dr. Oren Beske and Reginald Beniac. 

At April 30, 2020, included in accounts payable and accrued liabilities is $412,188 (2019 - $nil) due to related parties. 

During the year ended April 30, 2020, the spouse of a former Director provided administrative services for $nil (2019 – $54,225). 

During the year ended April, 30, 2020, a company controlled by Martin Hessing, a former Director of U-Protein, sold
certain equipment to U-Protein for a cash consideration of €25,000. 
 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 the related parties, unless otherwise noted. 

  
 14 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 OUTSTANDING SHARE DATA 

The Company’s outstanding share information as at August 28, 2020 is as follows: 

 

													
	 Security
	  	Number	 	  	Exercise Price	 	  	Expiry date	 
	 Issued and outstanding common shares
	  	 	74,349,871	 	  	 	NA	 	  	 	NA	 
	 Stock options
	  	 	200,000	 	  	$	1.00	 	  	 	October 1, 2021	 
	 Stock options
	  	 	485,000	 	  	$	0.30	 	  	 	December 20, 2021	 
	 Stock options
	  	 	887,500	 	  	$	1.01	 	  	 	September 18, 2022	 
	 Stock options
	  	 	250,000	 	  	$	0.65	 	  	 	January 3, 2023	 
	 Stock options
	  	 	700,000	 	  	$	0.47	 	  	 	February 7, 2023	 
	 Stock options
	  	 	55,000	 	  	$	1.01	 	  	 	March 3, 2023	 
	 Stock Options
	  	 	250,000	 	  	$	1.50	 	  	 	August 13, 2023	 
	 Stock options
	  	 	95,000	 	  	$	0.95	 	  	 	September 24, 2023	 
	 Stock options
	  	 	100,000	 	  	$	0.82	 	  	 	November 7, 2023	 
	 Stock options
	  	 	1,250,000	 	  	$	1.00	 	  	 	December 31, 2023	 
	 Stock options
	  	 	300,000	 	  	$	0.76	 	  	 	January 7, 2024	 
	 Stock options
	  	 	15,000	 	  	$	1.00	 	  	 	January 11, 2024	 
	 Stock options
	  	 	250,000	 	  	$	0.76	 	  	 	April 1, 2024	 
	 Stock options
	  	 	250,000	 	  	$	0.475	 	  	 	October 1, 2024	 
	 Stock options
	  	 	150,000	 	  	$	0.50	 	  	 	October 3, 2024	 
	 Warrants
	  	 	7,381,500	 	  	$	1.25	 	  	 	September 24, 2020	 
	 Warrants
	  	 	1,262,000	 	  	$	1.25	 	  	 	October 25, 2020	 
	 Warrants
	  	 	5,385,971	 	  	$	0.70	 	  	 	March 26, 2022	 
		  	  
	  
	 	  				  			
	 Total
	  	 	93,616,842	 	  				  			

 OFF-BALANCE SHEET ARRANGEMENTS 

The Company does not utilize off-balance sheet transactions. 

COMMITMENTS 
 The Company entered into an operating lease
for a piece of equipment for its Victoria, BC, Canada laboratory space on April 29, 2020. The lease commenced on May 15, 2020 with a 36-month term. The monthly lease payment is USD$15,829. The
Company has a right to purchase the equipment at fair market value at the end of the lease term. 
 SUBSEQUENT EVENTS 

Subsequent to April 30, 2020, ImmunoPrecise Antibodies (USA) Ltd. and its subsidiary Talem Therapeutics, LLC (Subgrantee), was awarded a grant of
USD$1.5 million by the ND Department of Agriculture through the CARES Act ND Bioscience Group Program for the development of antibody therapeutics against SARS-CoV- 2. The total grant project cost is USD$2M for which the Subgrantee’s must
contribute an amount not less than 25% of the grant project cost or USD$500,000. The amount earned for the year ended April 30, 2020 of approximately USD$158,000 has been accrued and recorded in other income. 

  
 15 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 Subsequent to April 30, 2020, the Company made the second deferred payment pursuant to the acquisition
of IPA Europe and Immulease, by making a cash payment of €335,555 (CAD$518,533) and issuing 664,163 common shares of the Company with a fair value of $511,406. 

Subsequent to April 30, 2020 and on August 31, 2020, the Company issued 250,000 with an exercise price of $1.50 that vest 25% every three months
with an expiration date of August 13, 2023. 
 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 

The preparation of the consolidated financial statements in conformity with IFRS required estimates and judgments that affect the amounts reported in the
financial statements. Actual results could differ from these estimates and judgments. Estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised. Significant areas
requiring the use of estimates and judgments are as follows: 
 Functional currency 

The Company has used judgment in determining the currency of the primary economic environment in which the entity operates. 

Amounts receivable 
 The Company monitors the financial
stability of its customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade receivable balances will be paid. Credit risks for outstanding customer receivables are regularly assessed and
allowances are recorded for estimated losses, if required. 
 Equipment 

The Company has used estimates in the determination of the expected useful lives of equipment and leasehold improvements. 

Revenue recognition 
 The
percentage-of-completion method requires the use of estimates to determine the stage of completion which is used to determine the recorded amount of revenue, unbilled
revenue and deferred revenue on uncompleted contracts. The determination of anticipated revenues includes the contractually agreed revenue and may also involve estimates of future revenues if such additional revenues can be reliably estimated and it
is considered probable that they will be recovered. The determination of anticipated costs for completing a contract is based on estimates that can be affected by a variety of factors, including the cost of materials, labor, and sub-contractors. The determination of estimates is based on the Company’s business practices as well as its historical experience. 

Impairments 
 For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are separately identifiable cash flows (“cash generating units” or “CGU”s). Each asset or CGU is evaluated every reporting period to determine whether there are any
indicators of impairment. If any such indicators exist, which is often judgment-based, a formal estimate of recoverable amount is performed, and an impairment charge is recognized to the extent that the carrying amount exceeds the recoverable
amount. The recoverable amount of an asset or CGU of assets is measured at the higher of fair value less costs of disposal or value in use. These determinations and their individual assumptions require that management make a decision based on the
best available information at each reporting period. The estimates and assumptions are subject to risk and uncertainty; hence, there is the possibility that changes in circumstances will alter these projections, which may impact the recoverable
amount of the assets. In such circumstances, some or all the carrying value of the assets may be further impaired or the impairment charge reversed with the impact recorded in profit or loss. 

  
 16 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 The Company performs a goodwill impairment test annually and when circumstances indicate that the carrying
value may not be recoverable. For the purposes of impairment testing, goodwill acquired through business combinations has been allocated to two different CGUs. The recoverable amount of each CGU was based on value in use, determined by discounting
the future cash flows to be generated from the continuing use of the CGU. The cash flows were projected over a five-year period based on past experience and actual operating results. 

The Company performed its annual goodwill impairment test in April 2020 and no impairment was indicated for the period tested. The values assigned to the key
assumptions represented management’s assessment of future trends in the industry and were based on historical data from both internal and external sources. Weighted average costs of capital of 16.33% and 12.26%, respectively, was used in the
assessments of the two CGUs. 
 Determination of segments 

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses. All operating
segments’ results are reviewed by the Company’s management in order to make decisions regarding the allocation of resources to the segment. Segment results include items directly attributable to a segment as those that can be allocated on
a reasonable basis. 
 As the Company provides antibody production and related services in one distinct category, there is only one category to report
revenues by production site. 
 Life of intangible assets 

Intangible assets are amortized based on estimated useful life less their estimated residual value. Significant assumptions are involved in the determination
of useful life and residual values and no assurance can be given that actual useful lives and residual values will not differ significantly from current assumptions. Actual useful life and residual values may vary depending on a number of factors
including internal technical evaluation, attributes of the assets and experience with similar assets. Changes to these estimates may affect the carrying value of assets, net income (loss) and comprehensive income (loss) in future periods. 

Purchase price allocation 
 The acquisition of U-Protein on August 22, 2017 and the acquisition of IPA Europe and Immulease on April 5, 2018 were accounted for as business combinations at fair value in accordance with IFRS 3, Business
Combinations. The acquired assets and assumed liabilities were adjusted to their fair values assigned through completion of a purchase price allocation, as described below. 

The purchase price allocation process resulting from a business combination requires management to estimate the fair value of identifiable assets acquired
including intangible assets and liabilities assumed including the deferred acquisition payment obligations. The Company uses valuation techniques, which are generally based on forecasted future net cash flows discounted to present value and relies
on work performed by third-party valuation specialists. These valuations are closely linked to the assumptions used by management on the future performance of the related assets and the discount rates applied. 

ADOPTION OF NEW ACCOUNTING STANDARDS 
 The Company has
adopted the following new standards, along with any consequential amendments, effective May 1, 2019. These changes were made in accordance with the applicable transitional provisions. 

The Company adopted all the requirements of IFRS 16, Leases (“IFRS 16”) as of May 1, 2019. IFRS 16 replaces IAS 17, Leases
(“IAS 17”). IFRS 16 provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low

  
 17 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
value. The Company has adopted IFRS 16 using the modified retrospective application method, where the 2019 comparatives are not restated and a cumulative catch up adjustment is recorded on
May 1, 2019 for any differences identified, including adjustments to opening deficit balance. 
 The Company analyzed its contracts to identify whether
they contain a lease arrangement for the application of IFRS 16. The following is the Company’s new accounting policy for leases under IFRS 16: 
 At
inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. 
 Leases of right-of- use assets are recognized at the lease
commencement date at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, and otherwise at the Company’s
incremental borrowing rate. At the commencement date, a right-of-use asset is measured at cost, which is comprised of the initial amount of the lease liability adjusted
for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received. 
 Each
lease payment is allocated between repayment of the lease principal and interest. Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease
liability. Except where the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) the interest on a lease liability and (b) variable lease payments not included in the measurement of a
lease liability in the period in which the event or condition that triggers those payments occurs. The Company subsequently measures the right-of-use asset at cost less
any accumulated depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability. Right-of-use assets are depreciated over
the shorter of the asset’s useful life and the lease term, except where the lease contains a bargain purchase option a right-of-use asset is depreciated over the
asset’s useful life. 
 On the date of transition, the Company recorded a
right-of-use asset of $1,668,533 related to the office rent in property and equipment, and the lease obligation of $1,723,277 was recorded as at May 1, 2019,
discounted using the Company’s incremental borrowing rate of 8%, and measured at an amount equal to the lease obligation as if IFRS 16 had been applied since the commencement date. The net difference between right-of-use assets and lease liabilities on the date of transition was recognized as a deficit adjustment of $54,744 on May 1, 2019. 

ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE 
 In
October 2018, the IASB issued amendments to IFRS 3, Business Combinations. The amendments narrowed and clarified the definition of a business. The amendments will help companies determine whether an acquisition is a business or a group of assets.
They also permit a simplified assessment of whether an acquired set of activities and assets is a group of assets rather than a business. Distinguishing between a business and a group of assets is important because an acquirer recognizes goodwill
only when acquiring a business. This amendment will be effective for annual periods beginning on or after January 1, 2020. Early adoption is permitted. 

DISCLOSURE CONTROLS AND PROCEDURES 
 Disclosure controls
and procedures are intended to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported within the time periods specified by securities regulations and that the information required to
be disclosed is accumulated and communicated to management. Internal controls over financial reporting are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with IFRS. In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer’s Annual and Interim Filings)

  
 18 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 
(“NI 52-109”), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect
to the financial information contained in the consolidated financial statements for the year ended April 30, 2020 and this accompanying MD&A (together, the “Annual Filings”). 

In contrast to the full certificate under NI 52-109, the Venture Issuer Basic Certificate does not include
representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109. For further information the reader
should refer to the Venture Issuer Basic Certificates filed by the Company with the Annual Filings on SEDAR at www.sedar.com. 
 FINANCIAL INSTRUMENTS

 The Company’s financial instruments include cash, amounts receivable, restricted cash, investment, accounts payable and accrued liabilities,
debentures, loans payable, leases and deferred acquisition payments. 
 Fair value 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 fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value, by reference to the reliability
of the inputs used to estimate the fair values. 
 Level 1 - applies to assets or liabilities for which there are quoted prices in active markets for
identical assets or liabilities. 
 Level 2 - applies to assets or liabilities for which there are inputs other than quoted prices that are observable for
the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or
model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. 
 Level
3 - applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. 

The fair value of investment is determined based on “Level 2” inputs as its value under the equity method was the best approximation of its
fair value. As at April 30, 2020, the Company believes that the carrying values of cash, amounts receivable, restricted cash, accounts payable and accrued liabilities, debentures, loans payable, leases and deferred acquisition payments
approximate their fair values because of their nature and relatively short maturity dates or durations. 
 Concentration of risk: 

Industry 
 The Company operates in the contract research
organization sector and is affected by general economic trends. A decline in economic conditions, research spending or other adverse conditions could lead to reduced revenue. 

Concentrations of credit risk 
 Credit risk relates to
cash, restricted cash and amounts receivable and arises from the possibility that counterparty to an instrument may fail to perform. At April 30, 2020, all of the Company’s cash was held with tier one banks. The Company has evaluated
amounts receivable and determined that there were no allowances for doubtful accounts at April 30, 2020 and 2019. During the year ended April 30, 2020 the Company incurred bad debt expense of $48,433 (2019 - $1,837). 

  
 19 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 Currency risk 

The Company operates in the US and Europe which gives rise to exposure to market risks from changes in foreign currency values. Most significantly, the Company
is exposed to potential currency fluctuations between US and Canadian dollars, which was translated at 1.3556 at April 30, 2020, and the Euro and Canadian dollar, which was translated at 1.51039 at April 30, 2020. Fluctuations in the
exchange rate could impact profitability. 
 At April 30, 2020, the Company is exposed to currency risk through the following assets and liabilities
denominated in US dollars and Euros: 
  

									
	 	  	Euros
(€)	 	  	US Dollars
(US $)	 
	 Cash
	  	 	1,246,018	 	  	 	452,226	 
	 Amounts receivable
	  	 	752,224	 	  	 	906,428	 
	 Investment
	  	 	78,719	 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
		  	 	2,076,961	 	  	 	1,358,654	 
		  	  
	  
	 	  	  
	  
	 
	 Accounts payable and accrued liabilities
	  	 	(642,781	) 	  	 	(570,253	) 
	 Loans payable
	  	 	(19,075	) 	  	 	(209,000	) 
	 Deferred acquisition payments
	  	 	(1,870,669	) 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
		  	 	(2,532,525	) 	  	 	(779,253	) 
		  	  
	  
	 	  	  
	  
	 
	 Net
	  	 	(455,564	) 	  	 	579,401	 
		  	  
	  
	 	  	  
	  
	 

 For the year ended April 30, 2020, a 5% increase in foreign exchange rates by the Canadian dollar relative to the US
dollar would have decreased other comprehensive income (loss) by approximately $39,000. 
 For the year ended April 30, 2020, a 5% increase in foreign
exchange rates by the Canadian dollar relative to the Euro would have decreased other comprehensive income (loss) by approximately $34,000. 
 Liquidity
risk: 
 The Company’s approach to managing its obligations is to maintain sufficient resources to meet its obligations when due without undue risk
to the Company. The Company monitors its cash requirements on an ongoing basis to ensure that there are sufficient resources for operations as well as to fund anticipated leasing, capital and development expenditures. In addition, the Company
manages its cash to meet its debt obligations and to fund general and administrative costs. 
 Contractual cash flow requirements as at April 30, 2020
were as follows: 
  

																					
	 	  	< 1
year
$	 	  	1 – 2
years
$	 	  	2 – 5
years
$	 	  	>5
years
$	 	  	Total
$	 
	 Accounts payable and accrued liabilities
	  	 	1,766,058	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	1,766,058	 
	 Loan payable
	  	 	121,833	 	  	 	190,306	 	  	 	—  	 	  	 	—  	 	  	 	312,139	 
	 Deferred acquisition payments(1) 
	  	 	1,546,088	 	  	 	506,538	 	  	 	—  	 	  	 	—  	 	  	 	2,052,626	 
	 Leases
	  	 	849,255	 	  	 	714,898	 	  	 	518,825	 	  	 	—  	 	  	 	2,082,978	 
	 Debentures
	  	 	2,000,000	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	2,000,000	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 
	 Total
	  	 	6,283,234	 	  	 	1,411,742	 	  	 	518,825	 	  	 	—  	 	  	 	8,213,801	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	  	  
	  
	 

  

	(1) 	 $1,016,112 aggregate payments not included in this table are to be settled by issuance of shares.

  
 20 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 RISKS AND UNCERTAINTIES 

Research and Development and Product Development 
 IPA is a
life science company that makes customized antibodies and is engaged in the research and product development of new processes, procedures and innovative approaches to the antibody production and new antibodies. The Company has been engaged in such
research and development activities for over 20 years and has had significant success. Continued investment in retaining key scientific staff as well as an ongoing commitment in research and development activities will continue to be a cornerstone
in the Company’s development of new services, processes, and competitive advantages such as Rapid Prime, B cell Select, DeepDisplay and its methods for the production of human antibodies. The Company realizes that such research and product
development activities endeavour, but cannot assure, the production of new and innovative processes, procedures or innovative approaches to antibody production or new antibodies. 

Custom Products 
 The Company is reliant on the
development, marketing and sale of its current custom monoclonal and polyclonal antibodies. If it does not achieve sufficient market acceptance of its expansion of its commercialization of its products and services, it will be difficult for the
Company to achieve consistent profitability. The Company’s marketing and sales approach and external sales personnel continues to introduce a steady stream of new customers. 

Obsolescence 
 Maintaining a competitive position requires
constant growth, development and strategic marketing and planning. If the Company is unable to maintain a technological advantage, its ability to grow its business will be adversely affected and its products may become obsolete compared with other
technologies. To mitigate this, the Company is making investments in new methods, technology and facilities. 
 Competition 

IPA may face significant competition in selling its products and services. Many competitors may have substantial marketing, financial, development and
personnel resources. To remain competitive, the Company believes that it must effectively and economically provide: (i) products and services that satisfy customer demands, (ii) superior customer service, (iii) high levels of quality
and reliability, and (iv) dependable and efficient distribution networks. Increased competition may require the Company to reduce prices or increase spending on sales and marketing and customer support, which may have a material adverse effect
on its financial condition and results of operations. Any decrease in the quality of IPA’s products or level of service to customers or any occurrence of a price war among the Company’s competitors may adversely affect the business and
results of operations. Customer reach, service and on-time delivery will continue to be a hallmark of the Company’s ability to compete with other market players. Further, the recent acquisitions translate
to spreading the IPA footprint on two continents. In addition, the Company has deployed a sales team tasked with continually sourcing and providing market intelligence as part of its activities. 

Intellectual Property Protection 
 Although IPA is
developing its patent portfolio, IPA’s intellectual property is still protected primarily through trade secrets and copyright protection. The Company takes steps to document and protect its trade secrets and authorship of works protectable by
copyright. However, there is no guarantee that such steps protect against the disclosure of confidential information, rights of employees, or that legal actions would provide sufficient remedy for any breach. Additionally, IPA’s trade secrets
might otherwise become known or be independently developed by competitors. If the Company’s internal information and knowledge cannot be protected, the business might be adversely affected. 

  
 21 

 

 
 IMMUNOPRECISE ANTIBODIES LTD. 

MANAGEMENT DISCUSSION AND ANALYSIS 
 FOR THE YEAR ENDED
APRIL 30, 2020 
  
  

 Failure of Laboratory Facilities 

The Company’s operations could suffer as a result of a failure of its laboratory facilities. The Company’s business is dependent upon a laboratory
infrastructure to produce products and services. These systems and operations are vulnerable to damage and interruption from fires, earthquakes, telecommunications failures, and other events. Any such errors or inadequacies in the software that may
be encountered could adversely affect operations, and such errors may be expensive or difficult to correct in a timely manner. 
 The production of
monoclonal and polyclonal antibodies requires state of the art laboratory facilities and animal care standards and the success of these laboratory services depends on the recruitment and retention of highly qualified technical staff to maintain the
level and quality standards that customers expect of the Company’s products and services. There is no assurance that the Company will be able to expand and operate such state-of-the-art laboratory services and recruit and retain qualified staff. 
 Financial and Regulatory
Risks 
 The Company is currently subject to financial and regulatory risks. The financial risk is derived from the uncertainty pertaining to the
Company’s ability to raise capital to continue operations. Regulatory risks include the possible delays in getting regulatory approval for the transactions that the Board of Directors believe to be in the best interest of the Company and
include increased fees for filings and the introduction of ever more complex reporting requirements, the cost of which the Company must meet in order to maintain its exchange listing. 

Pandemic Risk 
 A new Coronavirus, known as SARS-CoV-2 and causing a disease called COVID- 19, which has proved to be highly contagious, emerged in Wuhan, China at the end of 2019. Since the future course and duration
of the COVID-19 outbreak are unknown, the Company is currently unable to determine whether the outbreak will have a negative effect on the Company’s results in the fourth quarter of 2020 and beyond. There
has been no impact on results through April 30, 2020, and the Company has not experienced negative impact on client sales or the supply chain. The Company’s sales, operations and financial performance could suffer given a potential rapidly
spreading virus. Internally, the virus may infect its employees resulting in operating at lower productivity levels or even a complete laboratory shutdown. The Company’s business is dependent on its laboratories to produce its products and
services which if not operating will impact the financial performance of the company and its ability to meet its obligations. The Company has diversified geographic locations with the ability to perform similar services at other sites. In addition,
certain roles have the ability to work remotely and the Company has business interruption insurance which may aid in the recovery of lost profits. External factors may also contribute to this risk, such as the impact of a pandemic on the
Company’s clients and suppliers. 
 FURTHER INFORMATION : 

Additional information relating to the Company can be found on SEDAR at www.sedar.com. 

  
 22

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