Full Press Release Details
CONDENSED CONSOLIDATED INTERIM FINANCIAL
(Expressed in United States dollars)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2018
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
(Expressed in United States dollars)
| December 31, 2018 | September 30, 2018 | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash | $ | 12,174,228 | $ | 14,829,144 | ||||
| Receivables (Note 16) | 247,575 | 297,349 | ||||||
| Prepaids (Note 4) | 377,191 | 470,154 | ||||||
| 12,798,994 | 15,596,647 | |||||||
| Deposits | 201,399 | 201,399 | ||||||
| Intangible assets (Note 6) | 214,454 | 219,028 | ||||||
| Total assets | $ | 13,214,847 | $ | 16,017,074 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities | $ | 738,518 | $ | 523,669 | ||||
| Current portion of long-term debt (Note 7) | 2,873,980 | 2,815,947 | ||||||
| Income tax payable | - | 4,722 | ||||||
| 3,612,498 | 3,344,338 | |||||||
| Long-term debt (Note 7) | 2,817,729 | 3,501,016 | ||||||
| Derivative liabilities (Note 8) | 7,098 | 19,648 | ||||||
| Total liabilities | 6,437,325 | 6,865,002 | ||||||
| Shareholders' equity | ||||||||
| Share capital (Note 9) | 42,345,997 | 40,205,997 | ||||||
| Reserves (Note 10) | 13,587,857 | 15,391,640 | ||||||
| Accumulated other comprehensive loss | (2,076,479 | ) | (2,076,479 | ) | ||||
| Deficit | (47,079,853 | ) | (44,369,086 | ) | ||||
| 6,777,522 | 9,152,072 | |||||||
| Total liabilities and shareholders' equity | $ | 13,214,847 | $ | 16,017,074 |
Nature and continuance of operations (Note
Commitments (Note 16)
| On behalf of the Board on February 6, 2019 | |||
| "David R. Parkinson" | Director | "Franklin Berger" | Director |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
LOSS AND COMPREHENSIVE LOSS
(Expressed in United States dollars)
FOR THE THREE MONTHS ENDED DECEMBER 31
| 2018 | 2017 | |||||||
| OPERATING EXPENSES | ||||||||
| Research and development (Note 17) | $ | 1,286,323 | $ | 969,597 | ||||
| Financing costs | 177,434 | 244,810 | ||||||
| General and administration (Note 17) | 1,247,108 | 958,375 | ||||||
| Total operating expenses | (2,710,865 | ) | (2,172,782 | ) | ||||
| Foreign exchange | (2,800 | ) | (5,722 | ) | ||||
| Gain on derivative liability (Note 8) | 12,550 | 88,563 | ||||||
| Net loss for the period before taxes | (2,701,115 | ) | (2,089,941 | ) | ||||
| Income tax expense | (9,652 | ) | - | |||||
| Net loss and comprehensive loss for the period | $ | (2,710,767 | ) | $ | (2,089,941 | ) | ||
| Basic and diluted loss per common share | $ | (0.43 | ) | $ | (1.44 | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | 6,305,283 | 1,455,094 |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF
(Expressed in United States dollars)
FOR THE THREE MONTHS ENDED DECEMBER 31
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Loss for the period | $ | (2,710,767 | ) | $ | (2,089,941 | ) | ||
| Items not affecting cash: | ||||||||
| Amortization | 4,574 | 9,972 | ||||||
| Gain on derivative liability | (12,550 | ) | (88,563 | ) | ||||
| Finance expense | 177,434 | 244,810 | ||||||
| Unrealized foreign exchange | (722 | ) | (18,114 | ) | ||||
| Share-based payments (Note 10) | 336,217 | 88,388 | ||||||
| Changes in non-cash working capital items: | ||||||||
| Receivables | 53,021 | 5,967 | ||||||
| Prepaid expenses | 92,963 | 278,614 | ||||||
| Accounts payable and accrued liabilities | 213,849 | (332,030 | ) | |||||
| Income tax payable | (4,722 | ) | (41,827 | ) | ||||
| Net cash used in operating activities | (1,850,703 | ) | (1,942,724 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Loan principal repaid (Note 7) | (683,203 | ) | - | |||||
| Interest paid (Note 7) | (119,485 | ) | (146,611 | ) | ||||
| Net cash used in financing activities | (802,688 | ) | (146,611 | ) | ||||
| Effect of foreign exchange on cash | (1,525 | ) | (27 | ) | ||||
| Change in cash for the period | (2,654,916 | ) | (2,089,362 | ) | ||||
| Cash, beginning of period | 14,829,144 | 3,957,185 | ||||||
| Cash, end of period | $ | 12,174,228 | $ | 1,867,823 |
Supplemental Disclosure with respect to
Cash Flows (Note 11)
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
(Expressed in United States dollars)
| Reserves | ||||||||||||||||||||||||||||
| Number of shares | Share capital | Share-based payments | Warrants | Cumulative translation adjustment | Deficit | Total | ||||||||||||||||||||||
| Balance, September 30, 2017 | 1,455,098 | $ | 25,980,117 | $ | 4,252,712 | $ | 309,293 | $ | (2,076,479 | ) | $ | (32,739,646 | ) | $ | (4,274,003 | ) | ||||||||||||
| Share-based payments | - | - | 88,388 | - | - | - | 88,388 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (2,089,941 | ) | (2,089,941 | ) | |||||||||||||||||||
| Balance, December 31, 2017 | 1,455,098 | $ | 25,980,117 | $ | 4,341,100 | $ | 309,293 | $ | (2,076,479 | ) | $ | (34,829,587 | ) | $ | (6,275,556 | ) | ||||||||||||
| Financing | 4,321,000 | 17,284,000 | - | 8,756,000 | - | - | 26,040,000 | |||||||||||||||||||||
| Share issuance costs | - | (3,058,120 | ) | - | 672,221 | - | - | (2,385,899 | ) | |||||||||||||||||||
| Share-based payments | - | - | 1,313,026 | - | - | - | 1,313,026 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (9,539,499 | ) | (9,539,499 | ) | |||||||||||||||||||
| Balance, September 30, 2018 | 5,776,098 | $ | 40,205,997 | $ | 5,654,126 | $ | 9,737,514 | $ | (2,076,479 | ) | $ | (44,369,086 | ) | $ | 9,152,072 | |||||||||||||
| Warrants exercised | 535,000 | 2,140,000 | - | (2,140,000 | ) | - | - | - | ||||||||||||||||||||
| Share-based payments | - | - | 336,217 | - | - | - | 336,217 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (2,710,767 | ) | (2,710,767 | ) | |||||||||||||||||||
| Balance, December 31, 2018 | 6,311,098 | $ | 42,345,997 | $ | 5,990,343 | $ | 7,597,514 | $ | (2,076,479 | ) | $ | (47,079,853 | ) | $ | 6,777,522 |
The accompanying notes are an integral part
of these condensed consolidated interim financial statements.
AND CONTINUANCE OF OPERATIONS
Nature and Continuance of Operations
ESSA Pharma Inc. (the "Company")
was incorporated under the laws of the Province of British Columbia on January 6, 2009. The Company's head office address
is Suite 720 - 999 West Broadway, Vancouver, BC, V5Z 1K5. The registered and records office address is the 26th Floor
at 595 Burrard Street, Three Bentall Centre, Vancouver, BC, V7X 1L3. The Company is listed on the NASDAQ Capital Market ("NASDAQ")
under the symbol "EPIX", and on the Toronto Venture Exchange ("TSX-V") under the symbol "EPI".
The Company is focused on the development
of small molecule drugs for the treatment of prostate cancer. The Company has acquired a license to certain patents (the "NTD
Technology") which were the joint property of the British Columbia Cancer Agency and the University of British Columbia.
As at December 31, 2018, no products are in commercial production or use. Since September 2017, the Company has been focused on
preclinical development of its next-generation compounds. Prior to that, the Company's primary activity was the Phase I clinical
development of clinical candidate EPI-506, which was discontinued on September 11, 2017.
Effective April 25, 2018, the Company
consolidated its issued and outstanding common shares on the basis of one post-consolidation share for 20 pre-consolidation shares.
Unless otherwise stated, all share and per share amounts have been restated retrospectively to reflect this share consolidation.
These financial statements have been
prepared in accordance with International Financial Reporting Standards ("IFRS") assuming the Company will continue
on a going-concern basis. The Company has incurred losses and negative operating cash flows since inception. The Company incurred
a net loss of $2,710,767 during the three months ended December 31, 2018 and has an accumulated deficit of $47,079,853. The ability
of the Company to continue as a going concern in the long-term depends upon its ability to develop profitable operations and to
continue to raise adequate financing. As at December 31, 2018, the Company has not advanced its research into a commercially
viable product. The Company's continuation as a going concern is dependent upon the successful development of its NTD Technology
to a commercial standard. Management has forecasted that the Company's current working capital will not be sufficient to
execute its planned expenditures for the coming year. These matters indicate the existence of material uncertainties that raises
substantial doubt about the Company's ability to continue as a going concern.
Management continues to seek sources
of additional financing which would assure continuation of the Company's operations and research programs. However, there
is no certainty that such financing will be provided or provided on favorable terms. Management believes that it will complete
a financing in sufficient time to continue to execute its planned expenditures without interruption.
Statement of Compliance
These condensed consolidated interim
financial statements, including comparatives, have been prepared in accordance with International Accounting Standards ("IAS")
34 Interim Financial Reporting' ("IAS 34") using accounting policies consistent with International Financial
Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations
of the International Financial Reporting Interpretations Committee ("IFRIC").
OF PRESENTATION (cont'd )
Statement of Compliance (cont'd )
The condensed consolidated interim
financial statements do not include all the information and disclosures required in the annual consolidated financial statements
and should be read in conjunction with the Company's annual consolidated financial statements for the year ended September
30, 2018. The accounting policies and methods of computation applied by the Company in these condensed consolidated interim financial
statements are the same as those applied in the Company's annual financial statements except for those adopted as of October
1, 2018 as described in Note 3.
Basis of Presentation
The condensed consolidated interim
financial statements have been prepared on a historical cost basis except for certain financial assets measured at fair value.
In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting,
except for cash flow information.
All amounts expressed in these condensed
consolidated interim financial statements and the accompanying notes are expressed in United States dollars, except per share data
and where otherwise indicated. References to "$" are to United States dollars and references to "C$" are
to Canadian dollars.
Basis of Consolidation
The condensed consolidated interim
financial statements comprise the accounts of ESSA Pharma Inc., the parent company, and its wholly-owned subsidiary, ESSA Pharmaceuticals
Corp., after the elimination of all material intercompany balances and transactions.
Subsidiaries are all entities over
which the Company has exposure to variable returns from its involvement and has the ability to use power over the investee to affect
its returns. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when
assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Company until the date on which control ceases.
The accounts of subsidiaries are
prepared for the same reporting period as the parent company, using consistent accounting policies. Inter-company transactions,
balances and unrealized gains or losses on transactions are eliminated upon consolidation.
currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency
of the Company and its subsidiary has been determined to be the United States dollar.
statements are presented in United States dollars. All financial information is expressed in United States dollars unless otherwise
The Company makes estimates and assumptions