20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.  For the fiscal year ended November 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from ________ to ________

Commission File No. 0-53805

INTELLIPHARMACEUTICS INTERNATIONAL INC.

(Exact name of registrant as specified in its charter)

Canada

(Jurisdiction of incorporation or organization)

30 Worcester Road

Toronto, Ontario M9W 5X2

(Address of principal executive offices)

Dr. Amina Odidi, President, Chief Operating Officer and Acting Chief Financial Officer,

Intellipharmaceutics International Inc., 30 Worcester Road,

Toronto, Ontario M9W 5X2, Telephone: (416) 798-3001, Fax: (416) 798-3007

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Common shares, no par value  

As of November 30, 2022, the registrant had 33,092,665 common shares outstanding.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐     No ☒

If this report is an annual report or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐    No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐  Accelerated filer ☐ Non-accelerated filer  ☒  Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting over Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐     Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No ☒

TABLE OF CONTENTS

		Page
PART I		3
Item 1.	Identity of Directors, Senior Management and Advisers	3
A.	Directors and Senior Management	3
B.	Advisers	3
C.	Auditors	3
Item 2	Offer Statistics and Expected Timetable	3
A.	Offer statistics	3
B.	Method and expected timetable	3
Item 3.	Key Information	3
A.	Selected Financial Data	3
B.	Capitalization and Indebtedness	4
C.	Reasons for the Offer and Use of Proceeds	4
D.	Risk Factors	4
Item 4.	Information on the Company	31
A.	History and Development of the Company	31
B.	Business Overview	32
C.	Organizational Structure	54
D.	Property, Plant and Equipment	54
Item 4A.	Unresolved Staff Comments	54
Item 5.	Operating and Financial Review and Prospects	55
A.	Operating Results	55
B.	Liquidity and Capital Resources	58
C.	Research and development, patents, and licenses, etc.	60
D.	Trend Information	61
E.	Off-balance sheet arrangements	61
F.	Tabular disclosure of contractual obligations	62
G.	Safe Harbor	62
Item 6.	Directors, Senior Management and Employees	62
A.	Directors and Senior Management	62
B.	Compensation	65
C.	Board Practices	71
D.	Employees	76
E.	Share Ownership	76
Item 7.	Major Shareholders and Related Party Transactions	85
A.	Major Shareholders	85
B.	Related Party Transactions	86
Item 8.	Financial Information	87
A.	Consolidated Statements and Other Financial Information	87
B.	Significant changes	90
Item 9.	The Offer and Listing	90

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Item 10.	Additional Information	90
A.	Share Capital	90
B.	Articles and By-laws	94
C.	Material Contracts	95
D.	Exchange Controls	97
E.	Taxation	97
F.	Dividends and Paying Agents.	106
G.	Statement by Experts	107
H.	Documents on Display	107
I.	Subsidiary Information	107
Item 11.	Qualitative and Quantitative Disclosures about Market Risk	107
Item 12.	Description of Securities Other than Equity Securities.	109
A.	Debt Securities	109
B.	Warrants and Rights	109
C.	Other Securities	109
D.	American Depositary Shares	109
PART II
Item 13.	Defaults, Dividend Arrearages and Delinquencies	110
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	110
Item 15.	Controls and Procedures	111
Item 16.	[Reserved]	112
Item 16A.	Audit Committee Financial Expert.	112
Item 16B.	Code of Ethics.	112
Item 16C.	Principal Accountant Fees and Services.	112
Item 16D.	Exemptions from the Listing Standards for Audit Committees.	113
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers.	113
Item 16F.	Change in Registrant’s Certifying Accountant.	113
Item 16G.	Corporate Governance.	113
Item 16H.	Mine Safety Disclosure.	113
PART III
Item 17.	Financial Statements.	114
Item 18.	Financial Statements.	114
Item 19.	Exhibits.	115

ii

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this annual report constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and/or “forward-looking information” under the Securities Act (Ontario). These statements include, without limitation, statements expressed or implied regarding our expectations, plans, goals and milestones, status of developments or expenditures relating to our business, plans to fund our current activities, and statements concerning our partnering activities, health regulatory submissions, strategy, future operations, future financial position, future sales, revenues and profitability, projected costs and market penetration and risks or uncertainties arising from the delisting of our shares from Nasdaq and our ability to comply with OTCQB Venture Market (“OTCQB”) and Toronto Stock Exchange (“TSX”)  requirements. In some cases, you can identify forward-looking statements by terminology such as “appear”, “unlikely”, “target”, “may”, “will”, “should”, “expects”, “plans”, “plans to”, “anticipates”, “believes”, “estimates”, “predicts”, “confident”, “prospects”, “potential”, “continue”, “intends”, “look forward”, “could”, “would”, “projected”, “goals”, “set to”, “seeking” or the negative of such terms or other comparable terminology. We made a number of assumptions in the preparation of our forward-looking statements. You should not place undue reliance on our forward-looking statements, which are subject to a multitude of known and unknown risks and uncertainties that could cause actual results, future circumstances or events to differ materially from those stated in or implied by the forward-looking statements. Risks, uncertainties and other factors that could affect our actual results include, but are not limited to, the effects of general economic conditions, securing and maintaining corporate alliances, our estimates regarding our capital requirements, and the effect of capital market conditions and other factors, including the current status of our product development programs, capital availability, the estimated proceeds (and the expected use of any proceeds) we may receive from any offering of our securities, the potential dilutive effects of any financing, potential liability from and costs of defending pending or future litigation, risks associated with the novel coronavirus (COVID-19), including its impact on our business and operations, our programs regarding research, development and commercialization of our product candidates, the timing of such programs, the timing, costs and uncertainties regarding obtaining regulatory approvals to market our product candidates and the difficulty in predicting the timing and results of any product launches, the timing and amount of profit-share payments from our commercial partners, and the timing and amount of any available investment tax credits, the actual or perceived benefits to users of our drug delivery technologies, products and product candidates as compared to others, our ability to establish and maintain valid and enforceable intellectual property rights in our drug delivery technologies, products and product candidates, the scope of protection provided by intellectual property rights for our drug delivery technologies, products and product candidates, recent and future legal developments in the United States and elsewhere that could make it more difficult and costly for us to obtain regulatory approvals for our product candidates and negatively affect the prices we may charge, increased public awareness and government scrutiny of the problems associated with the potential for abuse of opioid-based medications, pursuing growth through international operations could strain our resources, our limited manufacturing, sales, marketing and  distribution capability and our reliance on third parties for such, the actual size of the potential markets for any of our products and product candidates compared to our market estimates, our selection and licensing of products and product candidates, our ability to attract distributors and/or commercial partners with the ability to fund patent litigation and with acceptable product development, regulatory and commercialization expertise and the benefits to be derived from such collaborative efforts, sources of revenues and anticipated revenues, including contributions from distributors and commercial partners, product sales, license agreements and other collaborative efforts for the development and commercialization of product candidates, our ability to create an effective direct sales and marketing infrastructure for products we elect to market and sell directly, the rate and degree of market acceptance of our products, delays in product approvals that may be caused by changing regulatory requirements, the difficulty in predicting the timing of regulatory approval and launch of competitive products, the difficulty in predicting the impact of competitive products on sales volume, pricing, rebates and other allowances, the number of competitive product entries, and the nature and extent of any aggressive pricing and rebate activities that may follow, the inability to forecast wholesaler demand and/or wholesaler buying patterns, seasonal fluctuations in the number of prescriptions written for our generic Focalin XR^® capsules, which may produce substantial fluctuations in revenue, the timing and amount of insurance reimbursement regarding our products, changes in laws and regulations affecting the conditions required by the United States Food and Drug Administration (“FDA”) for approval, testing and labeling of drugs including abuse or overdose deterrent properties, and changes affecting how opioids are regulated and prescribed by physicians, changes in laws and regulations, including Medicare and Medicaid, affecting among other things, pricing and reimbursement of pharmaceutical products, the effect of changes in U.S. federal income tax laws, including but not limited to, limitations on the deductibility of business interest, limitations on the use of net operating losses and application of the base erosion minimum tax, on our U.S. corporate income tax burden, the success and pricing of other competing therapies that may become available, our ability to retain and hire qualified employees, the availability and pricing of third-party sourced products and materials, challenges related to the development, commercialization, technology transfer, scale-up, and/or process validation of manufacturing processes for our products or product candidates, the manufacturing capacity of third-party manufacturers that we may use for our products, potential product liability risks, the recoverability of the cost of any pre-launch inventory, should a planned product launch encounter a denial or delay of approval by regulatory bodies, a delay in commercialization, or other potential issues, the successful compliance with FDA, Health Canada and other governmental regulations applicable to us and our third party manufacturers’ facilities, products and/or businesses, our reliance on commercial partners, and any future commercial partners, to market and commercialize our products and, if approved, our product candidates, difficulties, delays, or changes in the FDA approval process or test criteria for Abbreviated New Drug Applications (“ANDAs”) and New Drug Applications (“NDAs”), challenges in securing final FDA approval for our product candidates, including our oxycodone hydrochloride extended release tablets (“Aximris XR^TM”) product candidate, in particular, if a patent infringement suit is filed against us with respect to any particular product candidates (such as in the case of Oxycodone ER), which could delay the FDA’s final approval of such product candidates, healthcare reform measures that could hinder or prevent the commercial success of our products and product candidates, the risk that the FDA may not approve requested product labeling for our product candidate(s) having abuse-deterrent properties and targeting common forms of abuse (oral, intra-nasal and intravenous), risks associated with cyber-security and the potential vulnerability of our digital information or the digital information of a current and/or future drug development or commercialization partner of ours, and risks arising from the ability and willingness of our third-party commercialization partners to provide documentation that may be required to support information on revenues earned by us from those commercialization partners.

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Additional risks and uncertainties relating to us and our business can be found in the “Risk Factors” section in Item 3.D below, the “Risk Factors” sections of our latest annual information form and our latest registration statements on Form F-1 and F-3 (including any documents forming a part thereof or incorporated by reference therein), as amended, as well as in our reports, public disclosure documents and other filings with the securities commissions and other regulatory bodies in Canada and the U.S., which are available on www.sedar.com and www.sec.gov.  The forward-looking statements reflect our current views with respect to future events, and are based on what we believe are reasonable assumptions as of the date of this document and we disclaim any intention and have no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Nothing contained in this document should be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of our actual operating results.

In this annual report, unless the context otherwise requires, the terms “we”, “us”, “our”, “Intellipharmaceutics,” and the “Company” refer to Intellipharmaceutics International Inc. and its subsidiaries. Any reference in this annual report to our “products” includes a reference to our product candidates and future products we may develop. Whenever we refer to any of our current product candidates (including additional product strengths of products we are currently marketing) and future products we may develop, no assurances can be given that we, or any of our strategic partners, will successfully commercialize or complete the development of any of such product candidates or future products under development or proposed for development, that regulatory approvals will be granted for any such product candidate or future product, or that any approved product will be produced in commercial quantities or sold profitably.

Unless stated otherwise, all references to “$”, “U.S.$”, or “U.S. Dollars” are to the lawful currency of the United States and all references to “C$” are to the lawful currency of Canada. In this annual report, we refer to information regarding potential markets for our products, product candidates and other industry data. We believe that all such information has been obtained from reliable sources that are customarily relied upon by companies in our industry. However, we have not independently verified any such information.

Intellipharmaceutics™, Hypermatrix™, Drug Delivery Engine™, IntelliFoam™, IntelliGITransporter™, IntelliMatrix™, IntelliOsmotics™, IntelliPaste™, IntelliPellets™, IntelliShuttle™, nPODDDS™, PODRAS™.Regabatin™ XR and Aximris XR™ are our trademarks. These trademarks are important to our business. Although we may have omitted the “TM” trademark designation for such trademarks in this annual report, all rights to such trademarks are nevertheless reserved. Unless otherwise noted, other trademarks used in this annual report are the property of their respective holders.

We initially named our oxycodone hydrochloride extended-release tablets “Rexista™,” but later changed the name of our product candidate to “Aximris XR™”as the FDA did not approve the proposed name “Rexista”. References in this annual report, and/or the documents incorporated by reference herein or therein to Oxycodone ER,Rexista™ or Aximris XR™ are intended to refer to our oxycodone hydrochloride extended release tablets product candidate.

Unless the context otherwise requires, references in this document to (i) share amounts, per share data, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the 1-for-10 reverse split (the “reverse split”) which became effective on each of Nasdaq and TSX at the open of market on September 14, 2018, and (ii) ”consolidation” or “share consolidation” are intended to refer to such reverse split. The common shares of the Company are currently traded on the OTCQB and the TSX.

2

PART I

Item 1. Identity of Directors, Senior Management and Advisers

A. Directors and Senior Management

Not applicable.

B. Advisers

Not applicable.

C. Auditors

Not applicable.

Item 2 Offer Statistics and Expected Timetable

A. Offer statistics

Not applicable.

B. Method and expected timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data

The following selected financial data of the Company has been derived from the audited consolidated financial statements of the Company as at and for the years ended November 30, 2022, 2021, 2020, 2019, and 2018.As a result of the IPC Arrangement Transaction (as defined and described in Item 4.A below) completed on October 22, 2009, we selected a November 30 year end. The comparative number of shares issued and outstanding, basic and diluted loss per share have been amended to give effect to this arrangement transaction. These statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All dollar amounts in this annual report are expressed in U.S. dollars, unless otherwise indicated.

3

(In thousands of U.S. dollars, except for per share data)

	As at and for the year ended November 30, 2022			As at and for the year ended November 30, 2021			As at and for the year ended November 30, 2020			As at and for the year ended November 30, 2019			As at and for the year ended November 30, 2018
	$			$			$			$			$
Revenue		66		Nil				1,402			3,481			1,713
Loss for the year		(2,887	)		(5,145	)		(3,391	)		(8,085	)		(13,747	)
Total assets		1,403			2,096			3,387			3,797			11,474
Total liabilities		12,009			10,252			9,701			7,489			7,372
Net assets		(10,577	)		(8,155	)		(6,314	)		(3,692	)		4,102
Capital stock		49,176			49,176			46,144			45,561			44,328
Loss per share - basic and diluted		(0.09	)		(0.17	)		(0.14	)		(0.37	)		(2.89	)
Dividends	Nil			Nil			Nil			Nil			Nil
Weighted average common shares		33,093			29,430			23,562			21,580			4,762

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Prospects for companies in the pharmaceutical industry generally may be regarded as uncertain given the research and development (“R&D”) nature of the industry and uncertainty regarding the prospects of successfully commercializing product candidates and, accordingly, investments in companies such as ours should be regarded as very speculative. An investor should carefully consider the risks and uncertainties described below, as well as other information contained in this annual report. The list of risks and uncertainties described below is not an exhaustive list. Additional risks and uncertainties not presently known to us or that we believe to be immaterial may also adversely affect our business. If any one or more of the following risks occur, our business, financial condition and results of operations could be seriously harmed. Further, if we fail to meet the expectations of the public market in any given period, the market price of our common shares could decline. If any of the following risks actually occurs, our business, operating results, or financial condition could be materially adversely affected.

Our activities entail significant risks. In addition to the usual risks associated with a business, the following is a general description of certain significant risk factors which may be applicable to us.

Risks related to our Company

We have a history of operating losses, which may continue for the foreseeable future and our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern.

To date, we have not been profitable and have incurred significant losses and cash flow deficits. For fiscal year ended November 30, 2022, we reported net losses of $2,892,394 and negative cash flow from operating activities of $1,388,223. As of November 30, 2022, we had an aggregate accumulated deficit of $105,134,099. We anticipate that we will continue to report losses as well as negative operating cash flow. As a result of these net losses and other factors our independent auditors issued an audit opinion with respect to our financial statements for the three years ended November 30, 2022 that indicated that there is a substantial doubt about our ability to continue as a going concern.

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There can be no assurance that we will ever be able to achieve or sustain profitability or positive cash flow. In addition to the other factors described in this annual report, our ultimate success will depend on how many of our product candidates receive approval by the FDA or Health Canada and the regulatory authorities of the other countries in which our products are proposed to be sold and whether we are able to successfully market approved products. We cannot be certain that we will be able to receive FDA, Health Canada or such other regulatory approval for any of our current or future product candidates, or that we will reach the level of sales and revenues necessary to achieve and sustain profitability. If we are unsuccessful in commercializing our products and/or securing sufficient financing, we may need to cease or curtail our operations.

Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments would likely include substantial impairment of the carrying amount of our assets and potential contingent liabilities that may arise if we are unable to fulfill various operational commitments. In addition, the value of our securities would be greatly impaired. Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional capital and financing. If our ability to generate cash flow from operations is delayed or reduced and we are unable to raise additional funding from other sources, we may be unable to continue in business.

Our business is capital intensive and requires significant investment to conduct the research and development, clinical and regulatory activities necessary to bring our products to market, which capital may not be available in amounts or on terms acceptable to us, if at all.

Our business requires substantial capital investment to conduct our R&D, clinical and regulatory activities, to defend against patent litigation claims, and to establish commercial manufacturing, marketing and sales capabilities. As of November 30, 2022, our cash balance was $83,722. We currently expect to meet our short-term cash requirements from quarterly profit share payments from Par and by cost savings resulting from reduced R&D activities and staffing levels, as well as from potential revenues for approved generic products or other collaborations, and other available financing. Effective May 5, 2021 our exclusive license agreements with Tris Pharma, Inc. for generic Seroquel XR®, generic Pristiq® and generic Effexor XR® were mutually terminated. Products were never supplied nor distributed under the licenses. Termination of the exclusive agreements may provide opportunity for the Company to explore options of supplying the products to multiple sources on non-exclusive bases. However, there can be no assurance that the products previously licensed to Tris Pharma will be successfully commercialized and produce significant revenues for us. We will still need to obtain additional funding to, among other things, further product commercialization activities and development of our product candidates. Potential sources of capital may include, if conditions permit, equity and/or debt financing, payments from licensing and/or development agreements and/or new strategic partnership agreements. The Company has funded its business activities principally through the issuance of securities, loans from related parties (see “Related Party Transactions” for more information related to the terms of such loans and applicable maturities) and funds from development agreements. There is no certainty that such funding will be available going forward or, if it is, whether it will be sufficient to meet our needs. Our future operations are highly dependent upon our ability to source additional funding to support advancing our product candidate pipeline through continued R&D activities and to expand our operations. Our ultimate success will depend on whether our product candidates are approved by the FDA, Health Canada, or the regulatory authorities of other countries in which our products are proposed to be sold and whether we are able to successfully market our approved products. We cannot be certain that we will receive such regulatory approval for any of our current or future product candidates, that we will reach the level of revenues necessary to achieve and sustain profitability, or that we will secure other capital sources on terms or in amounts sufficient to meet our needs, or at all. Our cash requirements for R&D during any period depend on the number and extent of the R&D activities we focus on. At present, we are focused principally on the development of 505(b)(2) product candidates, such as our Regabatin™ XR and Oxycodone ER 505(b)(2) product candidates, as well as selected generic product candidates as resources permit. Our development of Oxycodone ER required significant expenditures, including costs to defend against the Purdue (as defined below) litigation (as described in the “Legal Proceedings and Regulatory Actions” section). Some of these costs remain to be paid by the Company. For our Regabatin™ XR product candidate, Phase III clinical trials can be capital intensive, and will only be undertaken consistent with the availability of funds and a prudent cash management strategy.

5

The availability of equity or other financing will be affected by, among other things, the results of our R&D, our ability to obtain regulatory approvals, our success in commercializing approved products with our commercial partners, the market acceptance of our products, the state of the capital markets generally, the availability of strategic alliance agreements and other relevant commercial considerations. If we raise additional funds by issuing equity securities, our then-existing security holders will likely experience dilution. Any additional indebtedness would create increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. In the event that we do not obtain sufficient additional capital, it will raise substantial doubt about our ability to continue as a going concern, realize our assets, and pay our liabilities as they become due. Our cash outflows are expected to consist primarily of internal and external R&D, legal and consulting expenditures to advance our product pipeline and selling, general and administrative expenses to support our commercialization efforts. Depending upon the results of our R&D programs, the impact of any litigation to which we are a party and the availability of financial resources, we could decide to accelerate, terminate, or reduce certain projects, or commence new ones. Any failure on our part, at any time, to successfully commercialize approved products or raise additional funds on terms favorable to us, or at all, may require us to significantly change or curtail our current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in us not taking advantage of business opportunities, in the termination or delay of clinical trials or us not taking any necessary actions required by the FDA or Health Canada or other regulatory authorities for one or more of our product candidates, in curtailment of our product development programs designed to identify new product candidates, in the sale or assignment of rights to our technologies, products or product candidates, and/or our inability to file ANDAs, Abbreviated New Drug Submissions (“ANDSs”) or NDAs, at all or in time to competitively market our products or product candidates.

Delays, suspensions and terminations in our preclinical studies and clinical trials could result in increased costs to us and delay our ability to generate product revenues.

The commencement of clinical trials can be delayed for a variety of reasons, including delays in:

· demonstrating sufficient safety and efficacy to obtain regulatory approval to commence a clinical trial;

· reaching agreement on acceptable terms with prospective contract research organizations and clinical trial sites;

· manufacturing sufficient quantities of a drug candidate;

· obtaining institutional review board approval to conduct a clinical trial at a prospective clinical trial site;

· patient enrollment; and

· for controlled substances, obtaining specific permission to conduct a study, and obtaining import and export permits to ship study samples.

Once a clinical trial has begun, it may be delayed, suspended or terminated due to a number of factors, including:

· the number of patients that participate in the trial;

· the length of time required to enroll suitable subjects;

· the duration of patient follow-up;

· the number of clinical sites included in the trial;

· changes in regulatory requirements or regulatory delays or clinical holds requiring suspension or termination of the trials;

· delays, suspensions or termination of clinical trials due to the institutional review board overseeing the study at a particular site;

· failure to conduct clinical trials in accordance with regulatory requirements;

· unforeseen safety issues, including serious adverse events or side effects experienced by participants; and

· inability to manufacture, through third party manufacturers, adequate supplies of the product candidate being tested.

Based on results at any stage of product development, we may decide to repeat or redesign preclinical studies or clinical trials, conduct entirely new studies or discontinue development of products for one or all indications. In addition, our product candidates may not demonstrate sufficient safety and efficacy in pending or any future preclinical testing or clinical trials to obtain the requisite regulatory approvals. Even if such approvals are obtained for our products, they may not be accepted in the market as a viable alternative to other products already approved or pending approvals.

6

If we experience delays, suspensions or terminations in a preclinical study or clinical trial, the commercial prospects for our products will be harmed, and our ability to generate product revenues will be delayed or we may never be able to generate such revenues.

Loss of key scientists and/or failure to attract qualified personnel could limit our growth and negatively impact our operations.

We are dependent upon the scientific expertise of Dr. Isa Odidi, our Chairman, Chief Executive Officer and Co-Chief Scientific Officer, and Dr. Amina Odidi, our President, Chief Operating Officer and Co-Chief Scientific Officer. Although we employ other qualified scientists, Drs. Isa and Amina Odidi are our only employees with the knowledge and experience necessary for us to continue the development of controlled-release products. We do not maintain key-person life insurance on any of our officers or employees. Although we have employment agreements with key members of our management team, each of our employees may terminate his or her employment at any time. The success of our business depends, in large part, on our continued ability to attract and retain highly qualified management, scientific, manufacturing and sales and marketing personnel, on our ability to successfully integrate new employees, and on our ability to develop and maintain important relationships with leading research and medical institutions and key distributors. If we lose the services of our executive officers or other qualified personnel or are unable to attract and retain qualified individuals to fill these roles or develop key relationships, our business, financial condition and results of operations could be materially adversely affected.

Our intellectual property may not provide meaningful protection for our products and product candidates.

We hold certain U.S., Canadian and foreign patents and have pending applications for additional patents outstanding. We intend to continue to seek patent protection for, or maintain as trade secrets, all of our commercially promising drug delivery platforms and technologies. Our success depends, in part, on our and our collaborative partners’ ability to obtain and maintain patent protection for products and product candidates, maintain trade secret protection and operate without infringing the proprietary rights of third parties. Without patent and other similar protection, other companies could offer substantially identical products without incurring sizeable development costs which could diminish our ability to recover expenses of and realize profits on our developed products. If our pending patent applications are not approved, or if we are unable to obtain patents for additional developed technologies, the future protection for our technologies will remain uncertain. Furthermore, third parties may independently develop similar or alternative technologies, duplicate some or all of our technologies, design around our patented technologies or challenge our issued patents. Such third parties may have filed patent applications, or hold issued patents, relating to products or processes competitive with those we are developing or otherwise restricting our ability to do business in a particular area. If we are unable to obtain patents or otherwise protect our trade secrets or other intellectual property and operate without infringing on the proprietary rights of others, our business, financial condition and results of operations could be materially adversely affected.

We may be subject to intellectual property claims that could be costly and could disrupt our business.

Third parties may claim we have infringed their patents, trademarks, copyrights or other rights. We may be unsuccessful in defending against such claims, which could result in the inability to protect our intellectual property rights or liability in the form of substantial damages, fines or other penalties such as injunctions precluding our manufacture, importation or sales of products. The resolution of a claim could also require us to change how we do business or enter into burdensome royalty or license agreements; provided, however, we may not be able to obtain the necessary licenses on acceptable terms, or at all. Insurance coverage may be denied or may not be adequate to cover every claim that third parties could assert against us. Even unsuccessful claims could result in significant legal fees and other expenses, diversion of management’s time and disruptions in our business. Any of these claims could also harm our reputation. Any of the foregoing may have a material adverse effect upon our business and financial condition.

7

We are a defendant in litigation and are at risk of additional similar litigation in the future that could divert management’s attention and adversely affect our business and could subject us to significant liabilities.

We are a defendant in the litigation matters described in this annual report. The defense of such litigation may increase our expenses and divert our management’s attention and resources, and any unfavorable outcome could have a material adverse effect on our business and results of operations. Any adverse determination in such litigation, or any settlement of such litigation matters could require that we make significant payments. In addition, we may be the target of other litigation in the future. Any negative outcome in any ongoing or future litigation may have a material adverse effect on our business and financial condition.

Recent and future legal developments could make it more difficult and costly for us to obtain regulatory approvals for our product candidates and negatively affect the prices we may charge.

In the United States and elsewhere, recent and proposed legal and regulatory changes to healthcare systems could prevent or delay our receipt of regulatory approval for our product candidates, restrict or regulate our post-approval marketing activities, and adversely affect our ability to profitably sell our products. We do not know whether additional legislative changes will be enacted, or whether the FDA’s regulations, guidance or interpretations will be changed, or what impact any such changes will have, if any, on our ability to obtain regulatory approvals for our product candidates. Further, the U.S. Centers for Medicare and Medicaid Services, or CMS, frequently changes product descriptors, coverage policies, product and service codes, payment methodologies and reimbursement values. Also, increased scrutiny by the U.S. Congress of the FDA’s approval process could significantly delay or prevent our receipt of regulatory approval for our product candidates and subject us to more stringent product labeling and post-marketing testing and other requirements.

We operate in a highly litigious environment.

From time to time, we may be exposed to claims and legal actions in the normal course of business. There has been substantial litigation in the pharmaceutical industry concerning the manufacture, use and sale of new products that are the subject of conflicting patent rights. When we file an ANDA or 505(b)(2) NDA for a bioequivalent version of a drug, we may, in some circumstances, be required to certify to the FDA that any patent which has been listed with the FDA as covering the branded product has expired, the date any such patent will expire, or that any such patent is invalid or will not be infringed by the manufacture, sale or use of the new drug for which the application is submitted. Approval of an ANDA is not effective until each listed patent expires, unless the applicant certifies that the patents at issue are not infringed or are invalid and so notifies the patent holder and the holder of the branded product. A patent holder may challenge a notice of non-infringement or invalidity by suing for patent infringement within 45 days of receiving notice. Such a challenge prevents FDA approval for a period which ends 30 months after the receipt of notice, or sooner if an appropriate court rules that the patent is invalid or not infringed. From time to time, in the ordinary course of business, we face and have faced such challenges and may continue to do so in the future.

As of the date of this annual report, we are not aware of any pending or threatened material litigation claims against us, other than as described in this annual report under the caption “Legal Proceedings and Regulatory Actions”. Litigation to which we are, or may be, subject could relate to, among other things, our patent and other intellectual property rights or such rights of others, business or licensing arrangements with other persons, product liability or financing activities. Such litigation could include an injunction against the manufacture or sale of one or more of our products or potential products or a significant monetary judgment, including a possible punitive damages award, or a judgment that certain of our patent or other intellectual property rights are invalid or unenforceable or infringe the intellectual property rights of others. If such litigation is commenced, our business, results of operations, financial condition and cash flows could be materially adversely affected.

We rely on maintaining as trade secrets our competitively sensitive know-how and other information, the intentional or unintentional disclosure of which could impair our competitive position.

                As to many technical aspects of our business, we have concluded that competitively sensitive information is either not patentable or that for competitive reasons it is not commercially advantageous to seek patent protection. In these circumstances, we seek to protect this know-how and other proprietary information by maintaining it in confidence as a trade secret. To maintain the confidentiality of our trade secrets, we generally enter into agreements that contain confidentiality provisions with our employees, consultants, collaborators, contract manufacturers and advisors upon commencement of their relationships with us. These provisions generally require that all confidential information developed by the individual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to third parties. We may not have these arrangements in place in all circumstances, and the confidentiality provisions in our favor may be breached. We may not become aware of, or have adequate remedies in the event of, any such breach. In addition, in some situations, the confidentiality provisions in our favor may conflict with, or be subject to, the rights of third parties with whom our employees, consultants, collaborators, contract manufacturers or advisors have previous employment or consulting relationships. To the extent that our employees, consultants, collaborators, contract manufacturers or advisors use trade secrets or know-how owned by others in their work for us, disputes may arise as to the ownership of relative inventions. Also, others may independently develop substantially equivalent trade secrets, processes and know-how, and competitors may be able to use this information to develop products that compete with our products, which could adversely impact our business. The disclosure of our trade secrets could impair our competitive position. Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information.

8

Our founders potentially may be able to exercise influence over certain corporate actions.

Our founders, Drs. Amina and Isa Odidi, our President, Chief Operating Officer and Co-Chief Scientific Officer and our Chairman, Chief Executive Officer and Co-Chief Scientific Officer, respectively, and shareholders of our Company, and Odidi Holdings Inc., a privately-held company controlled by Drs. Amina and Isa Odidi, own in the aggregate approximately 1.75% of our issued and outstanding common shares as of March 31, 2022 (and collectively beneficially owned in the aggregate approximately 15.12% of our common shares, including common shares issuable upon the exercise of outstanding options and the conversion of the 2018 Debenture (as defined below), May 2019 Debenture(as defined below) and the November 2019 Debenture (as defined below and collectively with the 2018 Debenture and the May 2019 Debenture, the “Debentures”). As a result, these shareholders potentially may be able to exercise influence over matters submitted to our shareholders for approval.

Approvals for our product candidates may be delayed or become more difficult to obtain because of failure to pay FDA fees required, or if the FDA changes its approval requirements.

The FDA may institute changes to its ANDA approval requirements, which may make it more difficult or expensive for us to obtain approval for our new generic products. For instance, in July 2012, the Generic Drug User Fee Amendments of 2012 (“GDUFA”), was enacted into law. The GDUFA legislation implemented substantial fees for new ANDAs, Drug Master Files, and product and establishment fees. In return, the program is intended to provide faster and more predictable ANDA reviews by the FDA and more timely inspections of drug facilities. For the FDA’s fiscal year 2023, the annual facility fee is $243,134 and the GUDFA fee is $162,056. Under GDUFA, generic product companies face significant penalties for failure to pay the new user fees, including rendering an ANDA not “substantially complete” until the fee is paid. Any failure by us or our suppliers to pay the fees or to comply with the other provisions of GDUFA may adversely impact or delay our ability to file ANDAs, obtain approvals for new generic products and generate revenues and thus may have a material adverse effect on our business, results of operations and financial condition.

We cannot ensure the availability of raw materials.

Certain raw materials necessary for the development and subsequent commercial manufacture of our product candidates may be proprietary products of other companies. While we attempt to manage the risk associated with such proprietary raw materials through contractual provisions in supply contracts, by management of inventory and by continuing to search for alternative authorized suppliers of such materials or their equivalents, if our efforts fail, or if there is a material shortage, contamination, and/or recall of such materials, the resulting scarcity, and scarcity as a result of any other reason (such as the novel coronavirus (COVID-19), could adversely affect our ability to develop or manufacture our product candidates. In addition, many third party suppliers are subject to governmental regulation and, accordingly, we are dependent on the regulatory compliance of, as well as on the strength, enforceability and terms of our various contracts with, these third party suppliers.

Further, the FDA requires identification of raw material suppliers in applications for approval of drug products. If raw materials are unavailable from a specified supplier, the supplier does not give us access to its technical information for our application or the supplier is not in compliance with FDA or other applicable requirements, FDA approval of the supplier could delay the manufacture of the drug involved. Any inability to obtain raw materials on a timely basis, or any significant price increases which cannot be passed on to our customers, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

9

Our product candidates may not be successfully developed or commercialized.

                Successful development of our product candidates is highly uncertain and is dependent on numerous factors, many of which are beyond our control. Products that appear promising in research or early phases of development may fail to reach later stages of development or the market for several reasons including:

· for ANDA candidates, bioequivalence studies results may not meet regulatory requirements or guidelines for the demonstration of bioequivalence;

· for NDA candidates, a product may not demonstrate acceptable large-scale clinical trial results, even though it demonstrated positive preclinical or initial clinical trial results;

· for NDA candidates, a product may not be effective in treating a specified condition or illness;

· a product may have harmful side effects on humans;

· products may fail to receive the necessary regulatory approvals from the FDA or other regulatory bodies, or there may be delays in receiving such approvals;

· changes in the approval process of the FDA or other regulatory bodies during the development period or changes in regulatory review for each submitted product application may also cause delays in the approval or result in rejection of an application;

· difficulties may be encountered in formulating products, scaling up manufacturing processes or in getting approval for manufacturing;

· difficulties may be encountered in the manufacture and/or packaging of our products;

· once manufactured, our products may not meet prescribed quality assurance and stability tests;

· manufacturing costs, pricing or reimbursement issues, other competitive therapeutics, or other commercial factors may make the product uneconomical; and

· the proprietary rights of others, and their competing products and technologies, may prevent the product from being developed or commercialized.

Further, success in preclinical and early clinical trials does not ensure that large-scale clinical trials will be successful, nor does success in preliminary studies for ANDA candidates or generic candidates in other jurisdictions ensure that bioequivalence studies will be successful. Results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. The length of time necessary to complete bioequivalence studies or clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly and may be difficult to predict.

As a result, there can be no assurance that any of our product candidates currently in development will ever be successfully commercialized and produce significant revenue for us.

Near-term revenue depends significantly on the success of our commercialized products.

Our ability to generate significant near-term revenue will depend upon successful commercialization of our ANDA and/or other products.

10

Our ANDA product, a once daily generic Focalin XR® capsules, for which we received final approval from the FDA in November 2013 under the Company ANDA (as defined below) to launch the 15 and 30 mg strengths. Commercial sales of these strengths were launched immediately by our commercialization partner in the U.S., Par Pharmaceutical, Inc. (“Par”). Our 5, 10, 20 and 40 mg strengths were also then tentatively FDA approved, subject to the right of Teva Pharmaceuticals USA, Inc. (“Teva”) to 180 days of generic exclusivity from the date of first launch of such products. Teva launched its own 5, 10, 20 and 40 mg strengths of generic Focalin XR® capsules on November 11, 2014, February 2, 2015, June 22, 2015 and November 19, 2013, respectively. In January 2017, Par launched the 25 and 35 mg strengths of its generic Focalin XR® capsules in the U.S., and in May 2017, Par launched the 10 and 20 mg strengths, complementing the 15 and 30 mg strengths of our generic Focalin XR® marketed by Par. The FDA granted final approval under the Par ANDA (as defined in Item 4.B. below) for its generic Focalin XR® capsules in the 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths. As the first filer of an ANDA for generic Focalin XR® in the 25 and 35 mg strengths, Par had 180 days of U.S. generic marketing exclusivity for those strengths. In November 2017, Par launched the remaining 5 and 40 mg strengths of generic Focalin XR®, complementing the 10, 15, 20, 25, 30 and 35 mg strengths previously launched and marketed by Par and providing us with the full line of general Focalin XR® strengths available in the U.S. market. Under the Par agreement (as defined below), we receive calendar quarterly profit-share payments on Par’s U.S. sales of generic Focalin XR®. There can be no assurance that commercialization of the product will produce significant revenue for us. We depend significantly on the actions of our marketing partner Par in the prosecution, regulatory approval and commercialization of our generic Focalin XR® capsules and on their timely payment to us of the contracted calendar quarterly payments as they come due. On August 15, 2019, we announced a license and commercial supply agreement with Tris Pharma, granting Tris Pharma the exclusive license to market, sell and distribute all strengths of generic Seroquel XR® (quetiapine fumarate extended-release tablets) in the United States. In May 2019, we received approval from the FDA for our ANDA for desvenlafaxine extended-release tablets in the 50 and 100 mg strengths and on September 5, 2019, we announced an agreement with Tris Pharma, granting Tris Pharma an exclusive license to market, sell and distribute that product in the United States. Our Venlafaxine hydrochloride extended-release capsules received final approval from the FDA in the 37.5, 75 and 150 mg strengths in November 2018; and the Company announced an exclusive licensing agreement with Tris Pharma to market, sell and distribute that product in the United States in November 2019.Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement. Termination of the exclusive agreements may provide opportunity for the Company to explore options of supplying the products to multiple sources on non-exclusive bases.

There can be no assurance that the products previously licensed to Tris Pharma will be successfully commercialized and produce significant revenues for us.

Our near-term ability to generate significant revenue will depend upon successful commercialization of our products in the U.S., where the branded products are in the market. Although we have some NDA 505(b)(2) product candidates in our pipeline, these are at early stages of development except Aximris XR that is still awaiting FDA decision. We have ANDAs still under review by the FDA and products that have been approved by the FDA that are not licensed.

Our significant expenditures on R&D may not lead to successful product introductions.

We conduct R&D primarily to enable us to manufacture and market pharmaceuticals in accordance with FDA regulations. Typically, research expenses related to the development of innovative compounds and the filing of NDAs are significantly greater than those expenses associated with ANDAs. As we continue to develop new products, our research expenses will likely increase. We are required to obtain FDA approval before marketing our drug products and the approval process is costly and time consuming. Because of the inherent risk associated with R&D efforts in our industry, particularly with respect to new drugs, our R&D expenditures may not result in the successful introduction of FDA approved new pharmaceuticals.

We may not have the ability to develop or license, or otherwise acquire, and introduce new products on a timely basis.

Product development is inherently risky, especially for new drugs for which safety and efficacy have not been established and the market is not yet proven. Likewise, product licensing involves inherent risks including uncertainties due to matters that may affect the achievement of milestones, as well as the possibility of contractual disagreements with regard to terms such as license scope or termination rights. The development and commercialization process, particularly with regard to new drugs, also requires substantial time, effort and financial resources. The process of obtaining FDA or other regulatory approval to manufacture and market new and generic pharmaceutical products is rigorous, time consuming, costly and largely unpredictable. We, or a partner, may not be successful in obtaining FDA or other required regulatory approval or in commercializing any of the product candidates that we are developing or licensing.

11

Our business and operations are increasingly dependent on information technology and accordingly we would suffer in the event of computer system failures, cyber-attacks or a deficiency in cyber-security.

Our internal computer systems, and those of our vendors and current and/or future drug development or commercialization partners of ours, may be vulnerable to damage from cyber-attacks, computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures. The risk of a security breach or disruption, particularly through cyber-attacks, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions have increased. If such an event were to occur and cause interruptions in our operations or those of a drug development or commercialization partner, it could result in a material disruption of our product development programs. For example, the loss of clinical trial data from completed or ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur significant liability and damage to our reputation. In addition, further development of our drug candidates could be adversely affected.

In addition, the unauthorized dissemination of sensitive personal information could expose us or other third parties to regulatory fines or penalties, litigation and potential liability, or otherwise harm our business.

Our business can be impacted by wholesaler buying patterns, increased generic competition and, to a lesser extent, seasonal fluctuations, which may cause our operating results to fluctuate.

We believe that the revenues derived from our generic Focalin XR^® capsules and other potential licensed products are subject to wholesaler buying patterns, increased generic competition negatively impacting price, margins and market share consistent with industry post-exclusivity experience and, to a lesser extent, seasonal fluctuations in relation to generic Focalin XR^® capsules (as these products are indicated for conditions including attention deficit hyperactivity disorder which we expect may see increases in prescription rates during the school term and declines in prescription rates during the summer months). Accordingly, these factors may cause our operating results to fluctuate.

We may not achieve our projected development goals in the time frames we announce and expect.

We set goals regarding the expected timing of meeting certain corporate objectives, such as the commencement and completion of clinical trials, anticipated regulatory approval and product launch dates. From time to time, we may make certain public statements regarding these goals. The actual timing of these events can vary dramatically due to, among other things, insufficient funding, delays or failures in our clinical trials or bioequivalence studies, the uncertainties inherent in the regulatory approval process, such as failure to secure appropriate product labeling approvals, requests for additional information, delays in achieving manufacturing or marketing arrangements necessary to commercialize our product candidates and failure by our collaborators, marketing and distribution partners, suppliers and other third parties to fulfill contractual obligations. In addition, the possibility of a patent infringement suit regarding one or more of our product candidates could delay final FDA approval of such candidates. If we fail to achieve one or more of these planned goals, the price of our common shares could decline.

We have limited manufacturing, sales, marketing or distribution capability and we must rely upon third parties for such.

While we have our own manufacturing facility in Toronto, we rely on third-party manufacturers to supply pharmaceutical ingredients, and we will be reliant upon a third-party manufacturer to produce certain of our products and product candidates. Third-party manufacturers may not be able to meet our deadlines or adhere to quality standards and specifications. Our reliance on third parties for the manufacture of pharmaceutical ingredients and finished products creates a dependency that could severely disrupt our research and development, our clinical testing, and ultimately our sales and marketing efforts if such third party manufacturers fail to perform satisfactorily, or do not adequately fulfill their obligations. If our manufacturing operation or any contracted manufacturing operation is unreliable or unavailable, we may not be able to move forward with our intended business operations and our entire business plan could fail. There is no assurance that our manufacturing operation or any third-party manufacturers will be able to meet commercialized scale production requirements in a timely manner or in accordance with applicable standards or current Good Manufacturing Practices (“cGMP”).

12

If our manufacturing facility is unable to manufacture our product(s) or the manufacturing process is interrupted due to failure to comply with regulations or for other reasons, it could have a material adverse impact on our business.

If our manufacturing facility fails to comply with regulatory requirements or encounter other manufacturing difficulties, it could adversely affect our ability to supply products. All facilities and manufacturing processes used for the manufacture of pharmaceutical products are subject to inspection by regulatory agencies at any time and must be operated in conformity with the current cGMP regulations. Compliance with FDA and Health Canada cGMP requirements applies to both drug products seeking regulatory approval and to approved drug products. In complying with cGMP requirements, pharmaceutical manufacturing facilities must continually expend significant time, money and effort in production, record-keeping and quality assurance and control so that their products meet applicable specifications and other requirements for product safety, efficacy and quality. Failure to comply with applicable legal requirements subjects our manufacturing facility to possible legal or regulatory action, including shutdown, which may adversely affect our ability to manufacture product. If we are not able to manufacture products at our manufacturing facility because of regulatory, business or any other reasons, the manufacture and marketing of these products would be interrupted. This could have a material adverse impact on our business, results of operations, financial condition, cash flows and competitive position.

The use of legal and regulatory strategies by competitors with innovator products, including the filing of citizen petitions, may delay or prevent the introduction or approval of our product candidates, increase our costs associated with the introduction or marketing of our products, or significantly reduce the profit potential of our product candidates.

Companies with innovator drugs often pursue strategies that may serve to prevent or delay competition from alternatives to their innovator products. These strategies include, but are not limited to:

· filing “citizen petitions” with the FDA that may delay competition by causing delays of our product approvals;

· seeking to establish regulatory and legal obstacles that would make it more difficult to demonstrate a product’s bioequivalence or “sameness” to the related innovator product;

· filing suits for patent infringement that automatically delay FDA approval of products seeking approval based on the Section 505(b)(2) pathway;

· obtaining extensions of market exclusivity by conducting clinical trials of innovator drugs in pediatric populations or by other methods;

· persuading the FDA to withdraw the approval of innovator drugs for which the patents are about to expire, thus allowing the innovator company to develop and launch new patented products serving as substitutes for the withdrawn products;

· seeking to obtain new patents on drugs for which patent protection is about to expire; and

· initiating legislative and administrative efforts in various states to limit the substitution of innovator products by pharmacies.

These strategies could delay, reduce or eliminate our entry into the market and our ability to generate revenues from our products and product candidates.

13

Our products and product candidates, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting our potential to generate revenue.

Even if we are able to obtain regulatory approvals for our product candidates, the success of any of our products will be dependent upon market acceptance by physicians, healthcare professionals and third-party payers and our profitability and growth will depend on a number of factors, including:

· demonstration of safety and efficacy;

· changes in the practice guidelines and the standard of care for the targeted indication;

· relative convenience and ease of administration;

· the prevalence and severity of any adverse side effects;

· the availability of alternative products from competitors;

· the prices of our products relative to those of our competitors;

· pricing, reimbursement and cost effectiveness, which may be subject to regulatory control;

· the number of competitive product entries, and the nature and extent of any aggressive pricing and rebate activities that may follow;

· the timing of our market entry;

· the ability to market our products effectively at the retail level;

· the acceptance of our products by government and private formularies; and

· the availability of adequate third-party insurance coverage or reimbursement.

If any product candidate that we develop does not provide a treatment regimen that is as beneficial as, or is perceived as being as beneficial as, the current standard of care or otherwise does not provide patient benefit, that product candidate, if approved for commercial sale by the FDA or other regulatory authorities, likely will not achieve market acceptance. Our ability to effectively promote and sell any approved products will also depend on pricing and cost-effectiveness, including our ability to produce a product at a competitive price and our ability to obtain sufficient third-party coverage or reimbursement. If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, patients and third-party payers, our ability to generate revenues from that product would be substantially reduced. In addition, our efforts to educate the medical community and third-party payers on the benefits of our product candidates may require significant resources, may be constrained by FDA rules and policies on product promotion, and may never be successful.

The risks and uncertainties inherent in conducting clinical trials could delay or prevent the development and commercialization of our own branded products, which could have a material adverse effect on our results of operations, liquidity, financial condition, and growth prospects.

There are a number of risks and uncertainties associated with clinical trials, which may be exacerbated by our relatively limited experience in conducting and supervising clinical trials and preparing NDAs. The results of initial clinical trials may not be indicative of results that would be obtained from large scale testing. Clinical trials are often conducted with patients having advanced stages of disease and, as a result, during the course of treatment these patients can die or suffer adverse medical effects for reasons that may not be related to the pharmaceutical agents being tested, but which nevertheless affect the clinical trial results. In addition, side effects experienced by the patients may cause delay of approval of our product candidates or a limited application of an approved product. Moreover, our clinical trials may not demonstrate sufficient safety and efficacy to obtain FDA approval.

14

Failure can occur at any time during the clinical trial process and, in addition, the results from early clinical trials may not be predictive of results obtained in later and larger clinical trials, and product candidates in later clinical trials may fail to show the desired safety or efficacy despite having progressed successfully through earlier clinical testing. A number of companies in the pharmaceutical industry have suffered significant setbacks in clinical trials, even in advanced clinical trials after showing positive results in earlier clinical trials. In the future, the completion of clinical trials for our product candidates may be delayed or halted for many reasons, including those relating to the following:

· delays in patient enrollment, and variability in the number and types of patients available for clinical trials;

· regulators or institutional review boards may not allow us to commence or continue a clinical trial;

· our inability, or the inability of our partners, to manufacture or obtain from third parties materials sufficient to complete our clinical trials;

· delays or failures in reaching agreement on acceptable clinical trial contracts or clinical trial protocols with prospective clinical trial sites;

· risks associated with trial design, which may result in a failure of the trial to show statistically significant results even if the product candidate is effective;

· difficulty in maintaining contact with patients after treatment commences, resulting in incomplete data;

· poor effectiveness of product candidates during clinical trials;

· safety issues, including adverse events associated with product candidates;

· the failure of patients to complete clinical trials due to adverse side effects, dissatisfaction with the product candidate, or other reasons;

· governmental or regulatory delays or changes in regulatory requirements, policy and guidelines; and

· varying interpretation of data by the FDA or other applicable foreign regulatory agencies.

In addition, our product candidates could be subject to competition for clinical study sites and patients from other therapies under development by other companies which may delay the enrollment in or initiation of our clinical trials. Many of these companies have significantly more resources than we do.

The FDA or other foreign regulatory authorities may require us to conduct unanticipated additional clinical trials, which could result in additional expense and delays in bringing our product candidates to market. Any failure or delay in completing clinical trials for our product candidates would prevent or delay the commercialization of our product candidates. There can be no assurance our expenses related to clinical trials will lead to the development of brand-name drugs which will generate revenues in the near future. Delays or failure in the development and commercialization of our own branded products could have a material adverse effect on our results of operations, liquidity, financial condition, and our growth prospects.

15

We rely on third parties to conduct clinical trials for our product candidates, and if they do not properly and successfully perform their legal and regulatory obligations, as well as their contractual obligations to us, we may not be able to obtain regulatory approvals for our product candidates.

We design the clinical trials for our product candidates, but rely on contract research organizations and other third parties to assist us in managing, monitoring and otherwise carrying out these trials, including with respect to site selection, contract negotiation and data management. We do not control these third parties and, as a result, they may not treat our clinical studies as their highest priority, or in the manner in which we would prefer, which could result in delays. Although we rely on third parties to conduct our clinical trials, we are responsible for confirming that each of our clinical trials is conducted in accordance with our general investigational plan and protocol. Moreover, the FDA and foreign regulatory agencies require us to comply with regulations and standards, commonly referred to as good clinical practices (“good clinical practices”) for conducting, recording and reporting the results of clinical trials to ensure that the data and results are credible and accurate and that the trial participants are adequately protected. Our reliance on third parties does not relieve us of these responsibilities and requirements. The FDA enforces good clinical practices through periodic inspections of trial sponsors, principal investigators and trial sites. If we, our contract research organizations or our study sites fail to comply with applicable good clinical practices, the clinical data generated in our clinical trials may be deemed unreliable and the FDA may require us to perform additional clinical trials before approving our marketing applications. There can be no assurance that, upon inspection, the FDA will determine that any of our clinical trials comply with good clinical practices. In addition, our clinical trials must be conducted with product manufactured under the FDA’s cGMP regulations. Our failure, or the failure of our contract manufacturers, if any are involved in the process, to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

If third parties do not successfully carry out their duties under their agreements with us; if the quality or accuracy of the data they obtain is compromised due to failure to adhere to our clinical protocols or regulatory requirements; or if they otherwise fail to comply with clinical trial protocols or meet expected deadlines, our clinical trials may not meet regulatory requirements. If our clinical trials do not meet regulatory requirements or if these third parties need to be replaced, such clinical trials may be extended, delayed, suspended or terminated. If any of these events occur, we may not be able to obtain regulatory approval of our product candidates, which could have a material adverse effect on our results of operations, financial condition and growth prospects.

Competition in our industry is intense, and developments by other companies could render our products and product candidates obsolete.

Many of our competitors, including medical technology, pharmaceutical or biotechnology and other companies, universities, government agencies, or research organizations, have substantially greater financial and technical resources and production and marketing capabilities than we have. They also may have greater experience in conducting bioequivalence studies, preclinical testing and clinical trials of pharmaceutical products, obtaining FDA and other regulatory approvals, and ultimately commercializing any approved products. Therefore, our competitors may succeed in developing and commercializing technologies and products that are more effective than the drug delivery technologies we have developed or we are developing or that will cause our technologies or products to become obsolete or non-competitive. In addition, such competitors may obtain FDA approval for products faster than us. Any of the foregoing could render our products obsolete and uncompetitive, which would have a material adverse effect on our business, financial condition and results of operations. Even if we commence further commercial sales of our products, we will be competing against the greater manufacturing efficiency and marketing capabilities of our competitors, areas in which we have limited or no experience.

We rely on collaborative arrangements with third parties that provide manufacturing and/or marketing support for some or all of our products and product candidates. Even if we find a potential partner, we may not be able to negotiate an arrangement on favorable terms or achieve results that we consider satisfactory. In addition, such arrangements can be terminated under certain conditions and do not assure a product’s success. We also face intense competition for collaboration arrangements with other pharmaceutical and biotechnology companies.

Although we believe that our ownership of patents for some of our drug delivery products will limit direct competition for such products, we must also compete with established existing products and other technologies, products and delivery alternatives that may be more effective than our products and proposed products. In addition, we may not be able to compete effectively with other commercially available products or drug delivery technologies.

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We require regulatory approvals for any products that use our drug delivery technologies.

Our drug delivery technologies can be quite complex, with many different components. The development required to take a technology from its earliest stages to its incorporation in a product that is sold commercially can take many years and cost a substantial amount of money. Significant technical challenges are common as additional products incorporating our technologies progress through development.

Any particular technology such as our abuse-deterrent technology may not perform in the same manner when used with different therapeutic agents, and therefore this technology may not prove to be as useful or valuable as originally thought, resulting in additional development work.

If our efforts do not repeatedly lead to successful development of product candidates, we may not be able to grow our pipeline or to enter into agreements with marketing and distribution partners or collaborators that are willing to distribute or develop our product candidates. Delays or unanticipated increases in costs of development at any stage, or failure to solve a technical challenge, could adversely affect our operating results.

If contract manufacturers fail to devote sufficient time and resources to our concerns, or if their performance is substandard, the commercialization of our products could be delayed or prevented, and this may result in higher costs or deprive us of potential product revenues.

We rely on contract manufacturers for certain components and ingredients of our clinical trial materials, such as active pharmaceutical ingredients (“APIs”), and we may rely on such manufacturers for commercial sales purposes as well. Our reliance on contract manufacturers in these respects will expose us to several risks which could delay or prevent the commercialization of our products, result in higher costs, or deprive us of potential product revenues, including:

· Difficulties in achieving volume production, quality control and quality assurance, or technology transfer, as well as with shortages of qualified personnel;

· The failure to establish and follow cGMP and to document adherence to such practices;

· The need to revalidate manufacturing processes and procedures in accordance with FDA and other nationally mandated cGMPs and potential prior regulatory approval upon a change in contract manufacturers;

· Failure to perform as agreed or to remain in the contract manufacturing business for the time required to produce, store and distribute our products successfully;

· The potential for an untimely termination or non-renewal of contracts; and

· The potential for us to be in breach of our collaboration and marketing and distribution arrangements with third parties for the failure of our contract manufacturers to perform their obligations to us.

In addition, drug manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state and foreign agencies to ensure strict compliance with cGMP and other government regulations. While we may audit the performance of third-party contractors, we will not have complete control over their compliance with these regulations and standards. Failure by either our third-party manufacturers or by us to comply with applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of applicable regulatory authorities to grant review of submissions or market approval of drugs, delays, suspension or withdrawal of approvals, product seizures or recalls, operating restrictions, facility closures and criminal prosecutions, any of which could harm our business.

We are subject to currency rate fluctuations that may impact our financial results.

Although our financial results are reported in U.S. dollars and our revenues are payable in U.S. dollars, a large percentage of our expenses are payable in Canadian dollars. Our financial condition may be affected by movements of the U.S. dollar against the Canadian dollar. There may be instances where we have net foreign currency exposure. Any fluctuations in exchange rates may have an adverse effect on our financial results.

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We are exposed to risks arising from the ability and willingness of our third-party commercialization partners to provide documentation that may be required to support information on revenues earned by us from those commercialization partners.

If our third-party commercialization partners, from whom we receive revenues, are unable or unwilling to supply necessary or sufficient documentation to support the revenue numbers in our financial statements in a timely manner to the satisfaction of our auditors, this may lead to delays in the timely publication of our financial results, our ability to obtain an auditor’s report on our financial statements and our possible inability to access the financial markets during the time our results remain unpublished.

We rely on commercial partners, and may rely on future commercial partners, to market and commercialize our products and, if approved, our product candidates, and one or more of those commercial partners may fail to develop and effectively commercialize our current, and any future, products.

Our core competency and strategic focus is on drug development and we now, and may in the future, utilize strategic commercial partners to assist in the commercialization of our products and our product candidates, if approved by the FDA. If we enter into strategic partnerships or similar arrangements, we will rely on third parties for financial resources and for commercialization, sales and marketing. Our commercial partners may fail to develop or effectively commercialize our current, and any future products, for a variety of reasons, including, among others, intense competition, lack of adequate financial or other resources or focus on other initiatives or priorities. Any failure of our third-party commercial partners to successfully market and commercialize our products and product candidates would diminish our revenues.

We have limited sales, marketing and distribution experience.

We have limited experience in the sales, marketing, and distribution of pharmaceutical products. There can be no assurance that, if required, we would be able to establish sales, marketing, and distribution capabilities or make arrangements with our collaborators, licensees, or others to perform such activities or that such efforts would be successful. If we fail to establish successful marketing and sales capabilities or to make arrangements with third parties, our business, financial condition and results of operations will be materially adversely affected.

Our effective tax rate may vary.

Various internal and external factors may have favorable or unfavorable effects on our future effective tax rate. These factors include, but are not limited to, changes in tax laws, regulations and/or rates, changing interpretations of existing tax laws or regulations, future levels of R&D spending, the availability of tax credit programs for the reimbursement of all or a significant proportion of R&D spending, and changes in overall levels of pre-tax earnings. At present, we qualify in Canada for certain research tax credits for qualified scientific research and experimental development pertaining to our drug delivery technologies and drug products in research stages. If Canadian tax laws relating to research tax credits were substantially negatively altered or eliminated, or if a substantial portion of our claims for tax credits were denied by the relevant taxing authorities, pursuant to an audit or otherwise, it would have a material adverse effect upon our financial results.

The effect of U.S. federal income tax law changes enacted in 2017 on the U.S. corporate income tax burden on our future U.S. operations cannot be predicted. Although such legislation reduced the maximum corporate income tax rate from 35% to 21%, it also introduced several changes that could increase our effective rate of tax to a rate in excess of 21% on any net operating income we earn in the future. For example, if our operations are highly leveraged, the new limitations on business interest deductions may prevent us from being able to reduce our corporate income tax base by a significant amount of interest incurred on debt necessary to fund operations. In addition, limitations enacted in and after 2017on a corporation’s ability to reduce its taxable income by net operating loss carryovers may prevent us from using prior year accumulated losses fully to offset taxable income earned in profitable years. Finally, if we make significant payments for interest, royalties, services and otherwise deductible items to our foreign affiliates, the base erosion minimum tax enacted in 2017 may apply to increase our effective rate of U.S. corporate income tax.

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Shareholder ownership interest in the Company may be diluted as a result of future financings and acquisitions.

The Company may seek to raise funds from time to time in public or private issuances of equity in the near future or over the longer term. Sales of the Company’s securities offered through future equity offerings may result in substantial dilution to the interests of the Company’s current shareholders. The sale of a substantial number of securities to investors, or anticipation of such sales, could make it more difficult for the Company to sell equity or equity-related securities in the future at a time and at a price that the Company might otherwise wish to effect sales. In addition, the Company may issue its common shares for various acquisitions in the future, which may also result in substantial dilution to the interests of the Company’s current shareholders.

Authorized capital includes an unlimited number of shares of Common Shares.

The Company’s authorized capital consists of an unlimited number of shares of one class designated as common shares. The directors may create any class or series of shares by resolution but may not make any modification to the provisions attaching to our common shares without the affirmative vote of two-thirds of the votes cast by the holders of the Common Shares. The Company’s common shares do not have pre-emptive rights to purchase additional shares.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

We are a “foreign private issuer,” as such term is defined under the U.S. Securities Act of 1933, as amended (“U.S. Securities Act”), and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”) and related rules and regulations. Under the U.S. Securities Act, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on May 31, 2023.

In the future, we would lose our foreign private issuer status if a majority of our shares are owned by U.S residents and a majority of our directors or executive officers are U.S. citizens or residents or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the Securities and Exchange Commission (“SEC”), which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus and equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an aggregate basis. We would also have to mandatorily comply with U.S. federal proxy requirements, and our executive officers, directors and principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the U.S. Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers. Such transition and modifications would involve additional costs and may divert our management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

Future issuances of our shares could adversely affect the trading price of our Common Shares and could result in substantial dilution to shareholders.

We may need to issue substantial amounts of common shares in the future. There can be no assurance that we will be able to sell any additional shares. To the extent that the market price of our common shares declines, we will need to issue an increasing number of common shares per dollar of equity investment. In addition to our common shares issuable in connection with the exercise of our outstanding warrants, our employees, and directors will hold rights to acquire substantial amounts of our common shares. In order to obtain future financing if required, it is likely that we will issue additional common shares or financial instruments that are exchangeable for or convertible into common shares. Also, in order to provide incentives to employees and induce prospective employees and consultants to work for us, we may offer and issue options to purchase common shares and/or rights exchangeable for or convertible into common shares. Future issuances of shares could result in substantial dilution to shareholders. Capital raising activities, if available, and dilution associated with such activities could cause our share price to decline. In addition, the existence of common share purchase warrants may encourage short selling by market participants. Also, in order to provide incentives to current employees and directors and induce prospective employees and consultants to work for us, we have historically granted options and deferred share units (“DSUs”), and intend to continue to do so or offer and issue other rights exchangeable for or convertible into common shares. Future issuances of shares could result in substantial dilution to all our shareholders. In addition, future public sales by holders of our common shares could impair our ability to raise capital through any future equity offerings.

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Risks related to our Industry

Generic drug manufacturers will increase competition for certain products and may reduce our expected royalties.

Part of our product development strategy includes making NDA filings relating to product candidates involving the novel reformulation of existing drugs with active ingredients that are off-patent. Such NDA product candidates, if approved, are likely to face competition from generic versions of such drugs in the future. Regulatory approval for generic drugs may be obtained without investing in costly and time consuming clinical trials. Because of substantially reduced development costs, manufacturers of generic drugs are often able to charge much lower prices for their products than the original developer of a new product. If we face competition from manufacturers of generic drugs on products we may commercialize, such as our once-daily Oxycodone ER product candidate, the prices at which such of our products are sold and the revenues we may receive could be reduced.

Revenues from generic pharmaceutical products typically decline as a result of competition, both from other pharmaceutical companies and as a result of increased governmental pricing pressure.

Our generic drugs face intense competition. Prices of generic drugs typically decline, often dramatically, especially as additional generic pharmaceutical companies (including low-cost generic producers based in China and India) receive approvals and enter the market for a given product and competition intensifies. Consequently, our ability to sustain our sales and profitability on any given product over time is affected by the number of new companies selling such product and the timing of their approvals.

In addition, intense pressure from government healthcare authorities to reduce their expenditures on prescription drugs could result in lower pharmaceutical pricing, causing decreases in our revenues.

Furthermore, brand pharmaceutical companies continue to defend their products vigorously. For example, brand companies often sell or license their own generic versions of their products, either directly or through other generic pharmaceutical companies (so-called “authorized generics”). No significant regulatory approvals are required for authorized generics, and brand companies do not face any other significant barriers to entry into such market. Brand companies may seek to delay introductions of generic equivalents through a variety of commercial and regulatory tactics. These actions may increase the costs and risks of our efforts to introduce generic products and may delay or prevent such introduction altogether.

Market acceptance of our products will be limited if users of our products are unable to obtain adequate reimbursement from third-party payers.

Government health administration authorities, private health insurers and other organizations generally provide reimbursement for products like ours, and our commercial success will depend in part on whether appropriate reimbursement levels for the cost of our products and related treatments are obtained from government authorities, private health insurers and other organizations, such as health maintenance organizations and managed care organizations. Even if we succeed in bringing any of our products to market, third-party payers may not provide reimbursement in whole or in part for the use of such products.

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Significant uncertainty exists as to the reimbursement status of newly approved health care products. Some of our product candidates, such as our once-daily Oxycodone ER, are intended to replace or alter existing therapies or procedures. These third-party payers may conclude that our products are less safe, less effective or less economical than those existing therapies or procedures. Therefore, third-party payers may not approve our products for reimbursement. We may be required to make substantial pricing concessions in order to gain access to the formularies of large managed-care organizations. If third party payers do not approve our products for reimbursement or fail to reimburse them adequately, sales will suffer as some physicians or their patients may opt for a competing product that is approved for reimbursement or is adequately reimbursed. Even if third-party payers make reimbursement available, these payers’ reimbursement policies may adversely affect our ability and our potential marketing and distribution partners’ ability to sell our products on a profitable basis.

We are subject to significant costs and uncertainties related to compliance with the extensive regulations that govern the manufacturing, labeling, distribution, cross-border imports and promotion of pharmaceutical products as well as environmental, safety and health regulations.

Governmental authorities in the United States and Canada regulate the research and development, testing and safety of pharmaceutical products. The regulations applicable to our existing and future products may change. Regulations require extensive clinical trials and other testing and government review and final approval before we can market our products. The cost of complying with government regulation can be substantial and may exceed our available resources, causing delay or cancellation of our product introductions.

Some abbreviated application procedures for controlled-release drugs and other products, including those related to our ANDA filings, or to the ANDA filings of unrelated third parties in respect of drugs similar to or chemically related to those of our ANDA filings, are or may become the subject of petitions filed by brand-name drug manufacturers or other ANDA filers seeking changes from the FDA in the interpretation of the statutory approval requirements for particular drugs as part of their strategy to thwart or advance generic competition. We cannot predict whether the FDA will make any changes to its interpretation of the requirements applicable to our ANDA applications as a result of these petitions, or whether unforeseen delays will occur in our ANDA filings while the FDA considers such petitions or changes or otherwise, or the effect that any changes may have on us. Any such changes in FDA interpretation of the statutes or regulations, or any legislated changes in the statutes or regulations, may make it more difficult for us to file ANDAs or obtain further approval of our ANDAs and generate revenues and thus may materially harm our business and financial results.

Any failure or delay in obtaining regulatory approvals could make it so that we are unable to market any products we develop and therefore adversely affect our business, results of operations, financial condition and cash flows. Even if product candidates are approved in the United States or Canada, regulatory authorities in other countries must approve a product prior to the commencement of marketing the product in those countries. The time required to obtain any such approval may be longer than in the United States or Canada, which could cause the introduction of our products in other countries to be cancelled or materially delayed.

The manufacturing, distribution, processing, formulation, packaging, labeling, cross-border importation and advertising of our products are subject to extensive regulation by federal agencies, including the FDA, Drug Enforcement Administration, Federal Trade Commission, Consumer Product Safety Commission and Environmental Protection Agency in the United States, and Health Canada and Canada Border Services Agency in Canada, among others. We are also subject to state and local laws, regulations and agencies. Compliance with these regulations requires substantial expenditures of time, money and effort in such areas as production and quality control to ensure full technical compliance. Failure to comply with FDA and Health Canada and other governmental regulations can result in fines, disgorgement, unanticipated compliance expenditures, recall or seizure of products, total or partial suspension of production or distribution, suspension of the FDA’s or Health Canada’s review of NDAs, ANDAs or ANDSs, as the case may be, enforcement actions, injunctions and civil or criminal prosecution.

Environmental laws have changed in recent years and we may become subject to stricter environmental standards in the future and face larger capital expenditures in order to comply with environmental laws. We are subject to extensive federal, state, provincial and local environmental laws and regulations which govern the discharge, emission, storage, handling and disposal of a variety of substances that may be used in, or result from, our operations. We are also subject periodically to environmental compliance reviews by environmental, safety, and health regulatory agencies and to potential liability for the remediation of contamination associated with both present and past hazardous waste generation, handling, and disposal activities. We cannot accurately predict the outcome or timing of future expenditures that we may be required to make in order to comply with the federal, state, local and provincial environmental, safety, and health laws and regulations that are applicable to our operations and facilities.

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There has been an increased public awareness of the problems associated with the potential for abuse opioid-based medications.

There has been increasing legislative attention to opioid abuse in the U.S., including passage of the 2016 Comprehensive Addiction and Recovery Act and the 21st Century Cures Act, which, among other things, strengthens state prescription drug monitoring programs and expands educational efforts for certain populations. These laws could result in fewer prescriptions being written for opioid drugs, which could impact future sales of our Oxycodone ER and related opioid product candidates.

Federal, state and local governmental agencies have increased their level of scrutiny of commercial practices of companies marketing and distributing opioid products, resulting in investigations, litigation and regulatory intervention affecting other companies. A number of counties and municipalities have filed lawsuits against pharmaceutical wholesale distributors, pharmaceutical manufacturers and retail chains related to the distribution of prescription opioid pain medications. Policy makers and regulators are seeking to reduce the impact of opioid abuse on families and communities and are focusing on policies aimed at reversing the potential for abuse. In furtherance of those efforts, the FDA has developed an action plan and has committed to enhance safety labeling, require new data, strengthen post-market requirements, update the Risk Evaluation and Mitigation Strategy program, expand access to and encourage the development of abuse-deterrent formulations and alternative treatments, and re-examine the risk-benefit profile of opioids to consider the wider public health effects of opioids, including the risk of misuse. Several states also have passed laws and have employed other clinical and public health strategies to curb prescription drug abuse, including prescription limitations, increased physician education requirements, enhanced monitoring programs, tighter restrictions on access, and greater oversight of pain clinics. This increasing scrutiny and related governmental and private actions, even if not related to a product that we intend to manufacture and commercialize, could have an unfavorable impact on the overall market for opioid-based products such as our Oxycodone ER product candidate, or otherwise negatively affect our business.

Healthcare reform measures could hinder or prevent the commercial success of our products and product candidates.

In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system that could affect our future revenues and potential profitability. Federal and state lawmakers regularly propose and, at times, enact legislation that results in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. An example of this is the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or, collectively, the Affordable Care Act. In addition, other legislative changes have been proposed and adopted in the U.S. since the Affordable Care Act was enacted.

The cost of prescription pharmaceuticals has also been the subject of considerable discussion in the U.S. Members of Congress have indicated that they will address such costs through new legislative and administrative measures. To date, there have been several U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

Individual state legislatures in the U.S. have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing. Some of these measures include price or patient reimbursement constraints, discounts, restrictions on certain product access, marketing cost disclosure and transparency measures, and, in some cases, measures designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

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We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, and which could result in reduced demand for our products once approved or additional pricing pressures, and may adversely affect our operating results.

Our ability to market and promote our Oxycodone ER product candidate and its abuse-deterrent features will be determined by FDA-approved labeling requirements.

The commercial success of our Oxycodone ER product candidate will depend upon our ability to obtain requested FDA-approved labeling describing its abuse-deterrent features. Our failure to achieve FDA approval of requested product labeling containing such information will prevent us from advertising and promoting the abuse-deterrent features of our product candidate in a way to differentiate it from competitive products. This would make our product candidate less competitive in the market. Moreover, FDA approval is required in order to make claims that a product has an abuse-deterrent effect.

In April 2015, the FDA published final guidance with respect to the evaluation and labeling of abuse-deterrent opioids. The guidance provides direction as to the studies and data required for obtaining abuse-deterrent claims in a product label. If a product is approved by the FDA to include such claims in its label, the applicant may use the approved labeling information about the abuse-deterrent features of the product in its marketing efforts to physicians.

Although we intend to provide data to the FDA to support approval of abuse-deterrence label claims for Oxycodone ER, there can be no assurance that Oxycodone ER or any of our other product candidates will receive FDA-approved labeling that describes the abuse-deterrent features of such products. The FDA may find that our studies and data do not support our requested abuse-deterrent labeling or that our product candidate does not provide substantial abuse-deterrence benefits because, for example, its deterrence mechanisms do not address the way it is most likely to be abused. Furthermore, the FDA could change its guidance, which could require us to conduct additional studies or generate additional data. If the FDA does not approve our requested abuse-deterrent labeling, we will be limited in our ability to promote Oxycodone ER based on its abuse-deterrent features and, as a result, our business may suffer.

We may be subject to product liability claims for which we may not have or be able to obtain adequate insurance coverage.

The testing and marketing of pharmaceutical products entails an inherent risk of product liability. Liability exposures for pharmaceutical products can be extremely large and pose a material risk. In some instances, we may be or may become contractually obligated to indemnify third parties for such liability. Our business may be materially and adversely affected by a successful product liability claim or claims in excess of any insurance coverage that we may have. Further, even if claims are not successful, the costs of defending such claims and potential adverse publicity could be harmful to our business.

While we currently have, and in some cases are contractually obligated to maintain, insurance for our business, property and our products as they are administered in bioavailability/bioequivalence studies, first and third party insurance is increasingly costly and narrow in scope. Therefore, we may be unable to meet such contractual obligations or we may be required to assume more risk in the future. If we are subject to third party claims or suffer a loss or damage in excess of our insurance coverage, we may be required to bear that risk in excess of our insurance limits. Furthermore, any first or third party claims made on our insurance policy may impact our ability to obtain or maintain insurance coverage at reasonable costs or at all in the future. Any of the foregoing may have a material adverse effect on our business and financial condition.

Our products involve the use of hazardous materials and waste, and as a result we are exposed to potential liability claims and to costs associated with complying with laws regulating hazardous waste.

Our R&D activities involve the use of hazardous materials, including chemicals, and are subject to Canadian federal, provincial and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste products. It is possible that accidental injury or contamination from these materials may occur. In the event of an accident, we could be held liable for any damages, which could exceed our available financial resources. Further, we may not be able to maintain insurance to cover these costs on acceptable terms, or at all. In addition, we may be required to incur significant costs to comply with environmental laws and regulations in the future.

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Our operations may be adversely affected by risks associated with international business.

We may be subject to certain risks that are inherent in an international business, including:

· varying regulatory restrictions on sales of our products to certain markets and unexpected changes in regulatory requirements;

· tariffs, customs, duties, and other trade barriers;

· difficulties in managing foreign operations and foreign distribution partners;

· longer payment cycles and problems in collecting accounts receivable;

· political risks;

· foreign exchange controls that may restrict or prohibit repatriation of funds;

· export and import restrictions or prohibitions, and delays from customs brokers or government agencies;

· seasonal reductions in business activity in certain parts of the world; and

· potentially adverse tax consequences.

Depending on the countries involved, any or all of the foregoing factors could materially harm our business, financial condition and results of operations.

In the event we pursue growth through international operations, such growth could strain our resources, and if we are unable to manage any growth we may experience, we may not be able to successfully implement our business plan.

In connection with any geographic expansion we may pursue, international operations would involve substantial additional risks, including, among others: difficulties complying with the U.S. Foreign Corrupt Practices Act and other applicable anti-bribery laws; difficulties maintaining compliance with the various laws and regulations of multiple jurisdictions that may be applicable to our business, many of which may be unfamiliar to us; more complexity in our regulatory and accounting compliance; differing or changing obligations regarding taxes, duties or other fees; limited intellectual property protection in some jurisdictions; risks associated with currency exchange and convertibility, including vulnerability to appreciation and depreciation of foreign currencies; uncertainty related to developing legal and regulatory systems and standards for economic and business activities in some jurisdictions; trade restrictions or barriers, including tariffs or other charges and import-export regulations, changes in applicable laws or policies; the impact of and response to natural disasters; and the potential for war, civil or political unrest and economic and financial instability. The occurrence of any of these risks could limit our ability to pursue international expansion, increase our costs or expose us to fines or other legal sanctions, any of which could negatively impact our business, reputation and financial condition.

Our business could be adversely affected by the novel coronavirus (COVID-19) outbreak.

Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases could have a material adverse effect on the Company. The ongoing COVID-19 outbreak and pandemic present complex challenges and uncertainties to organizations across the world. Businesses face unprecedented times and with the situation being dynamic, the ultimate duration and magnitude of COVID-19’s impact on the economy and our business are not known at this time. Travel bans, self-quarantines and social distancing have caused material disruptions to businesses globally, resulting in economic slowdown, with global equity markets experiencing volatility and weakness. The limitations on travel and interruption in global shipping is affecting the transport of supplies and raw materials. Any disruption of our suppliers would likely impact our ability to conduct R&D and commercial operations, and ultimately materially adversely affect our operating results.

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The extent to which COVID-19 impacts our results will depend on future developments, which are still uncertain and cannot be predicted, including the duration of the outbreak, new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. It is not possible to reliably estimate length and severity of the developments and impact on the future financial condition of the company. The challenges and uncertainties could impair the Company’s ability to raise capital, postpone research activities, impact our ability to maintain operations and launch new products; it could also impair the value of our shares, our long-lived assets, and materially adversely impact our ability to generate potential future revenue.

Risks related to our Common Shares

Trading on the OTC Markets is volatile and sporadic, which could depress the market price of the Company’s Common Shares and make it difficult for the Company’s shareholders to resell their shares.

The Company’s common shares are quoted on the OTCQB tier of the OTC Markets. Trading in stock quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors, some of which may have little to do with the Company’s operations or business prospects. This volatility could depress the market price of the Company’s common shares for reasons unrelated to operating performance. Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like the New York Stock Exchange. These factors may result in investors having difficulty reselling any shares of the Company’s common shares.

We may on occasion be unable to timely file certain periodic reports and other documents with the regulatory bodies in Canada and the United States.

We may not be able to timely file with the regulatory bodies in Canada and the United States our year-end and quarterly financial statements and management discussion and analysis, or our Annual Information Form and annual report on Form 20-F by the requisite due dates. If we are not able to file any required reports and other documents in the future in the times specified by the U.S. Exchange Act, we will continue to lose our eligibility to use Form F-3 for future capital raises, and that could impair our ability to conduct public offerings of our stock. Our inability to timely file required reports in the future could materially and adversely affect our financial condition and results of operations.

Our share price has been highly volatile and our shares could suffer a further decline in value.

The trading price of our Common Shares has been highly volatile and could continue to be subject to wide fluctuations in price in response to various factors, many of which are beyond our control, including:

· sales of our Common Shares, including any sales made in connection with future financings;

· announcements regarding new or existing corporate relationships or arrangements;

· announcements by us of significant acquisitions, joint ventures, or capital commitments;

· actual or anticipated period-to-period fluctuations in financial results;

· clinical and regulatory development regarding our product candidates;

· litigation or threat of litigation;

· failure to achieve, or changes in, financial estimates by securities analysts;

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· comments or opinions by securities analysts or members of the medical community;

· announcements regarding new or existing products or services or technological innovations by us or our competitors;

· conditions or trends in the pharmaceutical and biotechnology industries;

· additions or departures of key personnel or directors;

· economic and other external factors or disasters or crises;

· limited daily trading volume; and

· developments regarding our patents or other intellectual property or that of our competitors.

In addition, the stock market in general and the market for drug development companies in particular have experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Further, there has been significant volatility in the market prices of securities of life science companies. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. Litigation of this type has been instituted against us could result in substantial costs, potential liabilities, and the diversion of management’s attention and resources.

Sales of a significant number of our Common Shares in the public markets, or the perception that such sales could occur, could depress the market price of the Common Shares.

Sales of a substantial number of our common shares or securities convertible or exchangeable into common shares in the public markets could depress the market price of the common shares and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of common shares would have on the market price of our common shares.

As of May 31, 2023, we had approximately 33,092,665 common shares outstanding. In order to raise additional capital, we intend to offer additional common shares or other securities convertible into or exchangeable for our common shares. In addition, a substantial portion of our common shares are currently freely trading without restriction under the U.S. Securities Act, having been registered for resale or held by their holders for over six months and are eligible for sale under Rule 144.

If the holders of our registered common shares choose to sell such shares in the public market or if holders of our convertible securities exercise or convert their securities and sell the underlying common shares in the public market, or if holders of currently restricted common shares choose to sell such shares in the public market, the prevailing market price of our common shares may decline. The sale of shares issued upon the exercise of our securities convertible into or exchangeable for our common shares could also further dilute the holdings of our then-existing shareholders. In addition, future public sales by holders of our common shares could impair our ability to raise capital through equity offerings.

In April 2021, the Company completed a private placement offering of an aggregate of 9,414,560 Common Shares at a price of CAD$0.41 per Common Share for total gross proceeds of CAD$3,859,969.60. The Common Shares were subject to a four-month hold period which expired on August 22, 2021 in accordance with applicable securities legislation and the policies of the Toronto Stock Exchange (the “TSX”). The Common Shares were sold only to non-U.S. persons outside of the United States pursuant to Regulation S under the United States Securities Act of 1933 (the “1933 Act”). The Common Shares issued in the Private Placement were not registered under the 1933 Act or the securities laws of any state in the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) or persons in the United States absent registration or an applicable exemption from such registration requirements.

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On October 22, 2009, Intellipharmaceutics Ltd. (“IPC Ltd”) and Vasogen Inc. (“Vasogen”) completed a plan of arrangement and merger (the “IPC Arrangement Agreement”), resulting in the formation of the Company. Our shareholders who received shares under the IPC Arrangement Agreement who were not deemed “affiliates” of either Vasogen, IPC Ltd. or us prior to the IPC Arrangement Agreement were able to resell the common shares that they received without restriction under the U.S. Securities Act. The common shares received by an “affiliate” after the IPC Arrangement Agreement or who were “affiliates” of either Vasogen, IPC Ltd. or us prior to the IPC Arrangement Agreement are subject to certain restrictions on resale under Rule 144.

As of June 13, 2023, there are currently common shares issuable upon the exercise of outstanding options and warrants and the conversion of the outstanding Debentures for an aggregate of approximately 26,498,974 common shares. To the extent any of our options and warrants are exercised and the Debentures are converted, a shareholder’s percentage ownership will be diluted and our stock price could be further adversely affected. Moreover, as the underlying shares are sold, the market price could drop significantly if the holders of these restricted shares sell them or if the market perceives that the holders intend to sell these shares.

We have no history or foreseeable prospect of paying cash dividends.

We have not paid any cash dividends on our Common Shares and do not intend to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Dividend payments in the future may also be limited by loan agreements or covenants contained in other securities we may issue. Any future determination to pay cash dividends will be at the discretion of our Board and depend on our financial condition, results of operations, capital and legal requirements and such other factors as our Board deems relevant.

There may not be an active, liquid market for our Common Shares.

There is no guarantee that an active trading market for our Common Shares will be maintained on OTCQB or TSX. Investors may not be able to sell their shares quickly or at the latest market price if trading in our Common Shares is not active.

There may be future sales or other dilution of our equity, which may adversely affect the market price of our Common Shares.

The Company may, from time to time, issue additional Common Shares, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common shares. The market price of our Common Shares could decline as a result of sales of Common Shares or securities that are convertible into or exchangeable for, or that represent the right to receive, Common Shares or the perception that such sales could occur.

Future sales of our Common Shares may cause the prevailing market price of our Common Shares to decrease.

We have registered a substantial number of outstanding Common Shares and common shares that are issuable upon the exercise of outstanding warrants. If the holders of our registered Common Shares choose to sell such shares in the public market or if holders of our warrants exercise their purchase rights and sell the underlying Common Shares in the public market, or if holders of currently restricted common shares choose to sell such shares in the public market, the prevailing market price for our Common Shares may decline. The sale of shares issued upon the exercise of our warrants (and options) could also further dilute the holdings of our then existing shareholders. In addition, future public sales by holders of our Common Shares could impair our ability to raise capital through equity offerings.

We may in the future issue preference shares which could adversely affect the rights of holders of our common shares and the value of such shares.

Our Board has the ability to authorize the issue of an unlimited number of preference shares in series, and to determine the price, rights, preferences and privileges of those shares without any further vote or action by the holders of our common shares. Although we have no preference shares issued and outstanding, preference shares issued in the future could adversely affect the rights and interests of holders of our Common Shares.

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Our Common Shares may not continue to be listed on the TSX.

Failure to maintain the applicable continued listing requirements of the TSX could result in our common shares being delisted from the TSX. The TSX will normally consider the delisting of securities if, in the opinion of the exchange, it appears that the public distribution, price, or trading activity of the securities has been so reduced as to make further dealings in the securities on TSX unwarranted.

For example, participating securities may be delisted from the TSX if, among other things, the market value of an issuer’s securities that are listed on the TSX is less than C$3,000,000 over any period of 30 consecutive trading days. In such circumstances, the TSX may notify an issuer that it is under delisting review and the issuer will normally be given up to 120 days from the date of such notification to correct the fall in market value and such other deficiencies noted by the TSX. At any time prior to the end of the delisting review period, the TSX will provide the issuer with an opportunity to be heard where the issuer may present submissions to satisfy the TSX that all deficiencies identified in the TSX’s notice have been rectified. If at the conclusion of the hearing the issuer cannot satisfy the TSX that the deficiencies identified have been rectified and that no other delisting criteria are then applicable to the issuer, the TSX will determine whether to delist the issuer’s securities.

If the market price of our Common Shares declines further or we are unable to maintain other listing requirements, the TSX may determine to delist our Common Shares. If our common shares are no longer listed on the TSX, they may be eligible for listing on the TSX Venture Exchange. In the event that we are not able to maintain a listing for our Common Shares on the TSX or the TSX Venture Exchange, it may be extremely difficult or impossible for shareholders to sell their Common Shares in Canada. Moreover, if we are delisted from the TSX, but obtain a substitute listing for our common shares on the TSX Venture Exchange, our Common Shares will likely have less liquidity and more price volatility than experienced on the TSX.

Shareholders may not be able to sell their Common Shares on any such substitute exchange in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if our Common Shares are delisted from the TSX, the price of our Common Shares is likely to decline.

Our Common Shares are currently a “penny stock” under SEC rules. It may be more difficult to resell shares of Common Shares classified as “penny stock.”

Our Common Shares are a “penny stock” under applicable SEC rules. Transactions in securities that are traded in the United States by companies with net tangible assets of $5,000,000 or less and a market price per share of less than $5.00 that are not traded on Nasdaq or on other securities exchanges may be subject to the “penny stock” rules promulgated under the U.S. Exchange Act. Under these rules, broker-dealers who recommend such securities to persons other than institutional investors must:

· make a special written suitability determination for the purchaser;

· receive the purchaser’s written agreement to a transaction prior to sale;

· provide the purchaser with risk disclosure documents which identify risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

· obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

As a result of these requirements, since our common shares are subject to the “penny stock” rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in these shares in the United States may be significantly limited. Accordingly, the market price of the shares may be depressed, and investors may find it more difficult to sell the shares.

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As long as our stock price remains below $5.00 per share, our shareholders will face restrictions in using our shares as collateral for margin accounts.

The closing price of our common shares on the OTCQB on June 13, 2023 was $0.06 per share. If the market price of our common shares remains below $5.00 per share, under Federal Reserve regulations and account maintenance rules of many brokerages, our shareholders will face restrictions in using such shares as collateral for borrowing in margin accounts. These restrictions on the use of our common shares as collateral may lead to sales of such shares creating downward pressure on and increased volatility in, the market price of our common shares. In addition, many institutional investors will not invest in stocks whose prices are below $5.00 per share.

Our shareholders may face significant restrictions on the resale of our Common Shares due to state “Blue Sky” laws.

Each state has its own securities laws, often called “blue sky” laws, which (i) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (ii) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state. Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered in that state.

Absent compliance with such individual state laws, our common shares may not be traded in such jurisdictions. Because the securities have not been registered for resale under the Blue Sky laws of any state, the holders of such shares and persons who desire to purchase them in any trading market that might develop in the future, should be aware that there may be significant state Blue Sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. Accordingly, investors may not be able to liquidate their investments and should be prepared to hold common shares for an indefinite period of time. You should therefore consider the resale market for our common shares to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.

As a foreign private issuer in the United States, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer.

As a foreign private issuer under U.S. securities laws we are not required to comply with all the periodic disclosure requirements of the U.S. Exchange Act applicable to domestic United States companies and therefore the publicly available information about us may be different or more limited than if we were a United States domestic issuer. In addition, our officers, directors, and principal shareholders are exempt from the “real time” reporting and “short swing” profit recovery provisions of Section 16 of the U.S. Exchange Act and the rules thereunder. Although under Canadian rules, our officers, directors and principal shareholders are generally required to file on SEDI (www.sedi.ca) reports of transactions involving our common shares within five calendar days of such transaction, our shareholders may not know when our officers, directors and principal shareholders purchase or sell our common shares as timely as they would if we were a United States domestic issuer.

We are exposed to risks if we are unable to comply with laws and future changes to laws affecting public companies, including the Sarbanes-Oxley Act of 2002 (“SOX”), and also to increased costs associated with complying with such laws.

Any future changes to the laws and regulations affecting public companies, as well as compliance with existing provisions of SOX in the United States and applicable Canadian securities laws, regulations, rules and policies, may cause us to incur increased costs to comply with such laws and requirements, including, among others, hiring additional personnel and increased legal, accounting and advisory fees. Delays, or a failure to comply with applicable laws, rules and regulations could result in enforcement actions, the assessment of other penalties and civil suits. The new laws and regulations may increase potential costs to be borne under indemnities provided by us to our officers and directors and may make it more difficult to obtain certain types of insurance, including liability insurance for directors and officers; as such, we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult to attract and retain qualified persons to serve on our Board, or as executive officers.

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We are required annually to review and report on the effectiveness of our internal control over financial reporting in accordance with SOX Section 404 and Multilateral Instrument 52-109 – Certification of Disclosure in Issuer’s Annual and Interim Filings of the Canadian Securities Administrators. The results of this review are reported in our Annual Report on Form 20-F and in our Management Discussion and Analysis.

Management’s review is designed to provide reasonable, not absolute, assurance that all material weaknesses in our internal controls are identified. Material weaknesses represent deficiencies in our internal controls that may not prevent or detect a misstatement occurring which could have a material adverse effect on our quarterly or annual financial statements. In addition, there can be no assurance that any remedial actions we take to address any material weaknesses identified will be successful, nor can there be any assurance that further material weaknesses will not be identified in future years. Material errors, omissions or misrepresentations in our disclosures that occur as a result of our failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, financial condition, results of operations, and the value of our common shares.

We may be classified as a “passive foreign investment company” (“PFIC”), for U.S. income tax purposes, which could have significant and adverse tax consequences to U.S. investors.

The possible classification of our Company as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes could have significant and adverse tax consequences for U.S. Holders (as defined below) with respect to the sale or other disposition of our common shares acquired through the exercise of certain warrants. It may be possible for U.S. Holders of common shares to mitigate certain of these consequences by making an election (a so-called “QEF Election”) to treat us as a “qualified electing fund” or “QEF” under Section 1295 of the Internal Revenue Code (the “Code”); or a mark-to-market election under Section 1296 of the Code. A non-U.S. corporation generally will be a PFIC if, for a taxable year (a) 75% or more of the gross income of such corporation for such taxable year consists of specified types of passive income or (b) on average, 50% or more of the assets held by such corporation either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if such non-U.S. corporation is not publicly traded and either is a “controlled foreign corporation” under Section 957(a) of the Code, or makes an election to determine whether it is a PFIC based on the adjusted basis of the assets).

The determination of whether we are, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to various interpretations. We believe that there is a substantial basis for concluding that we were not a PFIC during our 2021 taxable year and will not likely be a PFIC during our 2022 taxable year, although that conclusion is not free from doubt. Because PFIC status is based on our income, assets and activities for the entire taxable year, and our market capitalization, it is not possible to determine whether we will be characterized as a PFIC for the 2023 taxable year until after the close of the taxable year. The tests for determining PFIC status are subject to a number of uncertainties. These tests are applied annually, and it is difficult to accurately predict future income, assets and activities relevant to this determination. In addition, because the market price of our common shares is likely to fluctuate, the market price may affect the determination of whether we will be considered a PFIC. There can be no assurance that we will not be considered a PFIC for any taxable year (including our 2021taxable year). Absent one of the elections described above, if we are a PFIC for any taxable year during which a U.S. Holder holds our common shares, we generally will continue to be treated as a PFIC regardless of whether we cease to meet the PFIC tests in one or more subsequent years. Accordingly, no assurance can be given that we will not constitute a PFIC in the current (or any future) tax year or that the Internal Revenue Service (the “IRS”) will not challenge any determination made by us concerning our PFIC status.

If we are a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the ownership and disposition of our common shares will depend to some extent on whether such U.S. Holder makes a QEF or mark-to-market election after acquisition of such shares (including an acquisition through the exercise of warrants). Unless otherwise provided by the IRS, a U.S. holder of our common shares is generally required to file an informational return annually to report its ownership interest in the Company during any year in which we are a PFIC.

The foregoing only speaks to the United States federal income tax considerations as to the Code in effect on the date of this annual report.

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The foregoing does not purport to be a complete enumeration or explanation of the tax risks involved in an investment in our Company. Prospective investors should read this entire annual report and consult with their own legal, tax and financial advisors before deciding to invest in our company.

It may be difficult to obtain and enforce judgments against us because of our Canadian residency.

We are governed by the laws of Canada. All of our directors and officers are residents of Canada and all or a substantial portion of our assets and the assets of such persons may be located outside of the United States. As a result, it may be difficult for shareholders to effect service of process upon us or such persons within the United States or to realize in the United States on judgments of courts of the United States predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States. In addition, there is doubt as to the enforceability in Canada of liabilities predicated solely upon U.S. federal securities law against us, our directors, controlling persons and officers who are not residents of the United States, in original actions or in actions for enforcements of judgments of U.S. courts.

Other Risks

There are other unidentified risks.

The risks set forth above are not a complete list of the risks facing purchasers of our securities. We acknowledge that there may exist significant risks yet to be recognized or encountered to which we may not be able to effectively respond. There can be no assurance that we will succeed in addressing these risks or future potential risks, and any failure to do so could have a material adverse effect on our business, financial condition and results of operations.

Item 4. Information on the Company

A. History and Development of the Company

The Company, Intellipharmaceutics International Inc., was incorporated under the Canada Business Corporations Act (the “CBCA”) by certificate and articles of arrangement dated October 22, 2009.

Our registered principal office is located at 30 Worcester Road, Toronto, Ontario, Canada M9W 5X2. Our telephone number is (416) 798-3001 and our facsimile number is (416) 798-3007.

Our agent for service in the United States is Corporation Service Company at 1090 Vermont Avenue N.W., Washington, D.C. 20005.

On October 19, 2009, the shareholders of IPC Ltd. and Vasogen approved the IPC Arrangement Agreement that resulted in the October 22, 2009 court-approved merger of IPC Ltd. and another U.S. subsidiary of Intellipharmaceutics Inc., coincident with an arrangement pursuant to which a predecessor of the Company combined with 7231971 Canada Inc., a new Vasogen company that acquired substantially all of the assets and certain liabilities of Vasogen, including the proceeds from its non-dilutive financing transaction with Cervus LP (the “IPC Arrangement Transaction”). The completion of the IPC Arrangement Transaction on October 22, 2009 resulted in the formation of the Company, which is incorporated under the laws of Canada and governed by the CBCA. The common shares of the Company are currently traded on the TSX and OTCQB.

For the years ended November 30, 2021, 2020 and 2019, we spent a total of $2,149,126, $2,661,875, and $3,517,018, respectively, on research and development. Over the past three fiscal years and up to June 13, 2023, we have raised approximately 3,319,448 in gross proceeds from the issuance of equity and convertible debt securities. Our common shares are currently listed on the TSX and on OTCQB under the symbol “IPCI” and “IPCIF” respectively.

During the last and current financial year, we have not been aware of any indications of public takeover offers by third parties in respect of the Company’s shares or by the Company in respect of other companies’ shares.

For additional information on key events, see Item 4.B below.

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For information on the availability of, and access to, information regarding the Company filed with the SEC or presented on the Company’s website, see Item 10.H. below.

B. Business Overview

Corporate Developments

· On March 7, 2023 the Company announced that the Ontario Securities Commission (the “OSC”) has issued a general “failure to file” cease trade order (CTO) pursuant to National Policy 11-103 – Failure to File Cease Trade Orders in Multiple Jurisdictions dated March 6, 2023 in respect of the securities of the Company as a result of the Company’s inability to file its annual audited financial statements and other required filings for the fiscal year ended November 30, 2022 by the filing deadline of February 28, 2023.

· The CTO prohibits the trading, whether direct or indirect, by any person of any securities of the Company in each jurisdiction in Canada in which the Company is a reporting issuer for as long as the CTO remains in effect; however, the CTO provides an exception for beneficial security holders of the Company who are not (and who were not as of March 6, 2023) insiders or control persons of the Company and who sell securities of the Company acquired before March 6, 2023 if both of the following criteria are met: (i) the sale is made through a “foreign organized regulated market”, as defined in section 1.1 of the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada and (ii) the sale is made through an investment dealer registered in a jurisdiction of Canada in accordance with applicable securities legislation. If the default is remedied within 90 days of the date of the CTO (March 6, 2023), including any annual or interim financial statements, MD&A and certifications that subsequently became due, the filing of the documents constitutes the application to revoke the CTO and no application fee will be required.

The Company filed the November 2022 annual financial statements, MD&A and required certifications as well as the Q1 2023 interim financial statements, MD&A and required certifications June 5, 2023 meeting the 90-day deadline. The failure to file cease trade order was revoked dated June 7, 2023.

· On February 3, 2023 the Company had announced that its annual audited financial statements for the fiscal year ended November 30, 2022, related management’s discussion and analysis and accompanying Chief Executive Officer and Chief Financial Officer certificates and annual information form for the fiscal year ended November 30, 2022 due February 28, 2023 will not be filed by the filing deadline.

· In connection with the anticipated delay, the Company had applied to the applicable Canadian securities regulators that a management cease trade order (the “MCTO”) be imposed to restrict trading in the common shares in the capital of the Company by insiders of the Company, as opposed to a general cease trade order, which would restrict all trading in the shares, pursuant to National Policy 12-203 – Management Cease Trade orders (“NP 12-203”). However we were informed that the company was not eligible for that consideration.

· In August 2022 the Company announced that it has entered into a license and supply agreement with Taro Pharmaceuticals Inc. (“Taro”), by which the Company has granted Taro an exclusive license to market, sell and distribute in Canada, Desvenlafaxine Extended-release Tablets in the 50 mg and 100 mg strengths (the “licensed product”) approved for sale in the Canadian market by the Pharmaceutical Drugs Directory (PDD) of Health Canada.

· In February 2022 the Company received marketing approval for the Canadian market from Health Canada (notice of compliance) for generic Pristiq (desvenlafaxine succinate extended-release tablets) in the 50 and 100 mg strengths.

· In November 2021 the Company received final FDA approval for its Dexmethylphenidate Extended-release Capsules in the 5 mg, 10 mg, 30 mg and 40 mg strengths. The 15 mg and 30 mg strengths were initially approved and commercialized by Par Pharmaceutical Inc. (“Par”) in November 2013; the additional strengths launched at the time, and subsequently, were approved in a Par abbreviated new drug application.

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There can be no assurance that our generic of Pristiq (desvenlafaxine succinate extended-release tablets) in the 50 and 100 mg strengths approved for marketing in Canada and licensed to Taro will be successfully commercialized and produce significant revenues for us. There can be no assurance that any of the generic products approved for the Company, for the US or Canadian market, will ever be successfully commercialized and produce significant revenue for us.

Nasdaq Delisting and OTCQB Quotation

In March 2019, we received formal notice that a Nasdaq Panel had determined to delist our Common Shares from Nasdaq based upon our non-compliance with the $1.00 bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The suspension of trading on Nasdaq took effect at the open of business on March 21, 2019. Our Common Shares began trading on the OTCQB under the symbol “IPCIF”, commencing on March 21, 2019. Our shares also are listed on the TSX under the symbol “IPCI” and our non-compliance with Nasdaq’s requirements did not impact our listing or trading status on that exchange.

Our Company

On October 22, 2009, Intellipharmaceutics Ltd. and Vasogen Inc. completed the IPC Arrangement Transaction, a court-approved plan of arrangement and merger resulting in the formation of the Company, which is incorporated under the laws of Canada and the common shares of which are currently traded on the TSX and OTCQB.

We are a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. Our patented Hypermatrix™ technology is a multidimensional controlled-release drug delivery platform that can be applied to the efficient development of a wide range of existing and new pharmaceuticals. Based on this technology platform, we have developed several drug delivery systems and a pipeline of products (some of which have received FDA approval) and product candidates in various stages of development, including ANDAs filed with the FDA (and one ANDS filed with Health Canada) and one NDA filing, in therapeutic areas that include neurology, cardiovascular, gastrointestinal tract (“GIT”), diabetes and pain.

In November 2005, we entered into a license and commercialization agreement with Par (as amended on August 12, 2011 and September 24, 2013, the “Par agreement”), pursuant to which we granted Par an exclusive, royalty-free license to make and distribute in the U.S. all strengths of our generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules for a period of 10 years from the date of commercial launch (which was November 19, 2013). Under the Par agreement, we made a filing with the FDA for approval to market generic Focalin XR® capsules in various strengths in the U.S. (the “Company ANDA”), and are the owner of that Company ANDA, as approved in part by the FDA. We retain the right to make and distribute all strengths of the generic product outside of the U.S. Calendar quarterly profit-sharing payments for its U.S. sales under the Company ANDA are payable by Par to us as calculated pursuant to the Par agreement. Within the purview of the Par agreement, Par also applied for and owns an ANDA pertaining to all marketed strengths of generic Focalin XR® (the “Par ANDA”), and is now approved by the FDA, to market generic Focalin XR® capsules in all marketed strengths in the U.S. As with the Company ANDA, calendar quarterly profit-sharing payments are payable by Par to us for its U.S. sales of generic Focalin XR® under the Par ANDA as calculated pursuant to the Par agreement.

We received final approval from the FDA in November 2013 under the Company ANDA to launch the 15 and 30 mg strengths of our generic Focalin XR® capsules. Commercial sales of these strengths were launched immediately by our commercialization partner in the U.S., Par.

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In January 2017, Par launched the 25 and 35 mg strengths of its generic Focalin XR® capsules in the U.S., and in May 2017, Par launched the 10 and 20 mg strengths, complementing the 15 and 30 mg strengths of our generic Focalin XR® marketed by Par. The FDA granted final approval under the Par ANDA for its generic Focalin XR® capsules in the 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths, and subsequently Par launched the remaining 5 and 40 mg strengths. Under the Par agreement, we receive quarterly profit share payments on Par’s U.S. sales of generic Focalin XR®. Revenues from sales of the generic Focalin XR® capsules continue to be impacted by ongoing competitive pressures in the generic market. There can be no assurance whether revenues from this product will improve going forward. We depend significantly on the actions of our marketing partner Par in the prosecution, regulatory approval and commercialization of our generic Focalin XR® capsules and on its timely payment to us of the contracted calendar quarterly payments as they come due. The Company has now received final FDA approval for the 5 mg, 10 mg, 30 mg and 40 mg strengths in its ANDA.

In May 2017, we received final approval from the FDA for our ANDA for quetiapine fumarate extended-release tablets in the 50, 150, 200, 300 and 400 mg strengths. The Company manufactured and shipped commercial quantities of all strengths of generic Seroquel XR® to Mallinckrodt, our then marketing and distribution partner, and Mallinckrodt launched all strengths in June 2017; however, the arrangement did not generate significant revenue. On April 12, 2019, we and Mallinckrodt mutually agreed to terminate the Mallinckrodt agreement. Effective August 12, 2019, the Mallinckrodt agreement was terminated.

These and the Company’s other approved products and products under development are discussed under “Our Products and Product Candidates (page 39)”.

We continue to evaluate options to commercial these approved generic products, but there can be no assurance these can ever produce significant revenue for the Company.

In February, 2022 we received marketing approval, for sale in the Canadian market, for our generic Pristiq (desvenlafaxine succinate extended-release tablets) in the 50 and 100 mg strengths. The Company has now entered into a license and supply agreement with Taro Pharmaceuticals Inc. (“Taro”), by which the Company has granted Taro an exclusive license to market, sell and distribute the product in Canada, There can be no assurance that the product will be successfully commercialized and produce significant revenues for us.

Our goal is to leverage our proprietary technologies and know-how in order to build a diversified portfolio of revenue generating commercial products. We intend to do this by advancing our products from the formulation stage through product development, regulatory approval and manufacturing. We believe that full integration of development and manufacturing will help maximize the value of our drug delivery technologies, products and product candidates. We also believe that out-licensing sales and marketing to established organizations, when it makes economic sense, will improve our return from our products while allowing us to focus on our core competencies. We expect our expenditures for the purchase of production, laboratory and computer equipment and the expansion of manufacturing and warehousing capability to be higher when we have to accommodate. the commercialization of more ANDAs, one NDA and one ANDS that are pending FDA and Health Canada approval respectively, if and when these events occur. We have reduced the levels of development activities and staffing levels from late 2019 due to the financial condition of the Company, and later the effects of COVID-19 as well.

There can be no assurance that any of our product candidates will receive regulatory approval from FDA, Health Canada or the regulatory authorities of any other country in which our products are proposed to be sold, or that any of our products will ever be successfully commercialized and produce significant revenues for us.

From late 2019 the Company has had to reduce development activities and staffing levels significantly due to ongoing financial problems which have continued, coupled with the effects of the Covid-19 pandemic. It is not possible to reliably estimate the length and severity of the developments and impact on the future financial results and condition of the Company. The challenges and uncertainties could impair the Company’s ability to raise capital, postpone research activities, impact our ability to maintain operations and launch new products; it could also impair the value of our shares, our long-lived assets, and materially adversely impact our ability to generate potential future revenue.

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Our Strategy

Our Hypermatrix™ technologies are central to the development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. The Hypermatrix™ technologies are a multidimensional controlled-release drug delivery platform that we believe can be applied to the efficient development of a wide range of existing and new pharmaceuticals. We believe that the flexibility of these technologies allows us to develop complex drug delivery solutions within an industry-competitive timeframe. Based on this technology platform, we have developed several drug delivery systems and a pipeline of products (some of which have received FDA approval) and product candidates in various stages of development, including ANDAs filed with the FDA (and one ANDS filed with Health Canada) and one NDA filing, in therapeutic areas that include neurology, cardiovascular, GIT, diabetes and pain. We expect that certain, but not all, of the products in our pipeline may be developed from time to time for third parties pursuant to drug development agreements with those third parties, under which our commercialization partner may pay certain of the expenses of development, make certain milestone payments to us and receive a share of revenues or profits if the drug is developed successfully to completion, the control of which would generally be in the discretion of our drug development partner.

The principal focus of our development activities previously targeted difficult-to-develop controlled-release generic drugs which follow an ANDA regulatory pathway. Later, our development program became increasingly directed towards improved difficult-to-develop controlled-release drugs which follow an NDA 505(b)(2) regulatory pathway. We increased emphasis towards specialty new product development, facilitated by the 505(b)(2) regulatory pathway, by advancing the product development program for Oxycodone ER and Regabatin^TM XR, and commencing other projects in our 505(b)(2) pipeline. We intend to work on these and other product candidates as resources permit. Currently, we are not working on these product candidates. In January 2019, we announced that we had commenced an R&D program of pharmaceutical cannabidiol (“CBD”) -based products. As part of the CBD-based R&D program, we filed provisional patent applications with the United States Patent and Trademark Office pertaining to the delivery and application of cannabinoid-based therapeutics. There can be no assurance that any of our provisional patent applications will successfully mature into patents. We had also previously identified several additional 505(b)(2) product candidates for development in various areas including cardiovascular, dermatology, pulmonary disease and oncology. We are still exploring the potential development of such product candidates when resources are available.The technology that is central to our abuse deterrent formulation of our Oxycodone ER is the nPODDDS™, or novel Point of Divergence Drug Delivery System. nPODDDS™ is designed to provide for certain unique drug delivery features in a product. These include the release of the active substance to show a divergence in a dissolution and/or bioavailability profile. The divergence represents a point or a segment in a release timeline where the release rate, represented by the slope of the curve, changes from an initial rate or set of rates to another rate or set of rates, the former representing the usually higher rate of release shortly after ingesting a dose of the drug, and the latter representing the rate of release over a later and longer period of time, being more in the nature of a controlled-release or sustained action. It is applicable for the delivery of opioid analgesics in which it is desired to discourage common methods of tampering associated with misuse and abuse of a drug, and also dose dumping in the presence of alcohol. It can potentially retard tampering without interfering with the bioavailability of the product.

In addition, our PODRAS™, or Paradoxical OverDose Resistance Activating System, delivery technology was initially introduced to enhance our Oxycodone ER (abuse deterrent oxycodone hydrochloride extended-release tablets) product candidate. The PODRAS™ delivery technology platform was designed to prevent an overdose when more pills than prescribed are swallowed intact. Preclinical studies of prototypes of oxycodone with PODRAS™ technology suggest that, unlike other third-party abuse-deterrent oxycodone products in the marketplace, if more tablets than prescribed are deliberately or inadvertently swallowed, the amount of drug active ingredient (“drug active”) released over 24 hours may be substantially less than expected. However, if the prescribed number of pills is swallowed, the drug release should be as expected. Certain aspects of our PODRAS™ technology are covered by U.S. Patent Nos. 9,522,119, 9,700,515, 9,700,516 and 9,801,939. The issuance of these patents provides us with the opportunity to accelerate our PODRAS™ development plan by pursuing proof of concept studies in humans. We intend to incorporate this technology in future product candidates, including Oxycodone ER and other similar pain products, as well as pursuing out-licensing opportunities. The development of an Oxycodone immediate-release (IR) product incorporating this technology as resources permit is in the Company’s development pipeline. There can be no assurance that any issued Patent can be maintained by the Company, there can be no assurance that any application filed by the Company will issue as a Patent.

The NDA 505(b)(2) pathway (which relies in part upon the FDA’s findings for a previously approved drug) both accelerates development timelines and reduces costs in comparison to NDAs for new chemical entities. An advantage of our strategy for development of NDA 505(b)(2) drugs is that our product candidates can, if approved for sale by the FDA, potentially enjoy an exclusivity period which may provide for greater commercial opportunity relative to the generic ANDA route.

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The market we operate in is created by the expiration of drug product patents, challengeable patents and drug product exclusivity periods. There are three ways that we employ our controlled-release technologies, which we believe represent substantial opportunities for us to commercialize on our own or develop products or out-license our technologies and products:

· For branded immediate-release (multiple-times-per-day) drugs, we can formulate improved replacement products, typically by developing new, potentially patentable, controlled-release once-a-day drugs. Among other out-licensing opportunities, these drugs can be licensed to and sold by the pharmaceutical company that made the original immediate-release product. These can potentially protect against revenue erosion in the brand by providing a clinically attractive patented product that competes favorably with the generic immediate-release competition that arises on expiry of the original patent(s). The regulatory pathway for this approach requires NDAs via a 505(b)(2) application for the U.S. or corresponding pathways for other jurisdictions where applicable.

· Some of our technologies are also focused on the development of abuse-deterrent and overdose preventive pain medications. The growing abuse and diversion of prescription “painkillers”, specifically opioid analgesics, is well documented and is a major health and social concern. We believe that our technologies and know-how are aptly suited to developing abuse-deterrent pain medications. The regulatory pathway for this approach requires NDAs via a 505(b)(2) application for the U.S. or corresponding pathways for other jurisdictions where applicable.

· For existing controlled-release (once-a-day) products whose APIs are covered by drug molecule patents about to expire or already expired, or whose formulations are covered by patents about to expire, already expired or which we believe we do not infringe, we can seek to formulate generic products which are bioequivalent to the branded products. Our scientists have demonstrated a successful track record with such products, having previously developed several drug products which have been commercialized in the U.S. by their former employer/clients. The regulatory pathway for this approach requires ANDAs for the U.S. and ANDSs for Canada.

We intend to collaborate in the development and/or marketing of one or more products with partners, when we believe that such collaboration may enhance the outcome of the project. We also plan to seek additional collaborations as a means of developing additional products. We believe that our business strategy enables us to reduce our risk by (a) having a diverse product portfolio that includes both branded and generic products in various therapeutic categories, and (b) building collaborations and establishing licensing agreements with companies with greater resources thereby allowing us to share costs of development and to improve cash-flow. There can be no assurance that we will be able to enter into additional collaborations or, if we do, that such arrangements will be commercially viable or beneficial.

Our Drug Delivery Technologies

Hypermatrix^TM

Our scientists have developed drug delivery technology systems, based on the Hypermatrix™ platform, that facilitate controlled-release delivery of a wide range of pharmaceuticals. These systems include several core technologies, which enable us to flexibly respond to a wide range of drug attributes and patient requirements, producing a desired controlled-release effect. Our technologies have been incorporated in drugs manufactured and sold by major pharmaceutical companies.

This group of drug delivery technology systems is based upon the drug active being imbedded in, and an integral part of, a homogeneous (uniform), core and/or coatings consisting of one or more polymers which affect the release rates of drugs, other excipients (compounds other than the drug active), such as for instance lubricants which control handling properties of the matrix during fabrication, and the drug active itself. The Hypermatrix™ technologies are the core of our current marketing efforts and the technologies underlying our existing development agreements.

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nPODDDS^TM

In addition to continuing efforts with Hypermatrix™ as a core technology, our scientists continue to pursue novel research activities that address unmet needs. Oxycodone ER (abuse deterrent oxycodone hydrochloride extended release tablets) is an NDA candidate, with a unique long acting oral formulation of oxycodone intended to treat moderate-to-severe pain. The formulation is intended to present a significant barrier to tampering when subjected to various forms of physical and chemical manipulation commonly used by abusers. It is also designed to prevent dose dumping when inadvertently co-administered with alcohol. The technology that supports our abuse deterrent formulation of oxycodone is the nPODDDS™ Point of Divergence Drug Delivery System. The use of nPODDDS™ does not interfere with the bioavailability of oxycodone. We intend to apply the nPODDDS™ technology platforms to other extended-release opioid drug candidates (e.g., oxymorphone, hydrocodone, hydromorphone and morphine) utilizing the 505(b)(2) regulatory pathway.

PODRAS^TM

Our Paradoxical OverDose Resistance Activating System (PODRAS™) delivery technology is designed to prevent overdose when more pills than prescribed are swallowed intact. Preclinical studies of prototypes of oxycodone with PODRAS™ technology suggest that, unlike other third-party abuse-deterrent oxycodone products in the marketplace, if more tablets than prescribed are deliberately or inadvertently swallowed, the amount of drug active released over 24 hours may be substantially less than expected. However, if the prescribed number of pills is swallowed, the drug release should be as expected. We started, and intend to continue, working on an alternate Oxycodone ER product candidate incorporating our PODRAS™ delivery technology. In April 2015, the FDA published Guidance for Industry: Abuse-Deterrent Opioids — Evaluation and Labeling, which cited the need for more efficacious abuse-deterrence technology. In this Guidance, the FDA stated, “opioid products are often manipulated for purposes of abuse by different routes of administration or to defeat extended-release properties, most abuse-deterrent technologies developed to date are intended to make manipulation more difficult or to make abuse of the manipulated product less attractive or less rewarding. It should be noted that these technologies have not yet proven successful at deterring the most common form of abuse—swallowing a number of intact capsules or tablets to achieve a feeling of euphoria.” The FDA reviewed our request for Fast Track designation for our abuse deterrent Oxycodone ER development program incorporating PODRAS™, and in May 2015 notified us that the FDA had concluded that it had met the criteria for Fast Track designation. Fast Track is a designation assigned by the FDA in response to an applicant’s request which meets FDA criteria. The designation mandates the FDA to facilitate the development and expedite the review of drugs intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs.

U.S. Patent Nos. 9,522,119, 9,700,515, 9,700,516 and 9,801,939 and Canadian Patent No. 2,910,865 were issued by the U.S. Patent and Trademark Office and the Canadian Intellectual Property Office in respect of “Compositions and Methods for Reducing Overdose”. The issued patents cover aspects of the PODRAS™ delivery technology. The issuance of these patents represents a significant advance in our abuse deterrence technology platform. The PODRAS™ platform has the potential to positively differentiate our technology from others of which we are aware, and may represent an important step toward addressing the FDA’s concern over the ingestion of a number of intact pills or tablets. In addition to its use with opioids, the PODRAS™ platform is potentially applicable to a wide range of drug products, inclusive of over-the-counter drugs, that are intentionally or inadvertently abused and cause harm by overdose to those who ingest them. We intend to apply the PODRAS™ technology platforms to other extended-release opioid drug candidates (e.g., oxymorphone, hydrocodone, hydromorphone and morphine) utilizing the 505(b)(2) regulatory pathway.

There can be no assurance that we will be successful in developing any product utilizing the PODRAS^TM platform, that we will be successful in submitting any NDA, that the FDA will approve the product candidate for sale in the U.S. market or any related abuse-deterrent label claims, or that it will ever be successfully commercialized and produce significant revenue for us.There can be no assurance that any issued Patent can be maintained by the Company,

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The Hypermatrix^TM Family of Technologies

Our platform of Hypermatrix™ drug delivery technologies include, but are not limited to, IntelliFoam™, IntelliGITransporter™, IntelliMatrix™, IntelliOsmotics™, IntelliPaste™, IntelliPellets™ andIntelliShuttle™. Some of their key attributes are described below.

These technologies provide a broad range of release profiles, taking into account the physical and chemical characteristics of a drug product, the therapeutic use of the particular drug, and the optimal site for release of the API in the GIT. At present those technologies have been applied in the laboratory and/or in bioavailability/bioequivalence studies in man to such orally administered small molecule drugs as are used in the treatment of neurological, cardiovascular, GIT, diabetes, pain and other significant indications.

IntelliFoam^TM

The IntelliFoam™ technology is based on the drug active being embedded in, but separate from a syntactic foam substrate, the properties of which are used to modulate the release of the drug active. The drug actives are embedded in a resin polymer matrix.

IntelliGITransporter^TM

The IntelliGITransporter™ technology consists of an active drug immobilized in a homogeneous (uniform) matrix structure. A precise choice of mix ratios, polymers, and other ingredients imparts characteristics which protect the drug composition from mechanical degradation due to digestion, and/or from chemical degradation in the acidic stomach environment, and ensures that this technology allows control of release as well as releasing the medication at certain parts of the stomach or intestines without significant food effects or unintentional premature release of the entire drug dose. We believe that this technology is most useful for drug molecules with characteristics such as very low or very high potency, opiate analgesics (pain medications derived from the chemical compounds found in opium), or susceptibility to acid degradation. It is also useful for products where a zero-order (constant rate over time, independent of the amount of drug available for dissolution) release profile is desirable.

IntelliMatrix^TM

The IntelliMatrix™ technology is a proprietary blend of several polymers. Depending on the constituents of the blend and the manner in which these interact, the use of the blend with a drug allows the drug to be released at predetermined rates, while imparting protective characteristics to both the drug and the GIT. This is most useful for drugs which require precisely controlled first-order release profiles, where the amount released with time is dependent on one component like the amount of drug available for dissolution.

IntelliOsmotics^TM

The IntelliOsmotics™ technology is based upon the inclusion of multiple populations of polymers with distinct chemical bonding characteristics. These set up a complex matrix of hydrophilic (water attracting) and hydrophobic (water repelling) domains. When the tablet or bead is in an aqueous environment, like gastric contents, a “mixture” of water-soluble polymer and drug core is surrounded by gel layer(s) of water-insoluble polymer. Osmotic pressure drives the drug out when solvent passes through the gel layer while the polymer molecules remain. This permits control of the rate of release of the drug active by the variation of polymer ratios. This technology is most useful for drug molecules which require precisely controlled pseudo-first-order release profiles, where the rate of release is proportional to the amount available for dissolution as well as being proportional to one other component; however the effect of the amount of drug is overriding, so that the rate appears first-order. This type of release control can be useful when attempting to match difficult profiles for generic formulation.

IntelliPaste^TM

The IntelliPaste™ technology is comprised of blends of multiple polymers, oils, excipients and drug active(s) which result in a paste-in-a-capsule dosage form. The physical attributes of the paste include that it is thixotropic, pseudoplastic and non-Newtonian or, in layman’s terms, like toothpaste. Typically, it is formulated as having very low solubility in water or oil, and low solubility in alcohol. These characteristics enable the resulting drug product to have tamper-deterrent properties, and to resist dissolution in even high concentrations of alcohol. As a result, IntelliPaste™ is our preferred delivery technology for the controlled delivery of opiates, narcotics and other central nervous system drug products which are susceptible to unlawful diversion or abuse.

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IntelliPellets^TM

The IntelliPellets™ technology consists of one or more type (population) of granule, bead, pellet, or tablet in a holding chamber or reservoir, such as a hard gelatin capsule. Each type (population) may be uniquely different from the other in the manner or rate it releases the drug. Our IntelliPellets™ technology is designed to control, prolong, delay or modify the release of drugs. It is particularly useful for the delivery of multiple drugs, for delayed, timed, pulsed or for chronotherapeutic drug delivery, designed to mimic our internal clocks for therapeutic optimization (the drug is delivered in the right amount for the patient at the right time). This technology is most useful for the delivery of multiple-drug cocktails, or in situations where the timing of a single dose or the sequencing of multiple doses of the same drug is important.

IntelliShuttle^TM

The IntelliShuttle™ technology provides for drug release past the stomach, such as for drugs required for action beyond the stomach, for drugs which could be destroyed by the stomach environment, or for drugs which could harm the stomach itself. This technology “shuttles” the drug past the stomach to be released at predetermined times or sites where appropriate for optimum therapeutic effect. This technology is most useful for acid labile drug molecules (drugs that are destroyed in acid environment), such as the proton pump inhibitors, of which well-known omeprazole (Prilosec) and lansoprazole (Prevacid) are examples, or for drug molecules which may harm the stomach, of which the well-known aspirin is an example.

Each of the above-noted proprietary technologies was fully developed and ready for application to client drug delivery requirements from the date of our inception. Each of them has been utilized and applied to client drug delivery requirements under our existing and previous development contracts; in several instances more than one technology has been applied to a single drug development. We continue to develop all of our existing technologies and to conduct the necessary research to develop new products and technologies.

Our Products and Product Candidates

The table below shows the present status of our ANDA, ANDS and NDA products and product candidates that have been disclosed to the public.

Generic name	Brand	Indication	Stage of Development(1)	Regulatory Pathway	Rights(2)
Dexmethylphenidate hydrochloride extended-release capsules	Focalin XR®	Attention deficit hyperactivity disorder	Received final approval for 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths from FDA(3) Received final approval for 5 mg, 10 mg, 20 mg and 40 mg in Intellipharmaceutics’ ANDA	ANDA	Intellipharmaceutics and Par (US) Philippines rights subject to licensing and distribution agreement
Levetiracetam extended-release tablets	Keppra XR®	Partial onset seizures for epilepsy	Received final approval for the 500 and 750 mg strengths from FDA	ANDA	ANDA Repository(4)
Venlafaxine hydrochloride extended-release capsules	Effexor XR®	Depression	Received final approval for 37.5, 75 and 150 mg strengths from FDA	ANDA	Intellipharmaceutics.

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Generic name	Brand	Indication	Stage of Development(1)	Regulatory Pathway	Rights(2)
Pantoprazole sodium delayed- release tablets	Protonix®	Conditions associated with gastroesophageal reflux disease	ANDA Application for commercialization approval for 2 strengths under review by FDA	ANDA	Intellipharmaceutics
Metformin hydrochloride extended-release tablets	Glucophage® XR	Management of type 2 diabetes	Received final approval for 500 and 750 mg strengths from FDA	ANDA	Intellipharmaceutics Philippines and Vietnamese rights subject to licensing and distribution agreements
Quetiapine fumarate extended-release tablets	Seroquel XR®	Schizophrenia, bipolar disorder & major depressive disorder	Received final FDA approval for all 5 strengths. .	ANDA ANDS	Intellipharmaceutics. Philippines, Malaysian and Vietnamese rights subject to licensing and distribution agreements.
Lamotrigine extended-release tablets	Lamictal® XR™	Anti-convulsant for epilepsy	ANDA application for commercialization approval for 6 strengths under review by FDA	ANDA	Intellipharmaceutics
Desvenlafaxine extended-release tablets	Pristiq®	Depression	Received approval for the 50 and 100 mg strengths from FDA. Received approval from Health Canada for the 50 mg and 100 mg strengths	ANDA ANDS	Intellipharmaceutics. Taro Pharmaceuticals Inc.
Carvedilol phosphate extended-release capsules	Coreg CR®	Heart failure, hypertension	Late-stage development	ANDA	Intellipharmaceutics
Oxycodone hydrochloride controlled-release capsules		Pain	NDA application accepted February 2017 and under review by FDA. Second FDA Advisory Committees meeting held January 2020. Awaiting action from FDA	NDA 505(b)(2)	Intellipharmaceutics
Pregabalin extended-release capsules		Neuropathic pain	IND application submitted in August 2015	NDA 505(b)(2)	Intellipharmaceutics
Ranolazine extended-release tablets	Ranexa®	Chronic angina	ANDA application for commercialization approval for 2 strengths under review by FDA	ANDA	Intellipharmaceutics
Oxycodone hydrochloride immediate release tablets (IPCI006)		Pain	IND application submitted in November 2018	NDA 505(b)(2)	Intellipharmaceutics

Notes:

(1) There can be no assurance as to when, or if at all, the FDA or Health Canada will approve any product candidate for sale in the U.S. or Canadian markets.

(2) For information regarding the Par agreement, the Taro Pharmaceuticals Inc. agreement, and the licensing and distribution agreements with pharmaceutical distributors in Malaysia, Vietnam and the Philippines, see the “Business Overview” and “Other Potential Products and Markets” sections. There can be no assurance as to when, or if at all, any of our products or product candidates, as the case may be, will receive regulatory approval for sale in the Philippines, Malaysia or Vietnam. For unpartnered products, we are seeking licensing agreement opportunities or other opportunities. While we believe that licensing agreements are possible, there can be no assurance that any can be secured.

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(3) Includes a Company ANDA final approval for our 15 and 30 mg strengths, and a Par ANDA final approval for their 5, 10, 15, 20, 25, 30, 35 and 40 mg strengths. Profit sharing payments to us under the Par agreement are the same irrespective of the ANDA owner.

(4) As at September 30, 2019, pursuant to the Levetiracetam ANDA Agreement, we sold the Transferred Levetiracetam ANDA to the Levetiracetam ANDA Purchaser in exchange for a purchase price of $1. Additionally, pursuant to the Levetiracetam ANDA Agreement, we agreed to pay the Levetiracetam ANDA Purchaser an annual fee for each fiscal year equal to 50% of the difference between the FDA Program Fee for 6 to 19 approved ANDAs and the FDA Program Fee for 1 to 5 approved ANDAs. Under the Levetiracetam ANDA Agreement, we have the option to repurchase the Transferred Levetiracetam ANDA for a purchase price of $1 at any time provided that any outstanding fees are paid to ANDA Repository, provided that any outstanding fees are paid to ANDA Repository.

Dexmethylphenidate Hydrochloride – Generic Focalin XR®(a registered trademark of the brand manufacturer)

Dexmethylphenidate hydrochloride, a Schedule II restricted product (drugs with a high potential for abuse) in the U.S., is indicated for the treatment of attention deficit hyperactivity disorder. In November 2005, we entered into the Par agreement pursuant to which we granted Par an exclusive, royalty-free license to make and distribute in the U.S. all of our FDA approved strengths of our generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules for a period of 10 years from the date of commercial launch (which was November 19, 2013). We retain the right to make and distribute all strengths of the generic product outside of the U.S. Calendar quarterly profit-sharing payments for its U.S. sales of all strengths of generic Focalin XR® are payable by Par to us as calculated pursuant to the Par agreement.

We received final approval from the FDA in November 2013 under the Company ANDA to launch the 15 and 30 mg strengths of our generic Focalin XR® capsules. Commercial sales of these strengths were launched immediately by our commercialization partner in the U.S., Par. Our 5, 10, 20 and 40 mg strengths were also then tentatively FDA approved, subject to the right of Teva to 180 days of generic exclusivity from the date of first launch of such products. In January 2017, Par launched the 25 and 35 mg strengths of its generic Focalin XR® capsules in the U.S., and in May 2017, Par launched the 10 and 20 mg strengths, complementing the 15 and 30 mg strengths of our generic Focalin XR® marketed by Par. In November 2017, Par launched the remaining 5 and 40 mg strengths providing us with the full line of generic Focalin XR® strengths available in the U.S. market. The Company has now received final FDA approval for the 5 mg, 10 mg, 30 mg and 40 mg strengths in its ANDA.

In November 2018, we announced that we entered into an exclusive licensing and distribution agreement with a pharmaceutical distributor in the Philippines pursuant to which the distributor was granted the exclusive right, subject to regulatory approval, to import and market our generic Focalin XR® in the Philippines. Under the terms of the agreement, the distributor will be required to purchase a minimum yearly quantity of our generic Focalin XR® and we will be the exclusive supplier of such product. This multi-year agreement is subject to early termination. There can be no assurance as to when and if such product will receive regulatory approval for the sale in the Philippines or that, if so approved, the product will be successfully commercialized there and produce significant revenues for us.

Levetiracetam – Generic Keppra XR®(a registered trademark of the brand manufacturer)

We received final approval from the FDA in February 2016 for the 500 and 750 mg strengths of our generic Keppra XR® (levetiracetam extended-release) tablets. Keppra XR®, and the drug active levetiracetam, are indicated for use in the treatment of partial onset seizures associated with epilepsy. We are aware that several other generic versions of this product are currently available and serve to limit the overall market opportunity. We have been exploring licensing and other options for this product.

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In November 2018, we announced that we entered into two exclusive licensing and distribution agreements with pharmaceutical distributors in Vietnam and the Philippines pursuant to which the distributors were granted the exclusive right, subject to regulatory approval, to import and market our generic Keppra XR® in Vietnam and the Philippines, respectively. Under the terms of the agreements, the distributors will be required to purchase a minimum yearly quantity of our generic Keppra XR®. These multi-year agreements are each subject to early termination. There can be no assurance that the Company’s generic Keppra XR® for the 500 and 750 mg strengths will be successfully commercialized in the US market. Further, there can be no assurance as to when and if such product will receive regulatory approval for the sale in Vietnam or the Philippines or that, if so approved, the product will ever be successfully commercialized there and produce significant revenues for us.

On September 30, 2019, pursuant to the “Levetiracetam ANDA Agreement, we sold the Transferred Levetiracetam ANDA to ANDA Repository, LLC (the “Levetiracetam ANDA Purchaser”) in exchange for a purchase price of $1. Additionally, pursuant to the Levetiracetam ANDA sale agreement, we agreed to pay the Levetiracetam ANDA Purchaser an annual fee for each fiscal year equal to 50% of the difference between the FDA Program Fee for 6 to 19 approved ANDAs and the FDA Program Fee for 1 to 5 approved ANDAs. Under the Levetiracetam ANDA Agreement, we have the option to repurchase the Transferred Levetiracetam ANDA for a purchase price of $1 at any time, provided that any outstanding fees are paid to the Levetiracetam ANDA Purchaser.

Metformin hydrochloride – Generic Glucophage® XR (a registered trademark of the brand manufacturer)

We received final approval from the FDA in February 2017 for the 500 and 750 mg strengths of our generic Glucophage® XR (metformin hydrochloride extended release) tablets. Glucophage® XR, and the drug active metformin, are indicated for use in the management of type 2 diabetes treatment. The Company is aware that several other generic versions of this product are currently available and serve to limit the overall market opportunity, however, we are continuing to evaluate options to realize commercial returns on this product, particularly in international markets.

In November 2018, we announced that we entered into two exclusive licensing and distribution agreements with pharmaceutical distributors in Vietnam and the Philippines pursuant to which the distributors were granted the exclusive right, subject to regulatory approval, to import and market our generic Glucophage® XR in Vietnam and the Philippines, respectively. Under the terms of the agreements, the distributors will be required to purchase a minimum yearly quantity of our generic Glucophage® XR. These multi-year agreements are each subject to early termination.

There can be no assurance that our generic Glucophage® XR for the 500 and 750 mg strengths will be successfully commercialized in the US market. Further, there can be no assurance as to when and if such product will receive regulatory approval for the sale in Vietnam or the Philippines or that, if so approved, the product will be successfully commercialized there and produce significant revenues for us.

Venlafaxine hydrochloride – Generic Effexor XR®(a registered trademark of the brand manufacturer)

We received final approval from the FDA in November 2018 for our ANDA for venlafaxine hydrochloride extended-release capsules in the 37.5, 75 and 150 mg strengths. The approved product is a generic equivalent of the branded product Effexor XR ® sold in the U.S. by Wyeth Pharmaceuticals, LLC. Effexor XR®, and the drug active venlafaxine hydrochloride, are indicated for the treatment of major depressive disorder, or MDD. We are actively exploring the best approach to maximize our commercial returns from this approval. On November 25, 2019, we announced that we had entered into a license and commercial supply agreement with Tris Pharma, by which we granted Tris Pharma an exclusive license to market, sell and distribute in the United States, Venlafaxine extended-release capsules in the 37.5, 75, and 150 mg strengths. Several other generic versions of the licensed products are currently available in the market and that this limits the overall market opportunity. Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement. There can be no assurance that the Company’s venlafaxine hydrochloride extended-release capsules for the 37.5 mg, 75 mg, and 150 mg strengths will be successfully commercialized and produce significant revenue for us.

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Quetiapine fumarate extended-release tablets - Generic Seroquel XR® (a registered trademark of the brand manufacturer)

In May 2017, we received final approval from the FDA for our ANDA for quetiapine fumarate extended-release tablets in the 50, 150, 200, 300 and 400 mg strengths. Our approved product is a generic equivalent for the corresponding strengths of the branded product Seroquel XR® sold in the U.S. by AstraZeneca. Seroquel XR®, and the drug active quetiapine fumarate, are indicated for use in the management of schizophrenia, bipolar disorder and major depressive disorder. The Company manufactured and shipped commercial quantities of all strengths of generic Seroquel XR® to our then marketing and distribution partner Mallinckrodt, and Mallinckrodt launched all strengths in June 2017. On April 12, 2019, we and Mallinckrodt mutually agreed to terminate the Mallinckrodt agreement, and effective August 12, 2019 the Mallinckrodt agreement was terminated.

In November 2018, we announced that we entered into three exclusive licensing and distribution agreements with pharmaceutical distributors in Malaysia, Vietnam and the Philippines pursuant to which the distributors were granted the exclusive right, subject to regulatory approval, to import and market our generic Seroquel XR® in Malaysia, Vietnam and the Philippines, respectively. Under the terms of the agreements, the distributors will be required to purchase a minimum yearly quantity of our generic Seroquel XR®. The multi-year agreements are each subject to early termination. There can be no assurance as to when and if such product will receive regulatory approval for the sale in Malaysia, Vietnam or the Philippines or that, if so approved, the product will be successfully commercialized there and produce significant revenues for us.

On August 15, 2019 we announced a license and commercial supply agreement with Tris Pharma, granting Tris Pharma an exclusive license to market, sell and distribute all strengths of the product in the United States. The agreement provides for the Company to have a profit-sharing arrangement with respect to the licensed product. Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement. There can be no assurance that the product will be successfully commercialized and produce significant revenue for us.

Desvenlafaxine succinate extended-release tablets – Generic Pristiq®(a registered trademark of the brand manufacturer)

In May 2019, we received approval from the FDA for our ANDA for desvenlafaxine extended-release tablets in the 50 and 100 mg strengths. This product is a generic equivalent of the branded product Pristiq® sold in the U.S. by Wyeth Pharmaceuticals, LLC. Pristiq®, and the drug active desvenlafaxine succinate, are indicated for use in the management of depression. We previously announced that we had entered into the Mallinckrodt agreement, which granted Mallinckrodt, subject to its terms, an exclusive license to market, sell and distribute in the U.S. the Company’s desvenlafaxine extended-release tablets (generic Pristiq®). Among other things, the agreement provides for the Company to have a profit-sharing arrangement with respect to the licensed product. Effective August 12, 2019, the Mallinckrodt agreement was terminated. On September 5, 2019, we announced a license and commercial supply agreement with Tris Pharma, granting Tris Pharma an exclusive license to market, sell and distribute the two strengths of the product in the United States. The agreement provides for the Company to have a profit-sharing arrangement with respect to the licensed product. The product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement. There can be no assurance that our desvenlafaxine extended-release tablets in the 50 and 100 mg strengths will be successfully commercialized and produce significant revenue for us.

In February 2022 the Company received Health Canada marketing approval (notice of compliance) for generic Pristiq (desvenlafaxine extended-release tablets) in the 50 and 100 mg strengths. The Company has entered into a license and supply agreement with Taro Pharmaceuticals Inc. for the commercialization of the product by which the Company has granted Taro an exclusive license to market, sell and distribute the product in Canada, There can be no assurance that the product will be successfully commercialized and produce significant revenues for us.

Oxycodone ER (Abuse Deterrent Oxycodone Hydrochloride Extended Release Tablets)

One of our non-generic products under development is our Oxycodone ER (abuse deterrent oxycodone hydrochloride extended-release tablets) product candidate, intended as an abuse and alcohol-deterrent controlled-release oral formulation of oxycodone hydrochloride for the relief of pain. Our Oxycodone ER is a new drug candidate, with a unique long-acting oral formulation of oxycodone intended to treat moderate-to-severe pain when a continuous, around the clock opioid analgesic is needed for an extended period of time. The formulation is intended to present a significant barrier to tampering when subjected to various forms of physical and chemical manipulation commonly used by abusers. It is also designed to prevent dose dumping when inadvertently co-administered with alcohol. Dose dumping is the rapid release of an active ingredient from a controlled-release drug into the blood stream that can result in increased toxicity, side effects, and a loss of efficacy. Dose dumping can result by consuming the drug through crushing, taking with alcohol, extracting with other beverages, vaporizing or injecting. In addition, when crushed or pulverized and hydrated, the proposed extended-release formulation is designed to coagulate instantaneously and entrap the drug in a viscous hydrogel, which is intended to prevent syringing, injecting and snorting. Our Oxycodone ER formulation is difficult to abuse through the application of heat or an open flame, making it difficult to inhale the active ingredient from burning.

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In November 2016, we filed an NDA seeking authorization to market our Oxycodone ER in the 10, 15, 20, 30, 40, 60 and 80 mg strengths, relying on the 505(b)(2) regulatory pathway which allowed us to reference data from Purdue’s file for its OxyContin®. In February 2017, the FDA accepted for filing our NDA, and set a Prescription Drug User Fee Act, or PDUFA, goal date of September 25, 2017. Our submission is supported by pivotal pharmacokinetic studies that demonstrated that Oxycodone ER is bioequivalent to OxyContin®. The submission also includes abuse-deterrent studies conducted to support abuse-deterrent label claims related to abuse of the drug by various pathways, including oral, intra-nasal and intravenous, having reference to the FDA’s “Abuse-Deterrent Opioids - Evaluation and Labeling” guidance published in April 2015.FDA had agreed that we would not be required to conduct Phase III studies if bioequivalence to OxyContin® was demonstrated based on pivotal bioequivalence studies.

Our NDA was filed under Paragraph IV of the Hatch-Waxman Act, as amended. We certified to the FDA that we believed that our Oxycodone ER product candidate would not infringe any of the OxyContin® patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book (the “Orange Book”), or that such patents are invalid, and so notified all holders of the subject patents of such certification. On April 7, 2017, we received notice that Purdue, Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., or collectively the Purdue parties, Rhodes Technologies, and Grünenthal GmbH, or collectively the Purdue litigation plaintiffs, had commenced patent infringement proceedings, or the Purdue litigation, against us in the U.S. District Court for the District of Delaware (docket number 17-392) in respect of our NDA filing for Oxycodone ER, alleging that our proposed Oxycodone ER infringes 6 out of the 16 patents associated with the branded product OxyContin®, or the OxyContin® patents, listed in the Orange Book.

Subsequent to the above-noted filing of lawsuit, 4 further such patents were listed and published in the Orange Book. On March 16, 2018, we received notice that the Purdue litigation plaintiffs had commenced further such patent infringement proceedings adding the 4 further patents. On April 15, 2020, Purdue filed a new patent infringement suit against the Company relating to additional Paragraph IV certifications lodged against two more listed Purdue patents. As a result of the commencement of the first of these legal proceedings, the FDA is stayed for 30 months from granting final approval to our Oxycodone ER product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs received notice of our certification concerning the patents, and would expire on August 24, 2019, unless the stay is earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties.

On or about June 26, 2018, the court issued an order to sever 6 “overlapping” patents from the second Purdue case, but ordered litigation to proceed on the 4 new (2017-issued) patents. An answer and counterclaim was filed on July 9, 2018.

On July 6, 2018, the court issued a so-called “Markman” claim construction ruling on the first case and the October 22, 2018 trial date remained unchanged.

On July 24, 2018, the parties to the case mutually agreed to and did have dismissed without prejudice the infringement claims related to the Grünenthal ‘060 patentc which is one of the six patents included in the original litigation case.

On April 4, 2019, the U.S. Federal Circuit Court of Appeals affirmed the invalidity of one Purdue OxyContin® formulation patent, subject to further appeal to the U.S. Supreme Court.

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Following the filing of a bankruptcy stay by Purdue Pharma L.P., the Company’s ongoing litigation case numbers 1:17-cv-00392-RGA and 1:18-cv-00404-RGA-SRF between Purdue Pharma L.P. et al and Intellipharmaceutics were stayed and the existing trial dates in both cases vacated by orders issued in each case by the judge in the District of Delaware on October 4, 2019. With the litigation stay order, the previous 30-month stay date of March 2, 2020 was unchanged.

On or about July 2, 2020 the parties in the Purdue Litigations between Purdue and Intellipharmaceutics entered into a stipulated dismissal of the Purdue Litigations. The stipulated dismissal, provides for the termination of patent infringement proceedings commenced by Purdue against the Company in the United States District Court for the District of Delaware in respect of the Company’s NDA filing for Aximris XR™ with the FDA. The stipulated dismissal also provides that (i) for a thirty (30) day period following a final approval of the Company’s Aximris XR™ NDA the parties will attempt to resolve any potential asserted patent infringement claims relating to the NDA and (ii) if the parties fail to resolve all such claims during such period Purdue Pharma will have fifteen (15) days to pursue an infringement action against the Company. The terms of the stipulated dismissal agreement are confidential.

On July 28, 2020 the United States District Court for the District of Delaware signed the stipulations of dismissal into order thereby dismissing the claims in the three cases without prejudice. In consideration of the confidential stipulated dismissal agreement and for future saved litigation expenses, Purdue has paid an amount of money to the Company.

In June 2017, we announced that a joint meeting of the Advisory Committees was scheduled for July 26, 2017 to review our NDA for Oxycodone ER. The submission requested that our Oxycodone ER product candidate include product label claims to support the inclusion of language regarding abuse-deterrent properties for the intravenous route of administration.

In July 2017, the Company announced that the FDA Advisory Committees voted 22 to 1 in finding that the Company’s NDA for Oxycodone ER should not be approved at this time. The Advisory Committees also voted 19 to 4 that the Company had not demonstrated that Oxycodone ER has properties that can be expected to deter abuse by the intravenous route of administration, and 23 to 0 that there was not sufficient data for Oxycodone ER to support inclusion of language regarding abuse-deterrent properties in the product label for the intravenous route of administration. The Advisory Committees expressed a desire to review the additional safety and efficacy data for Oxycodone ER that may be obtained from human abuse potential studies for the oral and intranasal routes of administration.

In September 2017, the Company received a Complete Response Letter (“CRL”) from the FDA for the Oxycodone ER NDA, stating that it could not approve the application at that time. In its CRL, the FDA provided certain recommendations and requests for information, including that Intellipharmaceutics complete studies to assess the abuse-deterrent properties of Oxycodone ER by the oral and nasal routes of administration, provide additional information related to the inclusion of the blue dye in the formulation, of the product, and submit an alternate proposed proprietary name for Oxycodone ER. The FDA required a response within a year of issuing the CRL but granted our request for an extension to resubmit by February 28, 2019.

In February 2018, the Company met with the FDA to discuss the above-referenced CRL for Oxycodone ER, including issues related to the blue dye in the product candidate. Based on those discussions, the product candidate will no longer include the blue dye. The blue dye was intended to act as an additional deterrent if Oxycodone ER is abused and serve as an early warning mechanism to flag potential misuse or abuse. The FDA confirmed that the removal of the blue dye is unlikely to have any impact on formulation quality and performance. As a result, the Company will not be required to repeat in vivo bioequivalence studies and pharmacokinetic studies submitted in the Oxycodone ER NDA. The FDA also indicated that, from an abuse liability perspective, Category 1 studies will not have to be repeated on Oxycodone ER with the blue dye removed.

The NDA resubmission in response to CRL was filed February 28, 2019. In March 2019, the FDA acknowledged receipt of our resubmission of the Oxycodone ER NDA. The FDA had informed the Company that it considered the resubmission a complete response to the September 22, 2017, action letter it issued in respect of the NDA.

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On July 24, 2019, we announced that the Company had been advised by the FDA that the FDA “is postponing product-specific advisory committee meetings for opioid analgesics,” including the one previously scheduled to discuss our NDA, “while it continues to consider a number of scientific and policy issues relating to this class of drugs.” According to the FDA, the reason for the postponement was not unique to our product and the Anesthetic and Analgesic Drug Products Advisory Committees (“AADPAC”) meeting earlier planned by the FDA, to discuss our NDA was going to be rescheduled at a future date. The FDA informed the Company that it would continue to review the Company’s NDA according to the existing PDUFA timeline, but noted that, due to the postponement of the AADPAC meeting, it was possible that the FDA may be unable to meet the PDUFA goal date of August 28, 2019. The FDA did not meet the PDUFA goal date of August 28, 2019.

On January 15, 2020, at a joint meeting of the Advisory Committees of the FDA to review our NDA for Aximris XR™, abuse-deterrent oxycodone hydrochloride extended-release tablets, the Advisory Committees voted 24 to 2 against the approval of our NDA for Aximris XR^TM for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. The 30-month stay date of March 2, 2020 has since expired. The Company has been following up with FDA, however no action has been taken on the NDA yet.

There can be no assurance that the studies submitted to the FDA will be adequate, that we will not be required to conduct further studies for Oxycodone ER, that the FDA will approve any of the Company’s requested abuse-deterrent label claims, that the FDA will ultimately approve our NDA for the sale of Aximris XR^TM in the U.S. market, or that it will ever be successfully commercialized and produce significant revenue for us.If the Aximris XR^TM NDA is approved, there can be no assurance that the Company and Purdue will resolve any potential asserted patent infringement claims relating to the NDA within a thirty (30) day period following the final approval as provided in the stipulated settlement agreement of the Purdue Litigations. There can be no assurance that the Purdue parties will not pursue an infringement claim against the Company again.

In November 2018, we announced that we entered into an exclusive licensing and distribution agreement with a pharmaceutical distributor in the Philippines pursuant to which the distributor was granted the exclusive right, subject to regulatory approval, to import and market Oxycodone ER in the Philippines. Under the terms of the agreement, the distributor will be required to purchase a minimum yearly quantity of our Oxycodone ER and we will be the exclusive supplier of our Oxycodone ER. This multi-year agreement is subject to early termination. There can be no assurance as to when and if such product candidate will receive regulatory approval for the sale in the Philippines or that, if so approved, the product will be successfully commercialized there and produce significant revenues for us.

Regabatin™ XR (Pregabalin Extended-Release)

Another Intellipharmaceutics non-generic controlled-release product under development is Regabatin™ XR, pregabalin extended-release capsules. Pregabalin is indicated for the management of neuropathic pain associated with diabetic peripheral neuropathy, postherpetic neuralgia, spinal cord injury and fibromyalgia. A controlled-release version of pregabalin should reduce the number of doses patients take, which could improve patient compliance, and therefore possibly enhance clinical outcomes. Lyrica® pregabalin, twice-a-day (“BID”) dosage and three-times-a-day (“TID”) dosage, are drug products marketed in the U.S. by Pfizer Inc. In October 2017, Pfizer also received approval for a Lyrica® CR, a controlled-release version of pregabalin. In 2014, we conducted and analyzed the results of six Phase I clinical trials involving a twice-a-day formulation and a once-a-day formulation. For formulations directed to certain indications which include fibromyalgia, the results suggested that Regabatin™ XR 82.5 mg BID dosage was comparable in bioavailability to Lyrica® 50 mg (immediate-release pregabalin) TID dosage. For formulations directed to certain other indications which include neuropathic pain associated with diabetic peripheral neuropathy, the results suggested that Regabatin™ XR 165 mg once-a-day dosage was comparable in bioavailability to Lyrica® 75 mg BID dosage.

In March 2015, the FDA accepted a Pre-Investigational New Drug or Pre-IND meeting request for our once-a-day Regabatin™ XR non-generic controlled release version of pregabalin under the NDA 505(b)(2) regulatory pathway, with a view to possible commercialization in the U.S. at some time following the December 30, 2018 expiry of the patent covering the pregabalin molecule. Regabatin™ XR is based on our controlled release drug delivery technology platform which utilizes the symptomatology and chronobiology of fibromyalgia in a formulation intended to provide a higher exposure of pregabalin during the first 12 hours of dosing. Based on positive feedback and guidance from the FDA, we submitted an IND application for Regabatin™ XR in August 2015. The FDA completed its review of the IND application and provided constructive input that we will use towards further development of the program. We believe our product candidate has significant additional benefits to existing treatments and have been evaluating strategic options to advance this opportunity.

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There can be no assurance that any additional Phase I or other clinical trials we conduct will meet our expectations, that we will have sufficient capital to conduct such trials, that we will be successful in submitting an NDA 505(b)(2) filing with the FDA, that the FDA will approve this product candidate for sale in the U.S. market, or that it will ever be successfully commercialized and produce significant revenue for us.

Oxycodone Hydrochloride IR Tablets (“IPCI006”) (Abuse Deterrent and Overdose Resistant Oxycodone Hydrochloride Immediate Release Tablets)

In November 2018, we announced that we had submitted an IND application to the FDA for our IPCI006 oxycodone hydrochloride immediate release tablets in the 5, 10, 15, 20 and 30 mg strengths. This novel drug formulation incorporates the Company’s PODRAS™, or Paradoxical OverDose Resistance Activating System, delivery technology and its nPODDDS™, or novel Point Of Divergence Drug Delivery System, technology. IPCI006 is designed to prevent, delay or limit the release of oxycodone hydrochloride when more intact tablets than prescribed are ingested, thus delaying or preventing overdose and allowing for sufficient time for a rescue or medical intervention to take place. It is also intended to present a significant barrier to abuse by snorting, “parachuting,” injecting or smoking finely crushed oxycodone hydrochloride immediate release tablets. The data generated from the studies conducted under this IND is expected to form part of an NDA seeking FDA approval for IPCI006 tablets.

If developed and approved, IPCI006 may be the first immediate release formulation of oxycodone hydrochloride intended to simultaneously prevent or delay overdose and prevent abuse by intranasal or intravenous routes.

There can be no assurance that we will be successful in submitting any NDA with the FDA, that the FDA will approve the Company’s IPCI006 product candidate for sale in the U.S. market or any related abuse-deterrent label claims, or that it will ever be successfully commercialized and produce significant revenue for us.

Other Potential Products and Markets

We are continuing our efforts to identify opportunities internationally, particularly in China, that could if effectuated provide product distribution alternatives through partnerships and therefore would not likely require an investment or asset acquisition by us. Discussions toward establishing a partnership to facilitate future development activities in China are ongoing. We have not at this time entered into and may not ever enter into any such arrangements.

In addition, we are seeking to develop key relationships in several other international jurisdictions where we believe there may be substantial demand for our generic products. These opportunities could potentially involve out-licensing of our products, third-party manufacturing supply and more efficient access to pharmaceutical ingredients and therefore assist with the development of our product pipeline.

In November 2018, we announced that we had entered into an exclusive licensing and distribution agreement for our abuse resistant Oxycodone ER product candidate and four generic drug products with a pharmaceutical distributor in the Philippines. Under the terms of the agreement the distributor was granted the exclusive right, subject to regulatory approval, to import and market our first novel drug formulation, abuse-deterrent Oxycodone ER, in the Philippines. Additionally, this distributor was granted, subject to regulatory approval, the exclusive right to import and market our generics of Seroquel XR®, Focalin XR®, Glucophage® XR, and Keppra XR® in the Philippines. Under the terms of the agreement, the distributor will be required to purchase a minimum yearly quantity of all products included in the agreement and we will be the exclusive supplier of said products. The multi-year agreement with the Philippines distributor is subject to early termination. Financial terms of the agreement have not been disclosed. There can be no assurance as to when or if any of our products or product candidates will receive regulatory approval for sale in the Philippines or that, if so approved, any such products will be successfully commercialized there and produce significant revenues for us. Moreover, there can be no assurance that we will not be required to conduct further studies for Oxycodone ER, that the FDA will approve any of our requested abuse-deterrent label claims, that the FDA will meet its deadline for review, that the FDA will ultimately approve the NDA for the sale of Oxycodone ER in the U.S. market, or that it will ever be successfully commercialized and produce significant revenue for us.

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In November 2018, we announced that we had entered into two exclusive licensing and distribution agreements with pharmaceutical distributors in Malaysia and Vietnam.

A Malaysian pharmaceutical distribution company was granted the exclusive right, subject to regulatory approval, to import and market our generic Seroquel XR® (quetiapine fumarate extended-release) in Malaysia. Under the terms of the agreement, four strengths (50, 200, 300 and 400 mg) of generic Seroquel XR® will be manufactured and supplied by us for distribution in Malaysia. There was also the potential to include other products in the agreement with said distributor, who will be required to purchase a minimum yearly quantity of all products included in the agreement.

A Vietnamese pharmaceutical distributor was granted the exclusive right, subject to regulatory approval, to import and market our generic Seroquel XR®, Glucophage® XR, and Keppra XR® in Vietnam. Under the terms of the agreement, two strengths (500 and 750 mg) of generic Glucophage® XR, three strengths (50, 150 and 200 mg) of generic Seroquel XR® and one strength (500 mg) of generic Keppra XR® will be manufactured and supplied by us for distribution in Vietnam. The Vietnamese distributor will be required to purchase a minimum yearly quantity of all products included in the agreement.

The multi-year agreements with the Malaysian and Vietnamese distributors are each subject to early termination. Financial terms of the agreements have not been disclosed. There can be no assurance as to when or if any of our products will receive regulatory approval for sale in Malaysia or Vietnam or that, if so approved, the products will ever be successfully commercialized there and produce significant revenues for the Company.

We had also commenced a R&D program of pharmaceutical cannabidiol, or CBD, based products. As part of this R&D program, we filed multiple provisional patent applications with the United States Patent and Trademark Office pertaining to the delivery and application of cannabinoid-based therapeutics. The patent filings, together with certain of our already issued drug delivery patents, are intended to form the basis of the development of a pipeline of novel controlled-release product candidates with CBD as the main active ingredient.

There can be no assurance that we will be able to develop cannabis-based products or that any cannabis-based product candidates we develop will ever be successfully commercialized or produce significant revenue for us. There can be no assurance that any patents pertaining to the delivery and application of cannabinoid-based therapeutics will be issued to the Company. There can be no assurance that the Company can maintain any issued patent.

COMPETITIVE ENVIRONMENT

We are engaged in a business characterized by extensive research efforts, rapid technological developments and intense competition. Our competitors include medical technology, pharmaceutical, biotechnology and other companies, universities and research institutions. All of these competitors currently engage in, have engaged in or may engage in the future, in development, manufacturing, marketing and commercialization of new pharmaceuticals and existing pharmaceuticals, some of which may compete with our present or future products and product candidates.

Our drug delivery technologies may compete with existing drug delivery technologies, as well as new drug delivery technologies that may be developed or commercialized in the future. Any of these drugs and drug delivery technologies may receive government approval or gain market acceptance more rapidly than our products and product candidates. As a result, our products and product candidates may become non-competitive or obsolete.

We believe that our ability to successfully compete will depend on, among other things, the efficacy, safety and reliability of our products and product candidates, the timing and scope of regulatory approval, the speed at which we develop product candidates, our, or our commercialization partners’ ability to manufacture and sell commercial quantities of a product to the market, product acceptance by physicians and other professional healthcare providers, the quality and breadth of our technologies, the skills of our employees and our ability to recruit and retain skilled employees, the protection of our intellectual property, and the availability of substantial capital resources to fund development and commercialization activities.

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MANUFACTURING

We have internal manufacturing capabilities consisting of cGLP research laboratories and a cGMP manufacturing plant for solid oral dosage forms at our 30 Worcester Road Facility (as defined below). Raw materials used in manufacturing our products are available from a number of commercial sources and the prices for such raw materials had generally not been particularly volatile. In October 2014, the FDA provided us with written notification that 30 Worcester Road Facility had received an “acceptable” classification. Such inspections are carried out on a regular basis by the FDA and an “acceptable” classification is necessary to permit us to be in a position to receive final approvals for ANDAs and NDAs and to permit manufacturing of drug products intended for commercial sales in the United States after any such approvals. The most recent inspections by FDA were conducted in July 2017 and June 2019; both closed satisfactorily. Similarly, Health Canada completed an inspection of 30 Worcester Road Facility in September 2015 which resulted in a “compliant” rating. The most recent Health Canada inspection was conducted in May/June 2022 and a compliance rating was issued dated June 29, 2022.

INTELLECTUAL PROPERTY

Proprietary rights are an important aspect of our business. These include know-how, trade secrets and patents. Know-how and trade secrets are protected by internal company policies and operating procedures, and where necessary, by contractual provisions with development partners and suppliers. We also seek patent protection for inventive advances which form the basis of our drug delivery technologies. With respect to particular products, we may seek patent protection on the commercial composition, our methods of production and our uses, to prevent the unauthorized marketing and sale of competitive products.

The Company has several issued Patents which relate to and protect various aspects of our drug delivery technologies. In addition to these issued patents, we have several patent applications relating to various aspects of our HyperMatrix^TM drug delivery technologies, including methods and compositions for coating of tablets and beads, compositions incorporating disintegrants to assist in controlled release, compositions incorporating multiple drug actives, and compositions directed to classes of drug actives designed as therapies for specific indications and compositions intended to enhance deterrence of willful abuse of narcotic compositions.

REGULATORY REQUIREMENTS

We focus on the development of both branded drug products (which require NDAs) and generic drug products (which require ANDAs). The research and development, manufacture and marketing of controlled-release pharmaceuticals are subject to regulation by U.S., Canadian and other governmental authorities and agencies. Such national agencies and other federal, state, provincial and local entities regulate the testing, manufacturing, safety and promotion of our products. The regulations applicable to our products may change as the currently limited number of approved controlled-release products increases and regulators acquire additional experience in this area.

United States Regulation

New Drug Application

We will be required by the FDA to comply with NDA procedures for our branded products prior to commencement of marketing by us or our licensees. New drug compounds and new formulations for existing drug compounds which cannot be filed as ANDAs, but follow a 505(b)(2) regulatory pathway, are subject to NDA procedures.

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These procedures for a new drug compound include (a) preclinical laboratory and animal toxicology tests; (b) scaling and testing of production batches; (c) submission of an IND, and subsequent approval is required before any human clinical trials can commence; (d) adequate and well controlled replicate human clinical trials to establish the safety and efficacy of the drug for its intended indication; (e) the submission of an NDA to the FDA; and (f) FDA approval of an NDA prior to any commercial sale or shipment of the product, including pre-approval and post-approval inspections of our manufacturing and testing facilities. If all of this data in the product application is owned by the applicant, the FDA will issue its approval without regard to patent rights that might be infringed or exclusivity periods that would affect the FDA’s ability to grant an approval if the application relied upon data which the applicant did not own.

Preclinical laboratory and animal toxicology tests may have to be performed to assess the safety and potential efficacy of the product. The results of these preclinical tests, together with information regarding the methods of manufacture of the products and quality control testing, are then submitted to the FDA as part of an IND requesting authorization to initiate human clinical trials. Once the IND notice period has expired, clinical trials may be initiated, unless an FDA hold on clinical trials has been issued.

A new formulation for an existing drug compound requires a 505(b)(2) application. This application contains full reports of investigations of safety and effectiveness but at least some information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. A 505(b)(2) application is submitted when some specific information necessary for approval is obtained from: (1) published literature and/or (2) the FDA findings of safety and effectiveness for an approved drug. The FDA has implemented this approach to encourage innovation in drug development without requiring duplicative studies while protecting the patent and exclusivity rights for the approved drug. A 505(b)(2) application can be submitted for a new chemical entity, a new molecular entity or any changes to previously approved drugs such as dosage form, strength, route of administration, formulation, indication, or bio inequivalence where the application may rely on the FDA’s finding on safety and effectiveness of the previously approved drug. In addition, the applicant may also submit a 505(b)(2) application for a change in drug product that is eligible for consideration pursuant to a suitability petition. For example, a 505(b)(2) application would be appropriate for a controlled-release product that is bio inequivalent to a reference listed drug where the proposed product is at least as bioavailable and the pattern of release is at least as favorable as the approved pharmaceutically equivalent product. A 505(b)(2) application may be granted three years of exclusivity if one or more clinical investigations, other than bioavailability/bioequivalence studies, was essential to the approval and conducted or sponsored by the applicant; five years of exclusivity is granted if it is for a new chemical entity. A 505(b)(2) application may also be eligible for orphan drug and pediatric exclusivity.

A 505(b)(2) application must contain the following: (1) identification of those portions of the application that rely on the information the applicant does not have a right of reference, (2) identification of any or all listed drugs by established name, proprietary name, dosage form, strength, route of administration, name of the listed drug’s sponsor, and the application number if application relies on the FDA’s previous findings of safety and effectiveness for a listed drug, (3) information with respect to any patents that claim the drug or the use of the drug for which approval is sought, (4) patent certifications or statement with respect to any relevant patents that claim the listed drug, (5) if approval for a new indication, and not for the indications approved for the listed drug, a certification so stating, (6) a statement as to whether the listed drug has received a period of marketing exclusivity, (7) bioavailability/bioequivalence studies comparing the proposed product to the listed drug (if any) and (8) studies necessary to support the change or modification from the listed drugs or drugs (if any). Before submitting the application, the applicant should submit a plan to identify the types of bridging studies that should be conducted and also the components of application that rely on the FDA’s findings of safety and effectiveness of a previously approved drug product. We intend to generate all data necessary to support FDA approval of the applications we file. A 505(b)(2) application must provide notice of certain patent certifications to the NDA holder and patent owner, and approval may be delayed due to patent or exclusivity protections covering an approved product.

Clinical trials involve the administration of a pharmaceutical product to individuals under the supervision of qualified medical investigators who are experienced in conducting studies under good clinical practices guidelines. Clinical studies are conducted in accordance with protocols that detail the objectives of a study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Each protocol is submitted to the FDA and to an institutional review board prior to the commencement of each clinical trial. Clinical studies are typically conducted in three sequential phases, which may overlap. In Phase I, the initial introduction of the product into human subjects, the compound is tested for absorption, safety, dosage, tolerance, metabolic interaction, distribution, and excretion. Phase II involves studies in a limited patient population with the disease to be treated to (1) determine the efficacy of the product for specific targeted indications, (2) determine optimal dosage and (3) identify possible adverse effects and safety risks. In the event Phase II evaluations demonstrate that a pharmaceutical product is effective and has an acceptable safety profile, Phase III clinical trials are undertaken to further evaluate clinical efficacy of the product and to further test its safety within an expanded patient population at geographically dispersed clinical study sites. Periodic reports on the clinical investigations are required.

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We, or the FDA, may suspend clinical trials at any time if either party believes the clinical subjects are being exposed to unacceptable health risks. The results of the product development, analytical laboratory studies and clinical studies are submitted to the FDA as part of an NDA for approval of the marketing and commercialization of a pharmaceutical product.

Abbreviated New Drug Application

In certain cases, where the objective is to develop a generic version of an approved product already on the market in controlled-release dosages, an ANDA may be filed in lieu of filing an NDA. Under the ANDA procedure, the FDA waives the requirement to submit complete reports of preclinical and clinical studies of safety and efficacy and instead requires the submission of bio equivalency data; that is, demonstration that the generic drug produces the same effect in the body as its brand-name counterpart and has the same pharmacokinetic profile, or change in blood concentration over time. The ANDA procedure is available to us for a generic version of a drug product approved by the FDA. In certain cases, an ANDA applicant may submit a suitability petition to the FDA requesting permission to submit an ANDA for a drug product that differs from a previously approved reference drug product (the “Listed Drug”) when the change is one authorized by statute. Permitted variations from the Listed Drug include changes in: (1) route of administration, (2) dosage form, (3) strength and (4) one of the active ingredients of the Listed Drug when the Listed Drug is a combination product. The FDA must approve the petition before the ANDA may be submitted. An applicant is not permitted to petition for any other kinds of changes from Listed Drugs. The information in a suitability petition must demonstrate that the change from the Listed Drug requested for the proposed drug product may be adequately evaluated for approval without data from investigations to show the proposed drug product’s safety or effectiveness. The advantages of an ANDA over an NDA include reduced R&D costs associated with bringing a product to market, and generally a shorter review and approval time at the FDA.

GDUFA implemented substantial fees for new ANDAs, Drug Master Files, product and establishment fees. In return, the program is intended to provide faster and more predictable ANDA reviews by the FDA and more timely inspections of drug facilities. For the FDA’s fiscal year 2023, the annual facility fee is $243,134 and the GUDFA fee is $162,056. Under GDUFA, generic product companies face significant penalties for failure to pay the new user fees, including rendering an ANDA not “substantially complete” until the fee is paid. It is currently uncertain the effect the new fees will have on our ANDA process and business. However, any failure by us or our suppliers to pay the fees or to comply with the other provisions of GDUFA may adversely impact or delay our ability to file ANDAs, obtain approvals for new generic products, generate revenues and thus may have a material adverse effect on our business, results of operations and financial condition.

Patent Certification and Exclusivity Issues

ANDAs and/or NDAs filed under Paragraph IV of the Hatch Waxman Act which seek approval by a non-brand owner to market a generic version of a branded drug product prior to the expiry of patents owned or listed in the Orange Book (the “Listed Patents”) as applicable to the brand owner’s product, are required to include certifications pursuant to Paragraph IV that either the Listed Patents are invalid or that the applicant’s drug product does not infringe the Listed Patents. In such circumstances, the owner of the branded drug and/or the holder of the patents may commence patent infringement litigation against the applicant. In such a case, the FDA is not empowered to approve such pending ANDA or NDA until the expiry of 30 months from the commencement of such litigation, unless within such 30-month period the said patents are found to be invalid, or the drug product covered by the ANDA or NDA is finally found by a court not to infringe such patents.

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Under the U.S. Food, Drug and Cosmetic Act (“FDC Act”), the first filer of an ANDA (but not an NDA) with a “non-infringement” certification is entitled, if its drug product is approved, to receive 180 days of market exclusivity. Subsequent filers of generic products, if non-infringing and approved by the FDA, are entitled to market their products six months after the first commercial marketing of the first filer’s generic product. A company having FDA approval and permission from the original brand owner is able to market an authorized generic at any time. The 180-day exclusivity period can be forfeited if the first applicant withdraws its application or the FDA considers the application to have been withdrawn, the first applicant amends or withdraws Paragraph IV Certification for all patents qualifying for 180 day exclusivity, or the first applicant fails to obtain tentative approval within 30 months after the date filed, unless failure is due to a change in review requirements. The preservation of the 180 day exclusivity period related to the first-to-file status of a drug not approved within 30 months after the date filed, generally requires that an application be made to the FDA for extension of the time period where the delay has been due to a change in the review requirements for the drug. The approval of the continued first-to-file status in such circumstances is subject to the discretion of the FDA. There can be no assurance that the FDA would accede to such a request if made.

Patent expiration refers to expiry of U.S. patents (inclusive of any extensions) on drug compounds, formulations and uses. Patents outside the United States may differ from those in the United States. Under U.S. law, the expiration of a patent on a drug compound does not create a right to make, use or sell that compound. There may be additional patents relating to a person’s proposed manufacture, use or sale of a product that could potentially prohibit such person’s proposed commercialization of a drug compound.

The FDC Act contains other market exclusivity provisions that offer additional protection to pioneer drug products which are independent of any patent coverage that might also apply. Exclusivity refers to the fact that the effective date of approval of a potential competitor’s ANDA for a generic of the pioneer drug may be delayed or, in certain cases, an ANDA may not be submitted until the exclusivity period expires. Five years of exclusivity are granted to the first approval of a “new chemical entity”. Three years of exclusivity may apply to products which are not new chemical entities, but for which new clinical investigations are essential to the approval. For example, a new indication for use, or a new dosage strength of a previously approved product, may be entitled to exclusivity, but only with respect to that indication or dosage strength. Exclusivity only offers protection against a competitor entering the market via the ANDA route, and does not operate against a competitor that generates all of its own data and submits a full NDA.

If applicable regulatory criteria are not satisfied, the FDA may deny approval of an NDA or an ANDA or may require additional testing. Product approvals may be withdrawn if compliance with current or future regulatory standards is not maintained or if problems occur after the product reaches the market. The FDA may require further testing and surveillance programs to monitor the pharmaceutical product that has been commercialized. Non-compliance with applicable requirements can result in additional penalties, including product seizures, injunction actions and criminal prosecutions.

Canadian Regulation

The requirements for selling pharmaceutical drugs in Canada are substantially similar to those of the United States described above.

Investigational New Drug Application

Before conducting clinical trials of a new drug in Canada, we must submit a Clinical Trial Application to the Pharmaceutical Drugs Directory (‘PDD’), formerly Therapeutic Products Directorate (“TPD”). This application includes information about the proposed trial, the methods of manufacture of the drug and controls, preclinical laboratory and animal toxicology tests on the safety and potential efficacy of the drug, and information on any previously executed clinical trials with the new drug. If, within 30 days of receiving the application, the TPD does not notify us that our application is unsatisfactory, we may proceed with clinical trials of the drug. The phases of clinical trials are the same as those described above under “United States Regulation – New Drug Application”.

New Drug Submission

Before selling a new drug in Canada, we must submit a New Drug Submission (“NDS”) or Supplemental New Drug Submission (“SNDS”) to the PDD and receive a Notice of Compliance (“NOC”) from the PDD to sell the drug. The submission includes information describing the new drug, including its proper name, the proposed name under which the new drug will be sold, a quantitative list of ingredients in the new drug, the methods of manufacturing, processing, and packaging the new drug, the controls applicable to these operations, the tests conducted to establish the safety of the new drug, the tests to be applied to control the potency, purity, stability and safety of the new drug, the results of bio-pharmaceutics and clinical trials as appropriate, the intended indications for which the new drug may be prescribed and the effectiveness of the new drug when used as intended. The PDD reviews the NDS or SNDS. If the submission meets the requirements of Canada’s Food and Drugs Act and Regulations, the PDD will issue an NOC for the new drug.

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Where the PDD has already approved a drug for sale in controlled-release dosages, we may seek approval from the TPD to sell an equivalent generic drug through an ANDS. In certain cases, the PDD does not require the manufacturer of a proposed drug that is claimed to be equivalent to a drug that has already been approved for sale and marketed, to conduct clinical trials; instead, the manufacturer must satisfy the PDD that the drug is bioequivalent to the drug that has already been approved and marketed.

The PDD may deny approval or may require additional testing of a proposed new drug if applicable regulatory criteria are not met. Product approvals may be withdrawn if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. Contravention of Canada’s Food and Drugs Act and Regulations can result in fines and other sanctions, including product seizures and criminal prosecutions.

Proposals have been made that, if implemented, would significantly change Canada’s drug approval system. In general, the recommendations emphasize the need for efficiency in Canadian drug review. Proposals include establishment of a separate agency for drug regulation and modeling the approval system on those found in European Union countries. There is no assurance, however, that such changes will be implemented or, if implemented, will expedite the approval of new drugs.

The Canadian government has regulations which can prohibit the issuance of an NOC for a patented medicine to a generic competitor, provided that the patentee or an exclusive licensee has filed a list of its Canadian patents covering that medicine with the Minister of Health and Welfare. After submitting the list, the patentee or an exclusive licensee can commence a proceeding to obtain an order of prohibition directed to the Minister prohibiting him or her from issuing an NOC. The minister may be prohibited from issuing an NOC permitting the importation or sale of a patented medicine to a generic competitor until patents on the medicine expire or the waiver of infringement and/or validity of the patent(s) in question is resolved by litigation in the manner set out in such regulations. There may be additional patents relating to a company’s proposed manufacture, use or sale of a product that could potentially prohibit such company’s proposed commercialization of a drug compound.

Certain provincial regulatory authorities in Canada have the ability to determine whether the consumers of a drug sold within such province will be reimbursed by a provincial government health plan for that drug by listing drugs on formularies. The listing or non-listing of a drug on provincial formularies may affect the prices of drugs sold within provinces and the volume of drugs sold within provinces.

Additional Regulatory Considerations

Sales of our products by our licensees outside the United States and Canada will be subject to regulatory requirements governing the testing, registration and marketing of pharmaceuticals, which vary widely from country to country.

Under the U.S. Generic Drug Enforcement Act, ANDA applicants (including officers, directors and employees) who are convicted of a crime involving dishonest or fraudulent activity (even outside the FDA regulatory context) are subject to debarment. Debarment is disqualification from submitting or participating in the submission of future ANDAs for a period of years or permanently. The Generic Drug Enforcement Act also authorizes the FDA to refuse to accept ANDAs from any company which employs or uses the services of a debarred individual. We do not believe that we receive any services from any debarred person.

In addition to the regulatory approval process, pharmaceutical companies are subject to regulations under provincial, state and federal law, including requirements regarding occupational safety, laboratory practices, environmental protection and hazardous substance control, and may be subject to other present and future local, provincial, state, federal and foreign regulations, including possible future regulations of the pharmaceutical industry. We believe that we are in compliance in all material respects with such regulations as are currently in effect.

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Before medicinal products can be distributed commercially, a submission providing detailed information must be reviewed and approved by the applicable government or agency in the jurisdiction in which the product is to be marketed. The regulatory review and approval process varies from country to country.

C. Organizational Structure

The following chart shows the corporate relationship structure of Intellipharmaceutics International Inc. and its three wholly-owned subsidiaries, including jurisdictions of incorporation, as of June 13, 2023.

D. Property, Plant and Equipment

On December 1, 2015, we entered into a lease agreement for a 25,000 square foot facility located at 30 Worcester Road Toronto, Ontario, Canada M9W 5X2 (“30 Worcester Road Facility”), as well as a 40,000 square foot facility on the adjoining property located at 22 Worcester Road, Toronto, Ontario, Canada M9W 5X2, both of which are owned indirectly by the same landlord (“22 Worcester Road Facility”, and together with 30 Worcester Road Facility, the “Combined Properties”) for a five-year term with a five-year renewal option. We use our 30 Worcester Road Facility as a cGLP research laboratory, office space, and cGMP scale-up and small to medium-scale manufacturing plant for solid oral dosage forms. The 30 Worcester Road Facility consists of approximately 4,900 square feet for administrative space, 4,300 square feet for R&D, 9,200 square feet for manufacturing, and 3,000 square feet for warehousing. On June 21, 2020, the Company entered into a lease surrender agreement and vacated the property at 22 Worcester Road on June 30, 2020. On August 20, 2020, the Company extended its lease for the premises at 30 Worcester Road that it currently operates from, for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021. Effective December 1, 2021, the Company extended its lease for the premises (30 Worcester Road) for one year and has exercised an option to renew for another year effective December 1, 2022. The current basic rent is$237,500 per year.

We continually monitor our facility requirements in the context of our needs and we expect these requirements to change commensurately with our activities.

Item 4E. Unresolved Staff Comments

Not applicable.

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Item 5. Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with the audited annual consolidated financial statements of the Company and notes thereto. See “Item 18. Financial Statements”. The consolidated financial statements have been prepared in accordance with U.S. GAAP. All amounts are expressed in United States dollars unless otherwise noted. Annual references are to the Company’s fiscal years, which ended on November 30, 2022, 2021 and 2020.

A. Operating Results

Our results of operations have fluctuated significantly from period to period in the past and are likely to do so in the future. We anticipate that our quarterly and annual results of operations will be impacted for the foreseeable future by several factors, including the timing of approvals to market our product candidates in various jurisdictions and any resulting licensing revenue, milestone revenue, product sales, the number of competitive products and the extent of any aggressive pricing activity, wholesaler buying patterns, the timing and amount of payments received pursuant to our current and future collaborations with third parties, the existence of any first-to-file exclusivity periods, and the progress and timing of expenditures related to our research, development and commercialization efforts. Due to these fluctuations, we presently believe that the period-to-period comparisons of our operating results are not a reliable indication of our future performance.

	For the years ended
	November 30			November 30			November 30			Change						Change
	2022			2021			2020			2022 vs 2021						2021 vs 2020
	$			$			$			$			%			$			%
Revenue:
Licensing		29,682			-			1,401,517			29,682			N/A			(1,401,517	)		-100	%
Up-front fees		19,068			-			-			19,068			N/A			-			N/A
Other Services		16,978			-			-			16,978			N/A			-			N/A
		65,728			-			1,401,517			65,728			N/A			(1,401,517	)		-100	%
Expenses:
Research and development		2,149,126			2,661,875			3,517,018			(512,749	)		-19	%		(855,143	)		-24	%
Selling, general and administrative		561,050			1,249,676			2,147,432			(688,626	)		-55	%		(897,756	)		-42	%
Depreciation		206,059			261,525			415,375			(55,466	)		-21	%		(153,850	)		-37	%
		2,916,235			4,173,076			6,079,825			(1,256,841	)		-30	%		(1,906,749	)		-31	%
Loss from operations		(2,850,507	)		(4,173,076	)		(4,678,308	)		1,322,569			-32	%		505,232			-11	%
Net foreign exchange (loss) gain		210,634			(22,465	)		(168,568	)		233,099			-1038	%		146,103			-87	%
Interest expense		(291,619	)		(549,299	)		(969,653	)		257,680			-47	%		420,354			-43	%
Gain on settlement		-			-			2,500,000			-			N/A			(2,500,000	)		-100	%
Loss on disposal of propery and equipment		44,435			-			(41,603	)		44,435			N/A			41,603			100	%
Impairment of fixed assets		-			(514,502	)		-			514,502			-100	%		(514,502	)		N/A
Net loss before income taxes		(2,887,057	)		(5,259,342	)		(3,358,132	)		2,372,285			-45	%		(1,901,210	)		57	%
Provision for income taxes
Current tax expense/(recovery)		10,858			(20,333	)		32,833			31,191			-153	%		(53,166	)		-162	%
Deferred tax recovery		(5,521	)		(93,854	)		-			88,333			-94	%		(93,854	)		N/A
Net loss and comprehenisve loss		(2,892,394	)		(5,145,155	)		(3,390,965	)		2,252,761			-44	%		(1,754,190	)		52	%

Year ended November 30, 2022 compared to the year ended November 30, 2021

Revenue

The Company recorded revenues of $65,728 for the year ended November 30, 2022 versus $Nil for the year ended November 30, 2021. Such revenues consisted primarily of up-front payment from the Taro license and supply agreement, for the year ended November 30, 2022. There was no revenue from generic Focalin XR^® for the year ended November 30, 2021, primarily due to a marked increase in gross-to-net deductions such as wholesaler rebates, chargebacks and pricing adjustments which continues to date.

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Research and Development

Expenditures for R&D were $2,149,126 for the year ended November 30, 2022 in comparison to $2,661,875 for the year ended November 30, 2021, resulting in a decrease of $512,749 compared to the year ended November 30, 2022. In the year ended November 30, 2022, we recorded $Nil of expenses for stock-based compensation for R&D employees compared to $Nil for the year ended November 30, 2021.  After adjusting for the stock-based compensation expenses discussed above, expenditures for R&D for the year ended November 30, 2022 were lower by $512,749 compared to the year ended November 30, 2021. The higher R&D expense during the year ended November 30, 2021 was due to the allocation of losses on royalty payments for generic Focalin XR^®.

Selling, General and Administrative

Selling, general and administrative expenses were $526,050 for the year ended November 30, 2022 in comparison to $1,249,676 for the year ended November 30, 2021, resulting in a decrease of $723,626. The decrease is due to a significant decrease in administrative costs, and a decrease in wages.

Administrative costs for the year ended November 30, 2022 were $194,536 in comparison to $871,679 in the year ended November 30, 2021. The decrease is due to a previously accrued expense being reversed during the year ended November 30, 2022.

Expenditures for wages and benefits for the year ended November 30, 2022 were $250,539, in comparison to $264,796 in the year ended November 30, 2021. For the year ended November 30, 2022, we recorded an expense of $Nil. for stock-based compensation compared to an expense of $Nil for the year ended November 30, 2021. After adjusting for the stock-based compensation expenses, expenditures for wages for the year ended November 30, 2022 were lower by $14,257 compared to the year ended November 30, 2021. The decrease during the year ended November 30, 2022 was mainly related to the reduction in staff.

Occupancy costs for the year ended November 30, 2022 were $79,451, in comparison to $73,453 for the year ended November 30, 2021.  The increase during the year ended November 30, 2022, was related to the increase in lease expense. Also, during the year ended November 20, 2021 occupancy cost was offset by the rent subsidy received from the government as part of the Canada Emergency Rent Subsidy (CERS) COVID-19 relief program.

Depreciation

Depreciation expenses for the year ended November 30, 2022 were $206,059 in comparison to $261,525 in the year ended November 30, 2021. The decrease is primarily due to less investment in production, laboratory and computer equipment during the year ended November 30, 2022.

Foreign Exchange Gain 

Foreign exchange gain was $210,634 for the year ended November 30, 2022 in comparison to a loss of $22,465 in the year ended November 30, 2021. The foreign exchange gain for the year ended November 30, 2022 was due to the strengthening of the U.S. dollar against the Canadian dollar during the year ended November 30, 2022 as the exchange rates changed to $1.00 for C$1.3508 as at November 30, 2022 from $1.00 for C$1.2793 as at November 30, 2021.

Interest Expense

Interest expense for the year ended November 30, 2022 was $287,917 in comparison to $549,299 in the year ended November 30, 2021. This decrease is primarily due to the November 2019 Debenture being accreted at an annual effective interest rate of 35.1% during the year ended November 30, 2022.  This is in comparison to the November 2019 Debenture being accreted at an annual effective interest rate of 90.8% during year ended November 30, 2021.

Net Loss

The Company recorded net loss for the year ended November 30, 2022 of $2,892,394 or $0.09 per common share, compared with a net loss of $5,259,342 or $0.17 per common share for the year ended November 30, 2021. In the year ended November 30, 2022, the net loss was attributed to the gain on sale of equipment, decreased administrative expense related to professional and legal fees and R&D expenses. In the year ended November 30, 2021, the net loss is attributed to the increase in interest expenses related the accounting for convertible debenture as well as, expenditures related to ongoing selling, general and administrative expenses related to professional and legal fees, as well as ongoing R&D expenses.

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Year ended November 30, 2021 compared to the year ended November 30, 2020

Revenue

The Company recorded revenues of $Nil for the year ended November 30, 2021 versus $1,401,517 for the year ended November 30, 2020. Such revenues are primarily licensing revenues from commercial sales of generic Focalin XR® under the Par agreement.

Research and Development

Expenditures for R&D for the year ended November 30, 2021 were lower by $855,143 compared to the year ended November 30, 2020.

In the year ended November 30, 2021, we recorded $9,719 of expenses for stock-based compensation for R&D employees compared to $60,446 for the year ended November 30, 2020.

After adjusting for the stock-based compensation expenses stated above, expenditures for R&D for the year ended November 30, 2021 were lower by $804,416 compared to the year ended November 30, 2020.The decrease is mainly due to the decrease in patent and litigation expenses, lower third-party consulting fees, and a reduction in R&D staff.

Selling, General and Administrative

Selling, general and administrative expenses were $1,249,676 for the year ended November 30, 2021 in comparison to $2,147,432 for the year ended November 30, 2020, resulting in a decrease of $867,981. The decrease is mainly due to a decrease in administrative costs and a decrease in wages, marketing costs and occupancy cost.

Administrative costs for the year ended November 30, 2021 were $871,679 in comparison to $1,515,645 in the year ended November 30, 2020. The decrease for the year ended November 30, 2021 was due to the significant decrease in professional and legal fees.

Expenditures for wages and benefits for the year ended November 30, 2021 were $264,796 in comparison to $452,382 in the year ended November 30, 2020. For the year ended November 30, 2021, we recorded an expense of $2,266 for stock-based compensation compared to an expense of $11,199 for the year ended November 30, 2020. After adjusting for the stock-based compensation expenses, expenditures for wages for the year ended November 30, 2021 were lower by $178,653 compared to the year ended November 30, 2020.The decrease was related to the accrual of severance pay to employees that was laid off during the year ended November 30, 2020, as well as the Company enrolling our employees to work under a workshare program for eligible current employees whereby the Company is paying personnel only for a certain number of days a week.

Marketing costs for the year ended November 30, 2021 were $39,748 in comparison to $65,757 in the year ended November 30, 2020. This decrease is primarily the result of a decrease in travel expenditures related to business development and investor relations activities. 

Occupancy costs for the year ended November 30, 2021 were $73,453 in comparison to $113,648 for the year ended November 30, 2020.The decrease is due to lower facility operating expenses because the Company was occupying only one building during the year ended 2021. The decrease is also attributable to the receipt of Canada Emergency Rent Subsidy (CERS) in the year ended November 30, 2021 as part of the CERS COVID-19 relief program offset by higher lease expense due to the changes in Accounting policy under ASC 842 which was adopted at the fiscal 2020 year end.

Depreciation

Depreciation expenses for the year ended November 30, 2021 were $261,525 in comparison to $415,376 in the year ended November 30, 2020.The decrease is primarily due to less investment in production, laboratory and computer equipment during the year ended November 30, 2021.

Foreign Exchange loss

Foreign exchange loss was $22,465 for the year ended November 30, 2021 in comparison to a loss of $168,568 in the year ended November 30, 2020. The foreign exchange loss for the year ended November 30, 2021 was due to the weakening of the U.S. dollar against the Canadian dollar during the year ended November 30, 2021 as the exchange rates changed to $1.00 for C$1.2793 as at November 30, 2021 from $1.00 for C$1.2965 as at November 30, 2020.  The foreign exchange loss for the year ended November 30, 2020 was due to the weakening of the U.S. dollar against the Canadian dollar during the year ended November 30, 2020 as the exchange rates changed to $1.00 for C$1.2965 as at November 30, 2020 from $1.00 for C$1.3289 as at November 30, 2019.

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Interest Expense

Interest expense for the year ended November 30, 2021 was $549,299 in comparison to $969,653 in the year ended November 30, 2020. This decrease is primarily due to the November 2019 Debenture being accreted at an annual effective interest rate of 309.06% during the year ended November 30, 2021. This is in comparison to the higher expense during the year ended November 30, 2020 where the May 2019 Debenture was accreted at an annual effective interest rate of 782.7%; the 2018 Debenture was accreted at an annual effective interest rate of approximately 7.3%; and the November 2019 Debenture was accreted at an annual effective interest rate of approximately 504.4%.

Net Loss

The Company recorded net loss for the year ended November 30, 2021 of $5,145,155 or $0.17 per common share, compared with a net loss of $3,390,965 or $0.14 per common share for the year ended November 30, 2020. In the year ended November 30, 2021, the net loss is attributed to the decrease in licensing revenues from commercial sales of generic Focalin XR®, combined with ongoing administrative expenses related to professional and legal fees as well as ongoing R&D expenses, as well as the Company realizing an impairment expense on its fixed assets. In the year ended November 30, 2020, the lower net loss is attributed to the other income received through a stipulated dismissal agreement, offset by a decrease in up-front fees recognized in revenue, combined with decreased administrative expenses related to professional and legal fees and R&D expenses related to the decrease in third party consulting fees, decrease in expenses related to biostudies and the reduction in R&D staff.

B. Liquidity and Capital Resources

	For the year ended
	November 30,			November 30,			November 30,
	2022			2021			2020		Change (2022 vs 2021)						Change (2020 vs 2020)
	$			$			$			$		%				$		%
Cash flows provided from (used in) operating activities		(1,388,223	)		(2,461,329	)		112,108		1,073,106			-44	%		(2,573,437	)		-2295	%
Cash flows provided from financing activities		200,000			3,031,228			-		(2,831,228	)		-93	%		3,031,228			N/A
Cash flows provided from (used in) investing activities		500,000			-			25,316		500,000			N/A			(25,316	)		-100	%
Increase (decrease) in cash		(688,223	)		569,899			137,424		(1,258,122	)		-221	%		432,475			315	%
Cash, beginning of year		771,945			202,046			64,622		569,899			282	%		137,424			213	%
Cash, end of year		83,722			771,945			202,046		(688,223	)		-89	%		569,899			282	%

                The Company had cash of $83,722 as at November 30, 2022 compared to $771,945 as at November 30, 2021. The increase in cash during the year ended November 30, 2021 was due to the completion of a non-brokered private placement of 9,414,560 common shares of the Company at a price of CAD$0.41 per Common Share for total gross proceeds of CAD$3,859,969, as well as lower expenditures for R&D, selling and general, and administrative expenses.

For the year ended November 30, 2022, net cash flows used in operating activities decreased to $1,388,223 as compared to net cash flows used in operating activities of $2,461,329 for the year ended November 30, 2021. The decrease was primarily a result of the Company paying off more accounts payable, offset by a decrease in R&D and selling, lower general and administrative expense, and a lower loss from operations.

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R&D costs, which are a portion of the cash flows used in operating activities, related to continued internal R&D programs, are expensed as incurred. However, equipment and supplies are capitalized and amortized over their useful lives if they have alternative future uses. For the year ended November 30, 2022 and the year ended November 30, 2021, R&D expenses were $2,149,126, and $2,661,875, respectively. The decrease was primarily due to the allocation of losses from royalty payments during the year ended November 30, 2021 to R&D.

For the year ended November 30, 2022, net cash flows from financing activities were $200,000, compared to $3,031,228 for the year ended November 30, 2021. During the year ended November 30, 2022, the Company issued an unsecured promissory note at an annual interest rate of 10%, with an original expiry date of April 6, 2023, which was extended to October 6, 2023. The financing activities in the year ended November 30, 2021 related to the completion of a non-brokered private placement of 9,414,560 common shares of the Company at a price of CAD$0.41 per Common Share for total gross proceeds of CAD$3,859,969.

For the year ended November 30, 2022, net cash flows from Investing activities were $500,000, compared to $Nil for the year ended November 30, 2021. The increase in the year ended November 30, 2022 was related to the sale of equipment.

All non-cash items have been added back or deducted from the condensed unaudited interim consolidated statements of cash flows.

With the exception of the quarter ended February 28, 2014, the Company has incurred losses from operations since inception. To date, the Company has funded its R&D activities principally through the issuance of securities, loans from related parties, funds from the IPC Arrangement Transaction and funds received under commercial license agreements. Since November 2013, research has also been funded from revenues earned on sales of our generic Focalin XR® capsules for the 15 and 30 mg strengths. Despite the launch of the 25 and 35 mg strengths by Par in January 2017, the launch of the 10 and 20 mg strengths in May 2017 along with the launch of the 5 and 40 mg strengths in November 2017, we expect sales of generic Focalin XR®, due to continued competitive pressures, to continue to be negatively impacted for the next several quarters. As of November 30, 2022, our cash balance was $83,722. We currently expect to meet our short-term cash requirements from potential revenues for approved generic products or other collaborations, other available financing and by cost savings resulting from reduced R&D activities and staffing levels, as well as quarterly profit share from Par. Effective May 5, 2021 our exclusive license agreements with Tris Pharma, Inc. for generic Seroquel XR^®, generic Pristiq^® and generic Effexor XR^® were mutually terminated. Products were never supplied nor distributed under the licenses. Termination of the exclusive agreements may provide opportunity for the Company to explore options of supplying the products to multiple sources on non-exclusive bases. However, there can be no assurance that the products previously licensed to Tris Pharma will be successfully commercialized and produce significant revenues for us. We will still need to obtain additional funding to, among other things, further product commercialization activities and development of our product candidates. The Company recently entered into a license and supply agreement with Taro Pharmaceuticals Inc. by which the Company has granted Taro an exclusive license to market, sell and distribute a product in Canada. There can be no assurance that the product will be successfully commercialized and produce significant revenues for us. Potential sources of capital may include, if conditions permit, equity and/or debt financing, payments from licensing and/or development agreements and/or new strategic partnership agreements. The Company has funded its business activities principally through the issuance of securities, loans from related parties (see “Related Party Transactions” for more information related to the terms of such loans and applicable maturities) and funds from development agreements. There is no certainty that such funding will be available going forward or, if it is, whether it will be sufficient to meet our needs. Our future operations are highly dependent upon our ability to source additional funding to support advancing our product candidate pipeline through continued R&D activities and to expand our operations. Our ultimate success will depend on whether our product candidates are approved by the FDA, Health Canada, or the regulatory authorities of other countries in which our products are proposed to be sold and whether we are able to successfully market our approved products. We cannot be certain that we will receive such regulatory approval for any of our current or future product candidates, that we will reach the level of revenues necessary to achieve and sustain profitability, or that we will secure other capital sources on terms or in amounts sufficient to meet our needs, or at all. Our cash requirements for R&D during any period depend on the number and extent of the R&D activities we focus on. At present, we are focused principally on the development of 505(b)(2) product candidates, such as our Regabatin™ XR and Oxycodone ER 505(b)(2) product candidates, and selected generic product candidates as resources permit. Our development of Oxycodone ER required significant expenditures, including costs to defend against the Purdue (as defined below) litigation (as described in the “Legal Proceedings and Regulatory Actions” section). Some of these costs remain to be paid by the Company. For our Regabatin™ XR product candidate, Phase III clinical trials can be capital intensive, and will only be undertaken consistent with the availability of funds and a prudent cash management strategy.

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There can be no assurance that we can raise sufficient funds to maintain current operations or that we can obtain additional funding to further commercialization activities or further development of our product candidates.

On September 10, 2018, the Company completed a private placement financing of the unsecured convertible 2018 Debenture in the principal amount of $0.5 million. The 2018 Debenture was originally scheduled to mature on September 1, 2020. The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, is pre-payable at any time at the option of the Company and is convertible at any time into common shares of the Company at a conversion price of $3.00 per common share at the option of the holder. The maturity date for the 2018 Debenture has been extended from time to time and the maturity date is now August 31, 2023. No interest was paid on the 2018 Debenture for year ended November 30, 2022.

On April 4, 2019, a tentative approval from TSX was received for refinancing of the 2013 Debenture subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000, was originally scheduled to mature on November 1, 2019, bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is currently August 31, 2023. No interest was paid on the May 2019 Debenture for the year ended November 30, 2022.

On November 15, 2019, the Company completed a private placement financing of the unsecured November 2019 Debenture in the principal amount of $0.25 million. The November 2019 Debenture was originally scheduled to mature on December 31, 2019. The November 2019 Debenture bears interest at a rate of 12% per annum, payable monthly, is pre-payable at any time at the option of the Company and is convertible at any time into common shares of the Company at a conversion price of $0.12 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company provided the Company with the $0.25 million of proceeds for the November 2019 Debenture. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date for the November 2019 Debenture is now August 31, 2023. No interest was paid on the November 2019 Debenture for the year ended November 30, 2022.

The availability of equity or debt financing will be affected by, among other things, the results of our R&D, our ability to obtain regulatory approvals, our success in commercializing approved products with our commercial partners and the market acceptance of our products, the state of the capital markets generally, our delisting from Nasdaq, strategic alliance agreements, and other relevant commercial considerations. In addition, if we raise additional funds by issuing equity securities, our then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. In the event that we do not obtain sufficient additional capital, it will raise substantial doubt about our ability to continue as a going concern, realize our assets and pay our liabilities as they become due. Our cash outflows are expected to consist primarily of internal and external R&D, legal and consulting expenditures to advance our product pipeline and selling, general and administrative expenses to support our commercialization efforts. Depending upon the results of our R&D programs, the impact of the litigation against us and the availability of financial resources, we could decide to accelerate, terminate, or reduce certain projects, or commence new ones. Any failure on our part to successfully commercialize approved products or raise additional funds on terms favorable to us or at all, may require us to significantly change or curtail our current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in us not taking advantage of business opportunities, in the termination or delay of clinical trials or us not taking any necessary actions required by the FDA or Health Canada for one or more of our product candidates, in curtailment of our product development programs designed to identify new product candidates, in the sale or assignment of rights to our technologies, products or product candidates, and/or our inability to file ANDAs, ANDSs or NDAs at all or in time to competitively market our products or product candidates.

C. Research and development, patents, and licenses, etc.

We expense R&D costs. For the years ended November 30, 2022, 2021 and 2020, R&D expense was $2,149,126, $2,661,875, and $3,517,018, respectively.

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D. Trend Information

The table below outlines selected financial data for the eight most recent quarters. The quarterly results are unaudited and have been prepared in accordance with U.S. GAAP, for interim financial information.

Quarter Ended	Revenue		Net (loss) income			(Loss) income per share
						Basici			Dilutedi
	$		$			$			$
November 30, 2022		46,660		(874,725	)		(0.09	)		(0.09	)
August 31, 2022		19,068		(296,043	)		(0.01	)		(0.01	)
May 31, 2022		-		(840,654	)		(0.03	)		(0.03	)
February 28, 2022		-		(880,972	)		(0.03	)		(0.03	)
November 30, 2021		-		(1,956,100	)		(0.17	)		(0.17	)
August 31, 2021		-		(1,264,305	)		(0.04	)		(0.04	)
May 31, 2021		93,427		(1,000,184	)		(0.04	)		(0.04	)
February 28, 2021		-		(924,566	)		(0.04	)		(0.04	)
November 30, 2020		299,442		(1,622,100	)		(0.07	)		(0.07	)

(i) Quarterly per share amounts may not sum due to rounding

It is important to note that historical patterns of revenue and expenditures cannot be taken as an indication of future revenue and expenditures. Net(loss) income has been somewhat variable over the last eight quarters and is reflective of varying levels of commercial sales of generic Focalin XR® capsules, the level of our R&D spending, and the vesting or modification of performance-based stock options. The higher net loss in the fourth quarter of 2022 is primarily attributed to higher R&D spending and an increase in interest expense partially offset by lower general, selling and administrative spending. The lower net loss in the third quarter of 2022 is primarily attributed to the significant decrease in the selling, general and administrative expenses. The lower net loss in the second quarter of 2022 is primarily attributed to the gain on the sale of equipment, offset by higher R&D spending and selling, general and administrative expenses. The lower net loss in the first quarter of 2022 is primarily attributed to slightly higher licensing revenue partially offset by higher accrued interest expense, higher general, selling, administrative spending. The higher net loss in the fourth quarter of 2021 is primarily attributed to higher R&D spending and an increase in interest expense, as well as the expense related to the impairment of fixed assets. The higher net loss in the third quarter of 2021 is primarily attributed to higher R&D spending and an increase in interest expense partially offset by lower general, selling and administrative spending. The higher net loss in the second quarter of 2021 is primarily attributed to higher general, selling, administrative spending partially offset by higher licensing revenue and lower R&D spending. The lower net loss in the first quarter of 2021 is primarily attributed to lower R&D spending and lower selling, general and administrative expenses. The higher net loss in the fourth quarter of 2020 is primarily attributed to lower licensing revenue and higher R&D expenses and selling, general and administrative expenses. The higher net income in the third quarter of 2020 is primarily attributed to other income received pursuant to the Purdue stipulated dismissal agreement and lower R&D spending and selling, general and administrative expenses. The lower net loss in the second quarter of 2020 is primarily attributed to slightly higher licensing revenue and lower R&D spending and selling, general and administrative expenses.

E. Off-balance sheet arrangements

The Company, as part of its ongoing business, does not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPE”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of November 30, 2021, the Company was not involved in any material unconsolidated SPE transactions.

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F. Tabular disclosure of contractual obligations

In the table below, we set forth our enforceable and legally binding obligations and future commitments and obligations related to all contracts. Some of the figures we include in this table are based on management’s estimate and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties, and other factors. Current operating lease obligations relate to the lease of the Company’s premises at 30 Worcester Road. On June 21, 2020, the Company entered into a lease surrender agreement and vacated the 22 Worcester Road Facility (which it also previously occupied) on June 30, 2020. On August 20, 2020, the Company extended its lease for the 30 Worcester Road Facility for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021.The Company had a one year lease expiring November 30, 2022 and has exercised an option to renew for another year effective December 1, 2022.

	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		to 1 year		1 year		Total
	$		$		$		$		$		$
Accounts payable		3,764,692		-		-		-		-		3,764,692
Accrued liabilities		2,821,506		-		-		-		-		2,821,506
Employee costs payable		3,067,578		-		-		-		-		3,067,578
Operating lease liabiity		45,891		45,891		45,891		45,891		-		183,564
Convertible debentures (Note 7)		1,800,000		-		-		-		-		1,800,000
Promissory notes payable (Note 7)		360,514		-		-		-		-		360,514
Total contractual obligations		11,860,181		45,891		45,891		45,891		-		11,997,854

G. Safe Harbor

See “Disclosure Regarding Forward-Looking Information” in the introduction to this annual report.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

DIRECTORS AND OFFICERS

The name and province of residence of each of our directors and officers as at the date hereof, the office presently held, principal occupation, and the year each director first became a director of the Company or its predecessor, IPC Ltd., are set out below. Each director is elected to serve until the next annual meeting of our shareholders or until his or her successor is elected or appointed. Officers are appointed annually and serve at the discretion of the Board.

Name and Province of Residence	Position held with the Company	Officer/Director Since
Dr. Isa Odidi Ontario, Canada	Chairman of the Board and Chief Executive Officer	September 2004
Dr. Amina Odidi(1) Ontario, Canada	President, Chief Operating Officer and Acting Chief Financial Officer and Director	September 2004
Norman Betts(2)(3)(4), New Brunswick, Canada	Director	January 2019
Shawn Graham(2)(3) (4), New Brunswick, Canada	Director	May 2018
Kenneth Keirstead(5) New Brunswick, Canada	Director	January 2006
Bahadur Madhani(2)(3)(4) Ontario, Canada	Director	March 2006
Dr. Patrick Yat Ontario, Canada	Vice-President, Chemistry and Analytical Services	September 2004

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Notes:

(1)	In addition to serving as President and Chief Operating Officer (and as a Director), Dr. Amina Odidi has (since the effective date of Greg Powell’s resignation described below) assumed the responsibilities of the Company’s Chief Financial Officer.
(2)	Member of the Audit Committee.
(3)	Member of the Compensation Committee.
(4)	Member of the Corporate Governance Committee.
(5)	Kenneth Keirstead is deceased January 6, 2022.

Greg Powell was appointed the Company’s Chief Financial Officer effective February 11, 2019. Mr. Powell resigned as the Company’s Chief Financial Officer on February 2, 2020 (effective March 4, 2020) for personal reasons.

Isa Odidi, Ph.D., MBA – Chairman, CEO, Co-Chief Scientific Officer and Executive Director

Dr. Isa Odidi has served as Chairman of the Board of the Company and Chief Executive Officer and Co-Chief Scientific Officer of the Company since September 2004. In 1998, Dr. Odidi co-founded Intellipharmaceutics Inc., the predecessor of publicly-traded Intellipharmaceutics International Inc. From 1995 to 1998, Dr. Odidi held positions, first as Director, then as Vice President of Research of Drug Development and New Technologies, at Biovail Corporation International, (now Valeant Pharmaceutical International, Inc.), a drug delivery company. Dr. Odidi currently holds a Chair as Professor of Pharmaceutical Technology at the Toronto Institute of Pharmaceutical Technology in Canada and is an Adjunct Professor at the Institute for Molecular Medicine in California. Dr. Isa Odidi is also the Chairman of Smart Pharmaceutical (Shanghai) Ltd, China. Dr. Odidi holds a Bachelor of Science degree in pharmacy from Ahmadu Bello University, Nigeria, a master of science in pharmaceutical technology, Ph.D. pharmaceutics from the University of London, and his MBA from Joseph L. Rotman School of Management, University of Toronto. He is also a graduate of the Western Executive Program, Ivey School of Business at the University of Western Ontario. Dr. Odidi was awarded an Honorary Doctor of Science degree (Honoris causa) from the University of Benin, Nigeria.

Amina Odidi, Ph.D. – President, COO, Co-Chief Scientific Officer and Executive Director

Dr. Amina Odidi has served as President, Chief Operating Officer and Co-Chief Scientific Officer of the Company since September 2004. In 1998, Dr. Odidi co-founded Intellipharmaceutics Inc., the predecessor of publicly-tradedIntellipharmaceutics International Inc. She has extensive experience developing and applying proprietary technologies to the development of controlled-release drug products for third-party pharmaceutical companies. She has invented or co-invented various proprietary controlled delivery devices for the delivery of pharmaceutical, nutraceutical, biological, agricultural and chemical agents. In the past she has worked for the pharmaceutical and health care industry. Dr. Odidi has co-authored eight articles, papers and textbooks. Dr. Odidi holds a bachelor of science in pharmacy, a master of science in biopharmaceutics, and a Ph.D. in pharmaceutics from the University of London.

Bahadur Madhani, CM – Non-Executive Director

Bahadur Madhani, an accountant by training, has been a director since March 2006. Since 1983, Mr. Madhani’s principal occupation has been President and CEO of Equiprop Management Limited, a Canadian property management company of which he is the principal shareholder. At present, he is also on the Board of the YMCA of Toronto and YMCA Canada. He was previously a member of the advisory board of Quebecor Ontario. He has also served as Chairman of United Way of Toronto, Chairman of the YMCA of greater Toronto, and Chairman of the Nelson Mandela Children’s Fund of Canada. Mr. Madhani was awarded membership in the Order of Canada in 2001.

Shawn Graham – Non-Executive Director

Shawn Graham has been a director of the Company since May 2018. Mr. Graham is the President and CEO of G&R Holdings Inc., which assists companies with developing and implementing global projects and business alliance strategies with a special focus on globalizing with China. From October 2006 until October 2010, Mr. Graham served as 31st Premier of Province of New Brunswick. He is a former Chair of the Council of The Federation, Co-chair of Northeastern Governors and Eastern Canadian Premiers, and Co-chair of a Pan-Canadian trade mission to China. He is currently a member of the advisory board of the faculty of business, University of New Brunswick, Saint John as well as a national board member to Ducks Unlimited Canada. Mr. Graham has been awarded an Honorary Doctor of Laws Degree from the University of New Brunswick.

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Norman Betts – Non-Executive Director

Norman Betts is a Professor, Faculty of Business Administration, University of New Brunswick, a Chartered Professional Accountant Fellow (FCPA) and a member of the Institute of Corporate Directors (ICD). Dr. Betts currently serves as a director and member of the audit committees of Tanzanian Royalty Exploration Corporation, 49 North Resources, Biotricity Inc. and Adex Mining Inc. He has extensive public company and Crown Corporation experience including having served on boards including Tembec Inc., New Brunswick Power Corporation, and the Bank of Canada. He is also co-chair of the board of trustees of the University of New Brunswick Pension Plan for Academic Employees. Dr. Betts is a former Finance Minister and Minister of Business New Brunswick with the Province of New Brunswick. He was awarded a Ph.D. in Management from the School of Business at Queens University in 1992.

From March 2006 until June 2013, Dr. Norman Betts served as a director of Starfield Resources Inc. (TSX: SRU) (“Starfield”). On August 22, 2013, Starfield was the subject of a cease trade order issued by the Ontario Securities Commission as a result of Starfield’s failure to file, inter alia, its audited annual financial statements, related management’s discussion and analysis and officer certifications for the year ended February 28, 2013. The order is still in effect. On April 18, 2013, Starfield’s shares were delisted from the TSX. On July 2, 2013, Starfield announced that it was deemed to have made an assignment in bankruptcy, effective at the close of business on June 28, 2013 for failure to file a proposal before the time for doing so had passed pursuant to the provisions of the Bankruptcy and Insolvency Act (Canada). Starfield had previously filed a Notice of Intention to Make a Proposal (“Notice of Intention”) pursuant to the provisions of Part III of the Bankruptcy and Insolvency Act (Canada). Pursuant to the Notice of Intention, PriceWaterhouseCoopers Inc. (“PwC”) was appointed as the trustee (“Proposal Trustee”) in Starfield’s proposal proceedings. Pursuant to an Order of the Ontario Superior Court of Justice (Commercial List), the time for Starfield to file a proposal expired at the end of the day on June 28, 2013. Starfield completed a sale of substantially all of its assets related to its Ferguson Lake Project in early June 2013. However, in consultation with the Proposal Trustee, Starfield determined that it would not be able to put forward a viable proposal and would not be filing a proposal by the deadline. As a result, Starfield was deemed to have made an assignment in bankruptcy at the end of the day on June 28, 2013. PwC acted as the trustee in bankruptcy for Starfield.

As of May 31, 2023, the directors and executive officers of the Company as a group owned, directly and indirectly, or exercise control or direction over 583,028 common shares, representing approximately 1.76% of the issued and outstanding common shares of the Company (and beneficially owned approximately 5,791,958 common shares representing 15.12% of our common shares including common shares issuable upon the exercise of outstanding options and the conversion of the outstanding Debentures that are exercisable or convertible within 60 days of the date hereof). Drs. Amina and Isa Odidi, our President and Chief Operating Officer and our Chairman and Chief Executive Officer, respectively, and Odidi Holdings Inc., a privately-held company controlled by Drs. Amina and Isa Odidi, owned in the aggregate directly and indirectly 578,131 common shares, representing approximately 1.75% of our issued and outstanding common shares of the Company (and collectively beneficially owned in the aggregate approximately 5,607,791 common shares representing 14.71% of our common shares including common shares issuable upon the exercise of outstanding options and the conversion of the outstanding Debentures that are exercisable or convertible within 60 days of the date hereof). (Reference is made to the section entitled “E. Share Ownership” under this “Item 6. Directors, Senior Management and Employees” for additional information regarding the options to purchase common shares held by directors and officers of the Company and the Debentures held by Drs. Amina and Isa Odidi.).

Family Relationships

Except Drs. Isa Odidi and Amina Odidi who are spouses to each other, there are no other family relationships among any of our officers and directors.

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B. Compensation

Compensation Discussion and Analysis

Background – We are a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. Our patented Hypermatrix™ technology is a multidimensional controlled-release drug delivery platform that can be applied to the efficient development of a wide range of existing and new pharmaceuticals. Based on this technology platform, we have developed several drug delivery systems and a pipeline of products (some of which have received FDA approval) and product candidates in various stages of development, including ANDAs filed with the FDA (and one ANDS filed with Health Canada) and one NDA filing, in therapeutic areas that include neurology, cardiovascular, GIT, diabetes and pain. As of November 30, 2022, the Company had 11 full-time employees engaged in administration and research and development.

Compensation Governance – The Company’s Compensation Committee is comprised of three directors, Messrs. Graham, Madhani and Betts, each of whom is considered “independent” within the meaning of section 2.4 of Form 51-102F6 – Statement of Executive Compensation. Each member of the Compensation Committee has sufficient experience in order to make decisions on the suitability of the Company’s compensation policies and practices.

The Compensation Committee recommends compensation policies concerning officers and senior management to the Board. The Corporate Governance Committee recommends compensation policies concerning independent directors to the Board. The Board makes the final determinations regarding the adequacy and form of the compensation for non-executive directors to ensure that such compensation realistically reflects the responsibilities and risks involved, without compromising a director’s independence. Further details relating to the role and function of the Compensation Committee and the Corporate Governance Committee is provided in Item 6.C.

Risk Management – The Board is responsible for identifying the principal risks of the Company’s business and ensuring the implementation of appropriate systems to manage these risks. Through the Compensation Committee, the Board is involved in the design of compensation policies to meet the specific compensation objectives discussed below and considers the risks relating to such policies, if any. The Compensation Committee is ultimately responsible for ensuring compliance of the compensation policies and practices of the Company. To date, the Board and the Compensation Committee have not identified any risks arising from the Company’s compensation policies and practices that would be reasonably likely to have a material adverse effect on the Company.

Objectives – The overall objectives of the Company’s compensation program include: (a) attracting and retaining talented executive officers; (b) aligning the interests of those executive officers with those of the Company; and (c) linking individual executive officer compensation to the performance of the Company. The Company’s compensation program is currently designed to compensate executive officers for performance of their duties and to reward certain executive officers for performance relative to certain milestones applicable to their services.

Elements of Compensation – The elements of compensation awarded to, earned by, paid to, or payable to the Named Executive Officers (as hereinafter defined) for the most recently completed financial year are: (a) base salary and discretionary bonuses; (b) long-term incentives in the form of stock options; (c) restricted share unit awards; and (d) perquisites and personal benefits. Prior to the most recently completed financial year, the Named Executive Officers have also received option-based awards which were assumed by the Company pursuant to the plan of arrangement completed on October 22, 2009.

Base Salary and Discretionary Bonus – Base salary is a fixed element of compensation payable to each Named Executive Officer for performing his or her position’s specific duties. The amount of base salary for a Named Executive Officer has been determined through negotiation of an employment agreement with each Named Executive Officer (see “Employment Agreements” below). While base salary is intended to fit into the Company’s overall compensation objectives in order to attract and retain talented executive officers, the size of the Company and the nature and stage of its business also impact the level of base salary. To date, the level of base salary has not impacted the Company’s decisions about any other element of compensation and the Board may consider discretionary bonuses for individual employees based on exceptional performance by such individuals in a particular fiscal year.

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Option-Based Awards – Option-based awards are a variable element of compensation that rewards each Named Executive Officer for individual and corporate performance overall determined by the Board. Option-based awards are intended to fit into the Company’s overall compensation objectives by aligning the interests of all Named Executive Officers with those of the Company, and linking individual Named Executive Officers’ compensation to the performance of the Company. The Board, which includes two of the Named Executive Officers, is responsible for setting and amending any equity incentive plan under which an option-based award is granted.

The Company has in place a stock option plan (the “Option Plan”) for the benefit of certain officers, directors, employees and consultants of the Company, including the Named Executive Officers (as described in greater detail in Item 6.E below). Named Executive Officers have been issued options under such plan.

The Company had also granted performance-based options to Dr. Isa Odidi and Dr. Amina Odidi pursuant to a separate option agreement which was negotiated at the same time as their employment agreements. These options vest upon the Company attaining certain milestones relating to FDA filings and approvals for Company drugs, such that 27,639 options vest in connection with each of the FDA filings for the first five Company drugs and 27,639 options vest in connection with each of the FDA approvals for the first five Company drugs. These options expired on September 2020. The Company’s Option Plan was adopted effective October 22, 2009 as part of the IPC Arrangement Agreement approved by the shareholders of IPC Ltd., the predecessor company of the Company, at the meeting of shareholders held on October 19, 2009. Subject to the requirements of the Option Plan, the Board, with the assistance of the Compensation Committee, has the authority to select those directors, officers, employees and consultants to whom options will be granted, the number of options to be granted to each person and the price at which common shares of the Company may be purchased. Grants are determined based on individual and aggregate performance, as determined by the Board.

RSUs – The Company established a restricted share unit plan (the “RSU Plan”) to form part of its incentive compensation arrangements available for officers and employees of the Company and its designated affiliates (as described in greater detail in Item 6.E) as of May 28, 2010, when the RSU Plan received shareholder approval.

Perquisites and personal benefits – The Company also provides perquisites and personal benefits to its Named Executive Officers, including basic employee benefit plans, which are available to all employees, and a car allowance to cover the cost of an automobile for business purposes. These perquisites and personal benefits were determined through negotiation of an employment agreement with each Named Executive Officer (see “Employment Agreements” below). While perquisites and personal benefits are intended to fit into the Company’s overall compensation objectives by serving to attract and retain talented executive officers, the size of the Company and the nature and stage of its business also impact the level of perquisites and benefits. To date, the level of perquisites and benefits has not impacted the Company’s decisions about any other element of compensation.

Other Compensation-Related Matters – The Company’s share trading policy prohibits all directors and officers of the Company from, among other things, engaging in any short sales designed to hedge or offset a decrease in market value of the securities of the Company.

Executive Compensation

The following table sets forth all direct and indirect compensation for, or in connection with, services provided to the Company for the fiscal years ended November 30, 2022, November 30, 2021 and November 30, 2020 in respect of the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officers (current acting and former) (“Named Executive Officers”). No other officers of the Company earned greater than C$150,000 in total compensation in the fiscal year ended November 30, 2022.

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SUMMARY COMPENSATION TABLE

Non-equity incentive plan compensation (U.S.$)(f)
Name and principal position(a)	Year(b)	Salary (U.S.$)(1)(2)(c)	Share-based awards (U.S.$)(d)	Option-based awards (U.S.$) (e)	Annual incentive plans	Long-term incentive plans	Pension value (U.S.$)(g)	All other compensation (U.S.$)(3)(h)	Total compensation (U.S.$)(i)
Dr. Isa Odidi, Chairman, Chief Executive Officer and Co-Chief Scientific Officer	2022 2021 2020	$334,616 $360,562 $348,628	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	$13,325 $14,359 $13,883	$347,941 $374,921 $362,511
Dr. Amina Odidi, President, Chief Operating Officer, Co-Chief Scientific Officer and Acting Chief Financial Officer	2022 2021 2020	$334,616 $360,562 $348,628	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	$13,325 $14,359 $13,883	$347,941 $374,921 $362,511
Dr. Patrick Yat Vice-President, Chemistry and Analytical Services	2022 2021 2020	$111,045 $47,874 $98,341	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	N/A N/A N/A	$8,884 $9,572 $9,256	$119,929 $57,446 $107,597
Greg Powell, Former Chief Financial Officer (4)	2020	$73,926	N/A	N/A	N/A	N/A	N/A	$5,013	$78,939

Notes:

(1)	Salaries paid by the Company to each Named Executive Officer are paid in Canadian dollars. All amounts are expressed in U.S. dollars converted at the exchange rate of U.S.$0.7403 to C$1.00 (2021 - $0.7979; 2020- U.S.$ 0.7713) being the average closing exchange rate quoted by the Bank of Canada for the respective periods. Salary includes all amounts paid or payable to the Named Executive Officer.
(2)	As at November 30, 2022, compensation in the amounts of $1,021,197, $1,054,510 and $106,881 (including all other compensation) were payable to Dr. Isa, Dr. Amina Odidi and Dr. Patrick Yat, respectively.
(3)	“All other compensation” includes car allowances and other miscellaneous benefits.
(4)	Mr. Powell served as the Company’s Chief Financial Officer from February 11, 2019 until his resignation effective on March 4, 2020.

Significant factors necessary to understand the information disclosed in the Summary Compensation Table above include the terms of each Named Executive Officer’s employment agreement and the terms of the separate agreement relating to performance-based options applicable to Drs. Isa and Amina Odidi described below.

Employment Agreements

The employment agreement with Dr. Isa Odidi, the Chief Executive Officer and Co-Chief Scientific Officer of the Company, effective September 1, 2004, entitles Dr. Isa Odidi to receive a base salary of $200,000 per year, which is paid in Canadian dollars, and is increased annually each year during the term of the agreement by 20% of the prior year’s base salary. In addition, he is entitled to: (a) participate in the Option Plan; (b) participate in all employee benefit plans and programs, except for the Company’s deferred share unit plan (the “DSU Plan”); and (c) a car allowance of up to $1,000 per month. The initial term of the employment agreement was until September 30, 2007, at which time, pursuant to the terms of the agreement, the agreement was deemed to be extended automatically for an additional three-year period on the same terms and conditions (i.e. until September 30, 2010). The agreement will continue to be extended automatically for successive additional three-year periods on the same terms unless the Company gives Dr. Isa Odidi written notice at least two years prior to the date on which the agreement would otherwise be extended. See “Termination and Change of Control Benefits” below. Dr. Isa Odidi’s employment agreement was amended on August 1, 2007 and June 8, 2009 to include intellectual property, non-competition and non-solicitation provisions. In April 2010, Dr. Isa Odidi’s employment agreement was amended effective as of December 1, 2009, to eliminate the right to annual increases in his base salary of 20% each year and to roll back his base salary effective December 1, 2009 to the level payable under the employment agreement for the period from September 2008 to August 2009 or C$452,000 per year. Pursuant to such amendment, Dr. Isa Odidi’s base salary is subject to increase on an annual basis at the discretion of the Board, and Dr. Isa Odidi is eligible to receive a bonus, based on his performance, and that of the Company, as determined by the Board. In March 2019, Dr. Isa Odidi received a grant of 500,000 options of which 166,667 vested immediately on issuance, 166,667 vested on March 20, 2020 and 166,666 vested on March 20, 2021 at an exercise price of C$0.35 per share.

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The employment agreement with Dr. Amina Odidi, the President, Chief Operating Officer and Co-Chief Scientific Officer of the Company, effective September 1, 2004, entitles Dr. Amina Odidi to receive a base salary of $200,000 per year, which is paid in Canadian dollars, and is increased annually by 20% of the prior year’s base salary. In addition, she is entitled to: (a) participate in the Option Plan; (b) participate in all employee benefit plans and programs, except for the DSU Plan; and (c) a car allowance of up to $1,000 per month. The initial term of the employment agreement was until September 30, 2007, at which time, pursuant to the terms of the agreement, the agreement was deemed to be extended automatically for an additional three-year period on the same terms and conditions (i.e. until September 30, 2010). The agreement will continue to be extended automatically for successive additional three-year periods on the same terms unless the Company gives Dr. Amina Odidi written notice at least two years prior to the date on which the agreement would otherwise be extended. See “Termination and Change of Control Benefits” below. Dr. Amina Odidi’s employment agreement was amended on August 1, 2007 and June 8, 2009 to include intellectual property, non-competition and non-solicitation provisions. In April 2010, Dr. Amina Odidi’s employment agreement was amended effective as of December 1, 2009, to eliminate the right to annual increases in her base salary of 20% each year and to roll back her base salary effective December 1, 2009 to the level payable under the employment agreement for the period from September 2008 to August 2009, being C$452,000 per year. Pursuant to such amendment, Dr. Amina Odidi’s base salary is subject to increase on an annual basis at the discretion of the Board, and Dr. Amina Odidi is eligible to receive a bonus, based on her performance and the Company, as determined by the Board. In March 2019, Dr. Amina Odidi received a grant of 500,000 options of which 166,667 vested immediately on issuance, 166,667 vested on March 20, 2020 and 166,666 vested on March 20, 2021 at an exercise price of C$0.35 per share.

In addition, the Company entered into a separate acknowledgement and agreement with Drs. Isa Odidi and Amina Odidi dated October 22, 2009 to be bound by the performance-based stock option agreement dated September 10, 2004 pursuant to which Drs. Isa Odidi and Amina Odidi are entitled to purchase up to 276,394 of the Company’s common shares. These options were not granted under the Option Plan. These options vest upon the Company attaining certain milestones related to the FDA filings and approvals for Company products and product candidates. The options are exercisable at a price of $36.20 per share and were to expire in September 2014. Effective March 27, 2014, the Company’s shareholders approved a two year extension of the performance-based stock option expiry date to September 2016. Effective April 19, 2016, the Company’s shareholders approved a further two year extension of the performance-based stock option expiry date to September 2018. Effective May 15, 2018, the Company’s shareholders approved a further two-year extension of the performance-based stock option expiry date to September 2020. These options expired on September 10, 2020.

The employment agreement with Dr. Patrick Yat, Vice President, Chemistry and Analytical Services of the Company, effective September 1,2004 entitles Dr. Yat to receive a base salary of C$150,000 per year, which is paid in Canadian dollars. In addition, he is entitled to: (a) participate in the Option Plan; (b) participate in all employee benefit plans and programs; and (c) a car allowance of C$1,000 per month. The employment agreement is for an indefinite term. Dr. Yat’s employment agreement contains intellectual property, non-competition and non-solicitation provisions in favor of the Company. In March 2019, Dr. Yat received a grant of 40,000 options of which 13,334 vested immediately on issuance, 13,333 vested on March 20, 2020 and 13,333 vested on March 20, 2021 at an exercise price of C$0.35 per share.

Greg Powell had served as the Company’s Chief Financial Officer from February 11, 2019 until his resignation effective on March4, 2020.The employment agreement with Mr. Powell, effective February 11, 2019 entitled Mr. Powell to receive a base salary of C$180,000 per year. In addition, he was to: (a) participate in the Option Plan; (b) participate in all employee benefit plans and programs; and (c) have a car allowance of C$1,000 per month. The employment agreement was for an indefinite term. The Company could terminate this agreement without cause upon 3 to 12 months’ notice, depending on the length of employment. If the agreement was terminated without cause, it required payment to Mr. Powell of 3 months’ base salary, plus 6 weeks’ base salary for every full year of service, up to a combined maximum of 12 months. If such termination occurred within 6 months of a change of control of the Company, it required payment to Mr. Powell of 12 months’ base salary, plus 6 weeks’ base salary for every full year of service, up to a combined maximum of 12 months. Mr. Powell’s employment agreement contained intellectual property, non-competition and non-solicitation provisions in favor of the Company. In March 2019, Mr. Powell received a grant of 40,000 options of which 13,334 vested immediately on issuance, 13,333were to vest on March 20, 2020 and 13,333 will vest on March 20, 2021 at an exercise price of C$0.35 per share. Mr. Powell’s options ceased to be exercisable on July 2, 2020. As Mr. Powell resigned, no payment was made to him in connection with the termination of his employment.

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Incentive Plan Awards

Outstanding Option-Based Awards and Share-Based Awards – The following table sets forth for .each Named Executive Officer .all awards outstanding at the end of the most recently completed financial year, including awards granted before the most recently completed financial year. Each option grant allows the holder to purchase one of the Company’s common shares.

	Option-based Awards							Share-based Awards
Name(a)	Number of securities underlying unexercised options (#)(b)		Option exercise price (C$)(c)		Option expiration date(d)	Value of unexercised in-the-money options (C$)(e)(2)		Number of shares or units of shares that have not vested (#)(f)		Market or payout value of share-based awards that have not vested (C$)(g)
Dr. Isa Odidi		500,000		0.35	Mar. 20, 2029		N/A		N/A		N/A
Dr. Amina Odidi		500,000		0.35	Mar. 20, 2029		N/A		N/A		N/A
Dr. Patrick Yat		40,000		0.35	Mar. 20, 2029		N/A		N/A		N/A

Notes:

(1) The value of unexercised options at year-end is calculated by subtracting the option exercise price from the closing price of the common shares of the Company on the TSX for C$ exercise prices and OTCQB for US$ exercise prices on November 30, 2022 (C$0.10 and US$0.07, respectively) and multiplying the result by the number of common shares underlying an option.

Incentive Plan Awards – Value Vested or Earned During the Year – The following table sets forth details of the value vested or earned during the most recently completed financial year for each incentive plan award.

Name	Option-based awards - Value vested during the year (U.S.$)	Share-based awards - Value vested during the year (U.S.$)	Non-equity incentive plan compensation - Value earned during the year (U.S.$)
(a)	(b)(1)	(c)	(d)
Drs. Isa Odidi	N/A	N/A	N/A
Dr. Amina Odidi	N/A	N/A	N/A
Dr. Patrick Yat	N/A	N/A	N/A

Notes:

(1) The amount represents the theoretical total value if the options had been exercised on the vesting date, established by calculating the difference between the closing price of the common shares of the Company on the TSX on the vesting date and the exercise price.

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Pension Plan Benefits

The Company does not provide a defined benefit pension plan or a defined contribution pension plan for any of its Named Executive Officers, nor does it have a deferred compensation pension plan for any of its Named Executive Officers. There are no amounts set aside or accrued by the Company or its subsidiaries to provide pension, retirement or similar benefits.

Termination and Change of Control Benefits

The employment agreement with each of Dr. Isa Odidi and Dr. Amina Odidi (collectively the “Odidis”), by virtue of it being a fixed-term agreement with automatic renewal provisions, effectively provides for payments to the Odidis following termination of the employment agreement unless the agreement has been terminated in accordance with its terms. As a result, if either of the Odidis had been terminated on the last business day of the Company’s most recently completed fiscal year, it is estimated that an amount of up to approximately C$1.3 million would be payable to each of the Odidis, which is the amount that would have been payable through to September 30, 2025, at each of the Odidis’ current annual base salary level. Given their nature as fixed term employment agreements, if notice is properly provided to not renew the agreement following the term ending September 30, 2025, then as such date approaches the amount payable upon termination to the Odidis will decrease to the point where no amount would be payable upon termination as at September 30, 2025. Any termination of the employment of the Odidis must be undertaken by and is subject to the prior approval of the Board. There are no payments applicable under the employment agreements of the Odidis relating to a change of control of the Company.

For a discussion of certain termination and change of control benefits under the employment agreement with Mr. Powell, see the description of their employment agreements under the heading “Employment Agreements” above.

Director Compensation

The following table sets forth all amounts of compensation provided to the non-executive directors for the Company’s most recently completed financial year.

Name	Fees earned	Share-based awards	Option-based awards	Non-equity incentive plan compensation	Pension value	All other compensation	Total
(a)	(b)	(c)(1)	(d)	(e)	(f)	(g)	(h)
Bahadur Madhani	C$47,000	N/A	N/A	N/A	N/A	N/A	C$47,000
Shawn Graham	C$42,000	N/A	N/A	N/A	N/A	N/A	C$42,000
Norman Betts	C$42,000	N/A	N/A	N/A	N/A	N/A	C$42,000

Notes:

(1) DSUs that were earned. Does not include DSUs earned in the previous financial year and granted in the most recently completed financial year.

Significant factors necessary to understand the information disclosed in the Director Compensation Table above include the following: Non-management directors receive an annual retainer of $25,000 paid in Canadian dollars. The Audit Committee chair receives an annual retainer of $10,000 paid in Canadian dollars. The Corporate Governance Committee chair and Compensation Committee Chair, each receives an annual retainer of $5,000 paid in Canadian dollars. Non-chair committee members are paid an additional $2,500 per year per committee paid in Canadian dollars. Meetings will result in an additional $1,000 per day per meeting paid in Canadian dollars.

Outstanding Option-Based Awards and Share-Based Awards – The following table sets forth all amounts of option-based and share-based awards to the non-executive directors for the Company’s most recently completed financial year.

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	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price	Option expiration date	Value of unexercised in-the-money options (U.S.$)	Number of shares or units of shares that have not vested (#)	Market or payout value of share-based awards that have not vested (U.S.$)
(a)	(b)	(c)	(d)	(e)	(f)	(g)
Bahadur Madhani	60,000	C$0.35	Mar. 20, 2029	N/A	N/A	N/A
Shawn Graham	40,000	C$0.35	Mar. 20, 2029	N/A	N/A	N/A
Norman Betts	40,000	C$0.35	Mar. 20, 2029	N/A	N/A	N/A

Notes:

(1) The value of unexercised options at year-end is calculated by subtracting the option exercise price from the closing price of the common shares of the Company on the TSX on November 30, 2021(C$0.14) and multiplying the result by the number of common shares underlying an option.

Incentive Plan Awards – Value Vested or Earned During the Year – The following table sets forth all amounts of option-based and share-based awards vested to the non-executive directors of the Company for the most recently completed financial year and no non-equity incentive plan compensation was earned during the most recently completed financial year.

Name	Option-based awards - Value vested during the year (U.S.$)	Share-based awards - Value vested during the year (U.S.$)	Non-equity incentive plan compensation - Value earned during the year (U.S.$)
(a)	(b)(1)	(c)(2)	(d)
Bahadur Madhani	N/A	N/A	Nil
Shawn  Graham	N/A	N/A	Nil
Norman Betts	N/A	N/A	Nil

Notes:

(1)	The amount represents the theoretical total value if the options had been exercised on the vesting date, established by calculating the difference between the closing price of the common shares of the Company on the TSX on the vesting date and the exercise price.
(2)	The amount represents the theoretical total value of DSUs which were fully vested on their respective dates of issuance. DSUs are issued at the calculated market value of a common share on the date of issuance.

Directors’ and Officers’ Liability Insurance

The Company maintains insurance for the liability of its directors and officers arising out of the performance of their duties. The total amount of such insurance maintained is $1,000,000 subject to a deductible loss payable by the Company of $1,500,000 (for securities claims) or $1,000,000 (for other claims). The premium payable by the Company for the period from November 30, 2022 to November 30, 2023 is $86,400.

C. Board Practices

Board of Directors

See Items 6.A and 6.B.

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Committees of the Board of Directors

AUDIT COMMITTEE

The Audit Committee of the Board monitors our financial activities, policies, and internal control procedures. The Audit Committee assists the Board in fulfilling its oversight responsibility to shareholders, potential shareholders, the investment community, and others with respect to the Company’s financial statements, financial reporting process, systems of internal accounting and disclosure controls, performance of the external auditors, and risk assessment and management. The Audit Committee has the power to conduct or authorize investigations into any matters within its scope of responsibilities, with full access to all books, records, facilities and personnel of the Company, its auditors and its legal advisors. In connection with such investigations or otherwise in the course of fulfilling its responsibilities under the Audit Committee Charter, the Audit Committee has the authority to independently retain special legal, accounting, or other consultants to advise it.

Audit Committee Charter

The charter of the Audit Committee can be found on the Company’s website at www.intellipharmaceutics.com.

Composition of the Audit Committee

Our Audit Committee is comprised of Norman Betts, Shawn Graham and Bahadur Madhani, each of whom is considered independent and financially literate (as such terms are defined under applicable Canadian securities legislation) and satisfies the independence criteria of Rule 10A3-(b)(1) under the U.S. Exchange Act. The members of the Audit Committee have selected a Chair from amongst themselves, being Mr. Madhani.

Under the SEC rules implementing SOX, Canadian issuers filing reports in the United States must disclose whether their audit committees have at least one “audit committee financial expert”. The Board has determined that Mr. Madhani qualifies as an audit committee financial expert under the applicable SEC rules.

Relevant Education and Experience

Norman Betts is a Professor, Faculty of Business Administration, University of New Brunswick, a Chartered Professional Accountant Fellow (FCPA) and a member of the Institute of Corporate Directors (ICD). Dr. Betts currently serves as a director and member of the audit committees of Tanzanian Royalty Exploration Corporation, 49 North Resources, Biotricity Inc. and Adex Mining Inc. He has extensive public company and Crown Corporation experience including having served on boards including Tembec Inc., New Brunswick Power Corporation, and the Bank of Canada.  He is also co-chair of the board of trustees of the University of New Brunswick Pension Plan for Academic Employees. Dr. Betts is a former Finance Minister and Minister of Business New Brunswick with the Province of New Brunswick. He was awarded a Ph.D. in Management from the School of Business at Queens University in 1992.

Shawn Graham is a member of the advisory board of the Faculty of Business, University of New Brunswick, volunteers as a national board member to Ducks Unlimited Canada and has been a director of the Company since May 2018. Mr. Graham has been awarded an Honorary Doctor of Laws degree from the University of New Brunswick. He served as the 31^st Premier of New Brunswick when he effectively steered the province through the worst recession in generations. He was Co-Chair of the Council of the Federation, Co-Chair if Northeastern Governors and Eastern Canadian Premiers, and Co-Chair of a Pan-Canadian Trade Mission to China. He is currently President and CEO of G&R Holdings Inc., a company involved in the development and implementation of global projects and business alliance strategies with a special focus on globalising with China.

Bahadur Madhani is a chartered accountant who has been a director of the Company since March 31, 2006. He was a member of the advisory board of Quebecor Ontario and former Chairman of United Way of Toronto, former Chair of YMCA of Greater Toronto, former Chair of Nelson Mandela Children’s Fund Canada, former Chair of YMCA Canada and former Chair, Toronto Grants Review Team of the Ontario Trillium Foundation. He was awarded membership in the Order of Canada in 2001. Since 1983, Mr. Madhani’s principal occupation has been as President and CEO of Equiprop Management Limited, a Canadian property management company of which Mr. Madhani is the principal shareholder.

See also Item 6.A.

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Pre-Approval Policies and Procedures

The Audit Committee reviewed with the independent auditor (who is responsible for expressing an opinion on the conformity of the Company’s audited financial statements with U.S. GAAP) their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under Canadian and United States generally accepted auditing standards. In addition, the Audit Committee has discussed with the independent auditor the auditor’s independence from management and the Company including the matters in the written disclosures provided to the Audit Committee by the independent auditor, and considered the compatibility of non-audit services with the auditor’s independence.

The Company’s independent auditor is accountable to the Board and to the Audit Committee. The Board, through the Audit Committee, has the ultimate responsibility to evaluate the performance of the independent auditor, and through the shareholders, to appoint, replace and compensate the independent auditor. Under SOX, the independent auditor of a public company is prohibited from performing certain non-audit services. The Audit Committee has adopted procedures and policies for the pre-approval of non-audit services, as described in the Audit Committee Charter. Under the terms of such policies and procedures, the Audit Committee has adopted a list of pre-approved services, including audit and audit-related services and tax services, and a list of prohibited non-audit services deemed inconsistent with an auditor’s independence.

The list of pre-approved services includes:

Audit Services

Audits of the Company’s consolidated financial statements;

Statutory audits of the financial statements of the Company’s subsidiaries;

Audit-Related Services

Reviews of the quarterly consolidated financial statements of the Company;

Services associated with registration statements, prospectuses, periodic reports and other documents filed with securities regulatory bodies (such as the SEC and the Ontario Securities Commission) or other documents issued in connection with securities offerings (e.g., comfort letters and consent letters) and assistance in responding to comment letters from securities regulatory bodies;

Special attest services as required by regulatory and statutory requirements;

Regulatory attestation of management reports on internal controls as required by the regulators;

Consultations with the Company’s management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the securities regulatory authorities, accounting standard setting bodies (such as the Financial Accounting Standards Board or Chartered Professional Accountants of Canada), or other regulatory or standard setting bodies.

Presentations or training on accounting or regulatory pronouncements;

Due diligence services related to accounting and tax matters in connection with potential acquisitions / dispositions;

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Tax Services

Compliance Services

Assistance with the preparation of corporate income tax returns and related schedules for the Company and its subsidiaries;

Assistance with the preparation of Scientific Research & Experimental Development investment tax credit claims and amended tax returns of the Company;

Assistance in responding to Canada Revenue Agency or IRS on proposed reassessments and other matters;

Canadian & International Planning Services

Advice with respect to cross-border/transfer pricing tax issues;

Advice related to the ownership of corporate intellectual property in jurisdictions outside of Canada;

Assistance in interpreting and understanding existing and proposed domestic and international legislation, and the administrative policies followed by various jurisdictions in administering the law, including assisting in applying for and requesting advance tax rulings or technical interpretations;

Assistance in interpreting and understanding the potential impact of domestic and foreign judicial tax decisions;

Assistance and advising on routine planning matters;

Assistance in advising on the implications of the routine financing of domestic and foreign operations, including the tax implications of using debt or equity in structuring such financing, the potential impact of non-resident withholding tax and the taxation of the repatriation of funds as a return of capital, a payment of a dividend, or a payment of interest;

Commodity Tax Services

Assistance regarding Harmonized Sales Tax/Goods and Services Sales Tax/Provincial Sales Tax/Customs/Property Tax filings and assessments;

Commodity tax advice and compliance assistance with business reorganizations;

Advice and assistance with respect to government audits/assessments;

Advice with respect to other provincial tax filings and assessments;

Assistance with interpretations or rulings;

All Other Services

Advice and documentation assistance with respect to internal controls over financial reporting and disclosure controls and procedures of the Company.

The list of prohibited services includes:

Bookkeeping or other services related to the preparation of accounting records or financial statements;

Financial information systems design and implementation;

Appraisal or valuation services for financial reporting purposes;

Actuarial services for items recorded in the financial statements;

Internal audit outsourcing services;

74

Management functions;

Human resources;

Certain corporate finance and other services;

Legal services;

Certain expert services unrelated to the audit.

The Audit Committee also discusses with the Company’s independent auditor the overall scope and plans for their audit. The Audit Committee meets with the independent auditor, with and without management present, to discuss the results of their examination, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held 4 meetings during the period from December 1, 2021 to November 30, 2022.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited consolidated financial statements be included in the Annual Report for the year ended November 30, 2022 for filing with the Canadian provincial securities commissions and the SEC.

COMPENSATION COMMITTEE AND CORPORATE GOVERNANCE COMMITTEE

Compensation Committee Mandate and Purpose

The Compensation Committee of the Board is a standing committee of the Board whose primary function is to assist the Board in fulfilling its responsibilities relating to:

the development, review and periodic approval of the Company’s compensation philosophy that attracts and retains key executives and employees, while supporting the overall business strategy and objectives and links compensation with business objectives and organizational performance;

evaluate and approve all compensation of executive officers including salaries, bonuses and equity compensation that are required to be determined;

review the Company’s Option Plan, the employee RSU Plan and the DSU Plan on an annual basis;

review and make recommendations to the Board on compensation payable to senior officers of the Company to be hired subsequent to the adoption of the Charter; and

produce a report annually on executive officer compensation for inclusion in the proxy circular of the Company.

Compensation Committee Charter

The charter of the Compensation Committee can be found on the Company’s website at www.intellipharmaceutics.com.

Composition of the Compensation Committee

The Compensation Committee is composed of Shawn Graham, Norman Betts and Bahadur Madhani, each of whom is considered independent and is a director of the Company. All of the members shall be “independent” as such term is defined in applicable securities legislation. In no case shall a member be a current employee or immediate family member of a current employee. The members of the Compensation Committee have selected a Chair from amongst themselves, being Mr. Graham.

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Corporate Governance Committee Mandate and Purpose

The Corporate Governance Committee of the Board is a standing committee of the Board whose primary function is to assist the Board in dealing with the corporate governance matters described in its charter.

Corporate Governance Committee Charter

The charter of the Corporate Governance Committee can be found the Company’s website at www.intellipharmaceutics.com.

Composition of the Corporate Governance Committee

The Corporate Governance Committee is composed of Norman  Betts, Shawn Graham and Bahadur Madhani, each of whom is considered independent and is a director of the Company. The members of the Corporate Governance Committee have selected a Chair from amongst themselves, being Dr. Betts.

D. Employees

The number of full-time employees as of the end of each of last three fiscal years is as follows:

	November 30, 2022	November 30, 2021	November 30, 2020
Research Employees	9	9	11
Administrative Employees	2	2	2

Our employees are not governed by a collective agreement. We have not experienced a work stoppage and believe our employee relations are satisfactory.

The Company reduced the number of employees as a cost saving measure, and because of reduced activity in operations due to the financial condition of the Company. We currently intend to hire additional employees if and when the Company’s circumstances allow for such hirings.

The nature of our business requires the recruitment and retention of a highly educated and skilled workforce, including highly qualified management, scientific and manufacturing personnel for innovation, research and development. Typically a high proportion of our employees have a Bachelor’s degree or higher. For each of the last three fiscal years, all employees of the Company were employed at the Company’s offices in Toronto.

E. Share Ownership

The following table states the names of the directors and officers of the Company (current and during the last fiscal year), the positions within the Company now held by them, and the approximate number of common shares of the Company beneficially owned or over which control or direction is exercised by each of them as of June 13, 2023.

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Name

Position with the Company

Number of Common Shares Owned

Percentage of Common Shares Owned

Number of Stock Options Held(2)

Exercise Price

Option Expiry dd/mm/yyyy

Number of Currently Exercisable Options(4)

Number of Common Shares Issuable on Conversion of Convertible Debt(3)

Number of DSU Held

Number of RSU Held

Dr. Isa Odidi

Chief Executive Officer and Chairman of the Board and Director of the Company

578,131

(1)

1.75

%

500,000

C$0.35

20/03/2029

500,000

1,779,661 166,666 2,083,333

N/A

N/A

Dr. Amina Odidi

President, Chief Operating Officer and Director of the Company(5)

578,131

(1)

1.75

%

500,000

C$0.35

20/03/2029

500,000

1,779,661 166,666 2,083,333

N/A

N/A

Bahadur Madhani

Director of the Company

750

0.002

%

60,000

C$0.35

20/03/2029

60,000

N/A

N/A

N/A

Shawn Graham

Director of the Company

1,430

0.004

%

40,000

C$0.35

20/03/2029

40,000

N/A

N/A

N/A

Norman Betts

Director of the Company

Nil

Nil

40,000

C$0.35

20/03/2029

40,000

N/A

N/A

N/A

Dr. Patrick Yat

Vice-President, Chemistry and Analytical Services

2,717

0.01

%

40,000

C$0.35

20/03/2029

40,000

N/A

N/A

N/A

Totals

583,028

1.76

%

1,180,000

1,180,000

4,029,660

N/A

N/A

Notes:

(1)	578,131 represents the number of shares owned of record by Odidi Holdings Inc., a privately-held company controlled by Drs. Amina and Isa Odidi. In addition, 500,000 stock options are held by each of Dr. Isa Odidi and Dr. Amina Odidi.
(2)	For information regarding option expiration dates and exercise price refer to the tables included under Item 6.B.
(3)	On January 10, 2013, the Company completed a private placement financing of a convertible debenture in the original principal amount of $1.5 million (the “2013 Debenture”), which was originally due to mature January 1, 2015. The 2013 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company, and was convertible at any time into 50,000 common shares at a conversion price of US$30.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, shareholders, directors and executive officers of the Company provided the Company with the $1.5 million of the proceeds for the 2013 Debenture. The maturity date of the 2013 Debenture was changed several times from the original maturity date. A principal repayment of $150,000 was made on April 1, 2017. In December 2018, a principal repayment of $300,000 was made on the 2013 Debenture. After giving effect to such partial repayments, the 2013 Debenture was convertible at any time into 35,000 common shares at a conversion price of $30.00 per common share at the option of the holder. On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000. The May 2019 Debenture bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. The maturity date for the May 2019 Debenture has been extended from time to time and the current maturity date is August 31, 2023. On September 10, 2018, the Company completed the 2018 Debenture financing in the principal amount of $0.5 million. The 2018 Debenture was originally scheduled to mature on September 1, 2020, and it is now due to mature on August 31, 2023. The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, is pre-payable at any time at the option of the Company and is convertible at any time into common shares at a conversion price of $3.00 per common share at the option of the holder. Drs. Isa Odidi and Amina Odidi provided us with the original $500,000 of the proceeds for the 2018 Debenture. On November 15, 2019, the Company issued to Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the November 2019 Debenture in the principal amount of $0.25 million. The November 2019 Debenture bears interest at a rate of 12% per annum, payable monthly, is pre-payable at any time at the option of the Company and is convertible at any time into 2,083,333 common shares of the Company at a conversion price of $0.12 per common share at the option of the holder. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date is now August 31, 2023.

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(4)	Includes options exercisable within 60 days of the date of this filing.
(5)	Dr. Amina Odidi has been Acting CFO since March 4, 2020.

As of May 31, 2023, the directors and executive officers of the Company as a group owned, directly or indirectly, or exercised control or direction over 578,131 common shares, representing approximately 1.7% of the issued common shares of the Company (and beneficially owned approximately 5,791,958 common shares representing 15.12% of our common shares including common shares issuable upon the exercise of outstanding options and the conversion of the Debentures that are exercisable or convertible within 60 days of the date hereof).

The Company has in place the Option Plan for the benefit of certain officers, directors, employees and consultants of the Company, including the Named Executive Officers (see below under “Employee Stock Option Plan”). Certain Named Executive Officers have been issued options under such plan. The Company had also granted performance-based options to Dr. Isa Odidi and Dr. Amina Odidi pursuant to a separate option agreement, which was negotiated with the Named Executive Officers at the same time as their employment agreements. These options vest upon the Company attaining certain milestones relating to FDA filings and approvals for Company drugs, such that 27,639 options vest in connection with each of the FDA filings for the first five Company drugs and 27,639 options vest in connection with each of the FDA approvals for the first five Company drugs. These options expired in September 2020. No other performance-based options have been granted to any other Named Executive Officer.

Employee Stock Option Plan

The Option Plan was adopted effective October 22, 2009 as part of the IPC Arrangement Transaction approved by the shareholders of IPC Ltd., our predecessor company, at the meeting of shareholders on October 19, 2009. Subject to the requirements of the Option Plan, the Board, with the assistance of the Compensation Committee, has the authority to select those directors, officers, employees and consultants to whom options will be granted, the number of options to be granted to each person and the price at which common shares of the Company may be purchased. Grants are determined based on individual and aggregate performance as determined by the Board.

The key features of the Option Plan are as follows:

The eligible participants are full-time and part-time employees, officers and directors of, or consultants to, the Company or its affiliates, which may be designated from time to time by the Board.

The fixed maximum percentage of common shares issuable under the Option Plan is 10% of the issued and outstanding common shares from time to time. The Option Plan will automatically “reload” after the exercise of an option provided that the number of common shares issuable under the Option Plan does not then exceed the maximum percentage of 10%.

There are no restrictions on the maximum number of options which may be granted to insiders of the Company other than not more than 1% of the total common shares outstanding on a non-diluted basis can be issued to non-executive directors of the Company pursuant to options granted under the Option Plan and the value of any options granted to any non-executive director of the Company, shall not, on an annual basis, exceed $100,000.

The Board determines the exercise price of each option at the time the option is granted, provided that such price is not lower than the “market price” of common shares at the time the option is granted. “Market price” means the volume weighted average trading price of common shares on the TSX, or another stock exchange where the majority of the trading volume and value of common shares occurs, for the five trading days immediately preceding the relevant date, calculated in accordance with the rules of such stock exchange.

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Unless otherwise determined by the Board, each option becomes exercisable as to 33⅓% on a cumulative basis, at the end of each of the first, second and third years following the date of grant.

The period of time during which a particular option may be exercised is determined by the Board, subject to any Employment Contract or Consulting Contract (both as hereinafter defined), provided that no such option term shall exceed 10 years.

If an option expiration date falls within a “black-out period” (a period during which certain persons cannot trade common shares pursuant to a policy of the Company’s respecting restrictions on trading), or immediately following a black-out period, the expiration date is automatically extended to the date which is the tenth business day after the end of the black-out period.

Options may terminate prior to expiry of the option term in the following circumstances:

on death of an optionee, options vested as at the date of death are immediately exercisable until the earlier of 180 days from such date and expiry of the option term; and

if an optionee ceases to be a director, officer, employee or consultant of the Company for any reason other than death, including receipt of notice from the Company of the termination of his, her or its Employment Contract or Consulting Contract (as defined below), options vested as at the date of termination are exercisable until the earlier of 120 days following such date and expiry of the option term, subject however to any contract between the Company and any employee relating to, or entered into in connection with, the employment of the employee or between the Company and any director with respect to his or her directorship or resignation there from (an “Employment Contract”), any contract between the Company and any consultant relating to, or entered into in connection with, services to be provided to the Company (a “Consulting Contract”) or any other agreement to which the Company is a party with respect to the rights of such person upon termination or change in control of the Company.

Options and rights related thereto held by an optionee are not to be assignable or transferable except on the death of the optionee.

If there is a take-over bid (within the meaning of the Securities Act (Ontario)) made for all or any of the issued and outstanding common shares of the Company, then all options outstanding become immediately exercisable in order to permit common shares issuable under such options to be tendered to such bid.

If there is a consolidation, merger, amalgamation or statutory arrangement involving the Company, separation of the business of the Company into two or more entities or sale of all or substantially all of the assets of the Company to another entity, the optionees will receive, on exercise of their options, the consideration they would have received had they exercised their options immediately prior to such event. In such event and in the event of a securities exchange take-over bid, the Board may, in certain circumstances, require optionees to surrender their options if replacement options are provided. In the context of a cash take-over bid for 100% of the issued and outstanding common shares of the Company, optionees may elect to conditionally surrender their options or, if provided for in an agreement with the offeror, automatically exchange their options for options of the offeror.

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The Board may from time to time in its absolute discretion amend, modify and change the provisions of the Option Plan or any options granted pursuant to the Option Plan, provided that any amendment, modification or change to the provisions of the Option Plan or any options granted pursuant to the Option Plan shall:

not adversely alter or impair any option previously granted;

be subject to any regulatory approvals, where required, including, where applicable, the approval of the TSX and/or such other exchange as may be required; and

not be subject to shareholder approval in any circumstances, except where the amendment, modification or change to the Option Plan or option would:

reduce the exercise price of an option held by an insider of the Company;

extend the term of an option held by an insider beyond the original expiration date (subject to such date being extended in a black-out extension situation);

increase the fixed maximum percentage of common shares issuable under the Option Plan; or

amend the amendment provision of the Option Plan; in which case the amendment, modification or change will be subject to shareholder approval in accordance with the rules of the TSX and/or such other exchange as may be required. Amendments to the Option Plan not requiring shareholder approval may for example include, without limitation:

amendments of a “housekeeping nature”, including any amendment to the Option Plan or an option that is necessary to comply with applicable law or the requirements of any regulatory authority or stock exchange;

changes to the exercise price of an option to an exercise price not below the “market price” unless the change is a reduction in the exercise price of an option held by an insider of the Company;

amendments altering, extending or accelerating any vesting terms or conditions in the Option Plan or any options;

changes amending or modifying any mechanics for exercising an option;

amendments changing the expiration date (including acceleration thereof) or changing any termination provision in any option, provided that such change does not entail an extension beyond the original expiration date of such option (subject to such date being extended in a black-out extension situation);

amendments introducing a cashless exercise feature, payable in securities, whether or not such feature provides for a full deduction of the number of underlying securities from the Option Plan maximum;

amendments changing the application of the provisions of the Option Plan dealing with adjustments in the number of shares, consolidations and mergers and take-over bids;

amendments adding a form of financial assistance or amending a financial assistance provision which is adopted;

amendments changing the eligible participants of the Option Plan; and

amendments adding a deferred or restricted share unit provision or any other provision which results in participants receiving securities while no cash consideration is received by the Company.

The Board may discontinue the Option Plan at any time without consent of the participants under the Option Plan provided that such discontinuance shall not adversely alter or impair any option previously granted.

A copy of the Option Plan is available upon request in writing to the Chief Financial Officer of the Company at 30 Worcester Road, Toronto, Ontario, M9W 5X2 or on www.sedar.com.

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A total of 1,309,000 options to purchase common shares have been issued, representing 3.96% of the shares issued and outstanding as of June 13, 2023. As of June 13, 2023,17,200 options have been exercised under the Plan since inception.

Restricted Share Unit Awards for Officers & Employees

The Company established the RSU Plan to form part of its incentive compensation arrangements available for officers and employees of the Company and its designated affiliates as of May 28, 2010, when the RSU Plan received shareholder approval.

The key features of the RSU Plan are as follows:

The stated purpose of the RSU Plan is to advance the interests of the Company through the motivation, attraction and retention of employees and officers of the Company and the designated affiliates of the Company and to secure for the Company and the shareholders of the Company the benefits inherent in the ownership of common shares by employees and officers of the Company, it being generally recognized that share incentive plans aid in attracting, retaining and encouraging employees and officers due to the opportunity offered to them to acquire a proprietary interest in the Company and to align their interests with those of the Company. Employees and officers, including both full-time and part-time employees, of the Company and any designated affiliate of the Company, but not any directors of the Company, are eligible to participate under the RSU Plan. By the terms of the RSU Plan, Dr. Isa Odidi, the Chief Executive Officer of the Company, and Dr. Amina Odidi, the President and Chief Operating Officer of the Company, are specifically not eligible to participate.

The RSU Plan is administered by the Board or a committee thereof, which will determine, from time to time, who may participate in the RSU Plan, the number of RSUs to be awarded and the terms of each RSU, all such determinations to be made in accordance with the terms and conditions of the RSU Plan, based on individual and/or corporate performance factors as determined by the Board.

The number of common shares available for issuance upon the vesting of RSUs awarded under the RSU Plan is limited to an aggregate of 33,000 common shares of the Company representing approximately 0.14% of the issued and outstanding common shares of the Company as of June 13, 2023

A separate notional account will be maintained for each participant under the RSU Plan. Each such account will be credited with RSUs awarded to the participant from time to time by way of a bookkeeping entry in the books of the Company. On the vesting of the RSUs and the corresponding issuance of common shares to the participant, or on the forfeiture and cancellation of the RSUs, the RSUs credited to the participant’s account will be cancelled.

At the time of the award of RSUs, the Board will determine in its sole discretion the vesting criteria (whether based on time or performance measures of individual and/or corporate performance) applicable to the awarded RSUs. Unless otherwise determined by the Board at the time of the award, RSUs will vest in respect of 33 1/3% of the common shares subject to the RSUs on the first day after each of the first three anniversaries of the award date of such RSU. Notwithstanding the foregoing, all vesting and issuances or payments, as applicable, will be completed no later than December 15 of the third calendar year commencing after an award date.

The RSU Plan provides that any unvested RSUs will vest at such time as determined by the Board in its sole discretion such that participants in the RSU Plan will be able to participate in a change of control transaction, including by surrendering such RSUs to the Company or a third party or exchanging such RSUs, for consideration in the form of cash and/or securities.

Under the RSU Plan, should the vesting of an RSU fall within a blackout period or within nine business days following the expiration of a blackout period, the vesting will be automatically extended to the tenth business day after the end of the blackout period.

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If an “event of termination” of employment has occurred, any and all common shares corresponding to any vested RSUs in a participant’s account, if any, will be issued as soon as practicable after the event of termination to the former participant. If an event of termination has occurred, any unvested RSUs in the participant’s account will, unless otherwise determined by the Board in its discretion, forthwith and automatically be forfeited by the participant and cancelled. Notwithstanding the foregoing, if a participant is terminated for just cause, each unvested RSU in the participant’s account will be forfeited by the participant and cancelled. An “event of termination” is defined under the RSU Plan as an event whereby a participant ceases to be eligible under the RSU Plan and is deemed to have occurred by the giving of any notice of termination of employment (whether voluntary or involuntary and whether with or without cause), retirement, or any cessation of employment for any reason whatsoever, including disability or death.

No rights under the RSU Plan and no RSUs awarded pursuant to the provisions of the RSU Plan are assignable or transferable by any participant other than pursuant to a will or by the laws of descent and distribution.

Under the RSU Plan, the Board may from time to time in its absolute discretion amend, modify and change the provisions of the RSU Plan or any RSUs awarded pursuant to the Plan, provided that any amendment will:

not adversely alter or impair any RSU previously awarded except as permitted by the adjustment provisions in the RSU Plan;

be subject to any regulatory approvals including, where required, the approval of the TSX;

be subject to shareholder approval in accordance with the rules of the TSX in circumstances where the amendment, modification or change to the RSU Plan or RSUs would:

(i)	allow for the assignment or transfer of any right under the RSU Plan or a RSU awarded pursuant to the provisions of the RSU Plan other than as provided for under the assignability provisions in the RSU Plan;
(ii)	increase the fixed maximum number of common shares which may be issued pursuant to the RSU Plan; or
(iii)	amend the amendment provisions of the RSU Plan; and

not be subject to shareholder approval in circumstances (other than those listed in the paragraph immediately above), including, but not limited to, circumstances where the amendment, modification or change to the RSU Plan or RSU would:

(i)	be of a “housekeeping nature”, including any amendment to the RSU Plan or a RSU that is necessary to comply with applicable law or the requirements of any regulatory authority or stock exchange and any amendment to the RSU Plan or a RSU to correct or rectify any ambiguity, defective provision, error or omission therein, including any amendment to any definitions therein;
(ii)	alter, extend or accelerate any vesting terms or conditions in the RSU Plan or any RSU;
(iii)	change any termination provision in any RSU;
(iv)	introduce features to the RSU Plan that would permit the Company to, instead of issuing common shares from treasury upon the vesting of the RSUs, retain a broker and make payments for the benefit of participants to such broker who would purchase common shares through the facilities of the TSX for such participants;
(v)	Introduce features to the RSU Plan that would permit the Company to, instead of issuing common shares from treasury upon the vesting of the RSUs, make lump sum cash payments to participants;

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(vi)	change the application of the adjustment provisions of the RSU Plan or the change of control provisions of the RSU Plan; or
(vii)	change the eligible participants under the RSU Plan.

A copy of the RSU Plan is available upon request in writing to the Chief Financial Officer of the Company at 30 Worcester Road, Toronto, Ontario, M9W 5X2.

The 33,000 common shares that are currently authorized for issuance under the RSU Plan represent approximately 0.09% of the Company’s common shares issued and outstanding as at June 13, 2023. No RSUs have been issued and none are outstanding as of June 13, 2022.

Deferred Share Unit Awards for Outside Directors

The Company established as of May 28, 2010 when it received shareholder approval, a DSU Plan to permit directors who are not officers of the Company, to defer receipt of all or a portion of their Board fees until termination of Board service and to receive such fees in the form of common shares at that time.

The key features of the DSU Plan are as follows:

The DSU Plan is administered by the Board or a committee thereof. Members of the Board who are not salaried officers or employees of the Company or a related corporation are eligible to participate under the DSU Plan. By the terms of the DSU Plan, Dr. Isa Odidi, the Chief Executive Officer of the Company, and Dr. Amina Odidi, the President and Chief Operating Officer of the Company, are specifically not eligible to participate.

The number of common shares available for issuance upon redemption of DSUs issued under the DSU Plan is limited to 11,000 common shares of the Company, representing approximately 0.03% of the total number of issued and outstanding common shares as of May 31, 2023.

Each participant may elect to be paid a minimum of 20% up to a maximum of 100%, in 10% increments, of Board fees in the form of DSUs in lieu of being paid such fees in cash. On the date on which Board fees are payable (on a quarterly basis), the number of DSUs to be credited to the participant is determined by dividing an amount equal to the designated percentage of the Board fees that the participant has elected to have credited in DSUs on that fee payment date, by the calculated market value of a common share (typically on the TSX) on that fee payment date. The market value of a common share is the weighted average trading price of the common shares on any exchange where the common shares are listed (including the TSX) for the last five trading days prior to such day. If dividends are declared by the Company, a participant will also be credited with dividend equivalents in the form of additional DSUs based on the number of DSUs the participant holds on the record date for the payment of a dividend. Dividend equivalents are calculated by dividing (i) the amount obtained by multiplying the amount of the dividend declared and paid per common share by the number of DSUs in the participant’s account on the record date for the payment of such dividend, by (ii) the market value of a common share on that dividend payment date. The market value of a common share is the weighted average trading price of the common shares on any exchange where the common shares are listed (including the TSX) for the last five trading days prior to such day.

A participant is permitted to redeem his/her DSUs only following termination of Board service by way of retirement, non-re-election as a director, resignation or death. Upon redemption of DSUs, the Company will issue to the participant common shares of the Company equal to the number of DSUs to be redeemed.

A separate notional account is maintained for each participant under the DSU Plan. Each such account will be credited with DSUs issued to the participant from time to time by way of a bookkeeping entry in the books of the Company. The DSUs credited to the participant’s account will be cancelled as of the applicable redemption date and following redemption of all DSUs credited to the participant’s account, such participant’s account will be closed.

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No rights under the DSU Plan and no DSUs credited pursuant to the provisions of the DSU Plan are assignable or transferable by any participant other than pursuant to a will or by the laws of descent and distribution.

Under the DSU Plan, the Board may from time to time in its absolute discretion amend, modify and change the provisions of the DSU Plan or any DSUs issued pursuant to the DSU Plan, provided that any amendment will:

not adversely alter or impair any DSU previously credited without such participant’s consent in writing except as permitted by the adjustment provisions in the DSU Plan;

be subject to any regulatory approvals including, where required, the approval of the TSX;

be subject to shareholder approval in accordance with the rules of the TSX in circumstances where the amendment, modification or change to the DSU Plan or DSU would:

(i)	allow for the assignment or transfer of any right under the DSU Plan or a DSU credited pursuant to the provisions of the DSU Plan other than as provided for under the assignability provisions in the DSU Plan;
(ii)	increase the fixed maximum number of common shares which may be issued pursuant to the DSU Plan; or
(iii)	amend the amendment provisions of the DSU Plan; and

not be subject to shareholder approval in circumstances (other than those listed in the paragraph immediately above), including, but not limited to, circumstances where the amendment, modification or change to the DSU Plan or DSU would:

(i)	be of a “housekeeping nature”, including any amendment to the DSU Plan or a DSU that is necessary to comply with applicable law or the requirements of any regulatory authority or stock exchange and any amendment to the DSU Plan or a DSU to correct or rectify any ambiguity, defective provision, error or omission therein, including any amendment to any definitions therein;
(ii)	introduce features to the DSU Plan that would permit the Company to, instead of issuing common shares from treasury upon the redemption of the DSUs, retain a broker and make payments for the benefit of participants to such broker who would purchase common shares through the facilities of the TSX for such participants;
(iii)	introduce features to the DSU Plan that would permit the Company to, instead of issuing common shares from treasury upon the redemption of the DSUs, make lump sum cash payments to participants;
(iv)	change the application of the adjustment provisions of the DSU Plan; or
(v)	change the eligible participants under the DSU Plan.

A copy of the DSU Plan is available upon request in writing to the Chief Financial Officer of the Company at 30 Worcester Road, Toronto, Ontario, M9W 5X2.

The 11,000 common shares that are currently authorized for issuance under the DSU Plan represent approximately 0.03% of the Company’s common shares issued and outstanding as at June 13, 2023. A total of nil DSUs have been issued, representing common share rights that comprise 0% of the common shares issued and outstanding as at June 13, 2023.

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Perquisites and Personal Benefits

The Company also provides perquisites and personal benefits to its Named Executive Officers, including basic employee benefit plans, which are available to all employees, and a car allowance to cover the cost of an automobile for business purposes. These perquisites and personal benefits were determined through negotiation of an employment agreement with each Named Executive Officer (see “Employment Agreements” above). While perquisites and personal benefits are intended to fit into the Company’s overall compensation objectives by serving to attract and retain talented executive officers, the size of the Company and the nature and stage of its business also impact the level of perquisites and benefits. To date, the level of perquisites and benefits has not impacted the Company’s decisions about any other element of compensation.

Other Compensation-Related Matters

The Company’s share trading policy prohibits all directors and officers of the Company from, among other things, engaging in any short sales designed to hedge or offset a decrease in market value of the securities of the Company.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

We completed a registered direct offering in October 2017, registered direct offerings in March 2018 and an underwritten public offering completed in October 2018 all of which resulted in a significant change in the percentage ownership of our then-principal shareholders, Drs. Amina and Isa Odidi, our President and Chief Operating Officer and our Chairman and Chief Executive Officer, respectively, and Odidi Holdings Inc., a privately-held company controlled by Drs. Amina and Isa Odidi (a decrease to approximately 14.3%) of our then-issued and outstanding common shares of the Company (subsequent to the offering) (See “Prior Sales”). As of May 31, 2023, Drs. Amina and Isa Odidi and Odidi Holdings Inc. own in the aggregate directly and indirectly 578,131 common shares, representing approximately 1.7% of our issued and outstanding common shares of the Company (and collectively beneficially owned in the aggregate approximately 5,029,660 common shares representing 15.2% of our common shares including common shares issuable upon the exercise of outstanding options and the conversion of the Debentures that are exercisable or convertible within 60 days of the date hereof). (Reference is made to the section entitled “E. Share Ownership” under “Item 6. Directors, Senior Management and Employees” for additional information regarding the options to purchase common shares and the Debentures held by Drs. Amina and Isa Odidi.) Armistice Capital, LLC, Armistice Capital Master Fund, Ltd., and Steven Boyd (collectively “Armistice”) reported on a Schedule 13-G/A, filed with the SEC on February 14, 2019, that they were each the beneficial owner of 575,099, representing less than 10% of the Company’s common shares. A subsequent Schedule 13G filed with the SEC on February 16, 2021, reported that Armistice was the beneficial owner of 2,627,978, representing approximately 9.99% of the Company’s common shares. A subsequent Schedule 13G filed with the SEC on February 15, 2022, reported that Armistice was the beneficial owner of 3,672,877, representing approximately 9.99% of the Company’s common shares at the time. The most recent Schedule 13G filed February 14, 2023 reported that Armistice was the beneficial owner of 3,672,877 common shares, representing approximately 9.99% of the Company’ common shares. Sabby Volatility Warrant Master Fund, Ltd. and its affiliates reported on a Schedule 13-G/A, filed with the SEC on January 21, 2020, that they were each the beneficial owner of 1,101,571, representing approximately 3.33% of the Company’s common shares.

 There are no arrangements, known to the Company, the operation of which may at a subsequent date result in a change in control of the Company.

No holder of common shares has different voting rights from any other holders of common shares.

As at December 31, 2022 there were a total of 346 registered holders of record of our common shares, of which 245 holders were registered with addresses in Canada holding in the aggregate approximately 2% of our 33,092,665 outstanding common shares, 47 holders were registered with addresses in the United States holding in the aggregate approximately 69% of our 33,092,665 outstanding common shares, and 54 holders were registered with addresses in other nations holding in the aggregate 28% of our  outstanding common shares. We believe that the number of beneficial owners of our common shares is substantially greater than the number of record holders, because a large portion of our common shares are held in broker “street names”.

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B. Related Party Transactions

In January 2013, we completed a private placement financing of the unsecured 2013 Debenture in the original principal amount of $1.5 million. The 2013 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company, and was convertible at any time into common shares at a conversion price of $30.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $1.5 million of the proceeds for the 2013 Debenture. In December 2016, a principal repayment of $150,000 was made on the 2013 Debenture.The maturity date of the 2013 Debenture was changed several times from the original maturity date. In December 2018, a principal repayment of $300,000 was made for the 2013 Debenture.

On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture, subject to certain conditions being met. As a result of the proposed refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture (the “May 2019 Debenture”). On May 1, 2019, the May 2019 Debenture was issued with a principal amount of $1,050,000, that was originally scheduled to mature on November 1, 2019, bear interest at a rate of 12% per annum and be convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023. No interest was paid on the May 2019 Debenture for the year ended November 30, 2022.

On September 10, 2018, the Company completed a private placement financing of an unsecured convertible debenture in the principal amount of $500,000 (the “2018 Debenture”). The 2018 Debenture bears interest at a rate of 10% per annum, is payable monthly, may be prepaid at any time at our option, and is convertible into common shares at any time prior to the maturity date at a conversion price of $3.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $500,000 of proceeds for the 2018 Debenture. The original maturity date for the 2018 Debenture was September 1, 2020.Effective September 1, 2020, the maturity date for the 2018 Debenture was extended to November 30, 2020.Effective November 30, 2020, the maturity date for the 2018 Debenture was extended to August 31, 2023. No interest was paid on the 2018 Debenture for the year ended November 30, 2022. The net proceeds of the 2018 Debenture were used for working capital and general corporate purposes.

In September 2019, the Company issued two unsecured, non-interest bearing promissory notes, with no fixed repayment terms, in the amounts of US$6,500 and CDN$203,886, to Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company. The proceeds from such notes were used for working capital and general corporate purposes.

On November 15, 2019, the Company issued to Drs. Isa and Amina Odidi, by way of a private placement, an unsecured convertible debenture of the Company in consideration for, and in the aggregate principal amount of, USD$250,000 (the “November 2019 Debenture”). The principal amount owing under the November 2019 Debenture is convertible at any time and from time to time into common shares at a conversion price equal to U.S. $0.12 per common share. Up to an aggregate of 2,083,333 common shares may be issued upon conversion of the principal amount owing under the November 2019 Debenture. The November 2019 Debenture bears interest at a rate of 12% per annum (calculated monthly) and, subject to our right to prepay the November 2019 Debenture in whole or in part at any time without penalty, and was scheduled to mature on December 31, 2019. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date for the November 2019 Debenture is now August 31, 2023. No interest was paid on the November 2019 Debenture for the year ended November 30, 2022. Dr. Isa Odidi is our Chairman, Chief Executive Officer and Co-Chief Scientific Officer, and Dr. Amina Odidi is our President, Chief Operating Officer, Co-Chief Scientific Officer and acting Chief Financial Officer.

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To the Company’s knowledge, Armistice, previously a holder of in excess of 10% of the Company’s outstanding common shares, participated in (i) a registered direct offering in October 2017, pursuant to a placement agent agreement dated October 10, 2017 between the Company and H.C. Wainwright & Co., LLC (“Wainwright”), and (ii) the registered direct offerings completed in March 2018, pursuant to placement agent agreements dated March 12, 2018 and March 18, 2018 between the Company and Wainwright; and (iii) the underwritten public offering completed in October 2018. Armistice reported on a Schedule 13-G/A, filed with the SEC on February 14, 2019, that it was the beneficial owner of less than 10% of the Company’s common shares. A subsequent Schedule 13G filed with the SEC on February 16, 2021, reported that Armistice was the beneficial owner of 2,627,978, representing approximately 9.99% of the Company’s common shares. A subsequent Schedule 13G filed with the SEC on February 15, 2022, reported that Armistice was the beneficial owner of 3,672,877, representing approximately 9.99% of the Company’s common shares at the time. The most recent Schedule 13G filed February 14, 2023 reported that Armistice was the beneficial owner of 3,672,877 common shares, representing approximately 9.99% of the Company’ common shares. Sabby Volatility Warrant Master Fund, Ltd. and its affiliates reported on a Schedule 13-G/A, filed with the SEC on January 21, 2020, that they were each the beneficial owner of 1,101,571 common shares of the Company, representing approximately 3.33% of the Company’s common shares at the time.

Since the beginning of the Company’s preceding three financial years to the date hereof, other than discussed above in this Item 7, there have been no transactions or proposed transactions which are material to the Company or to any associate, holder of 10% of the Company’s outstanding shares, director or officer or any transactions that are unusual in their nature or conditions to which the Company or any of its subsidiaries was a party.

The Company’s Corporate Governance Committee, made up of independent directors, oversees any potential transaction and negotiation that could give rise to a related party transaction or create a conflict of interest, and conducts an appropriate review.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

Reference is made to “Item 18. Financial Statements” for the financial statements included in this annual report.

Legal Proceedings and Regulatory Actions

From time to time, we may be exposed to claims and legal actions in the normal course of business. As at November 30, 2022, and continuing as at June 13, 2023, we are not aware of any pending or threatened material litigation claims against us, other than as described below.

In November 2016, we filed an NDA for our Oxycodone ER product candidate, relying on the 505(b)(2) regulatory pathway, which allowed us to reference data from Purdue’s file for its OxyContin® extended release oxycodone hydrochloride. Our Oxycodone ER application was accepted by the FDA for further review in February 2017. We certified to the FDA that we believed that our Oxycodone ER product candidate would not infringe any of the OxyContin® patents listed in the Orange Book, or that such patents are invalid, and so notified Purdue and the other owners of the subject patents listed in the Orange Book of such certification.

On April 7, 2017, we received notice that Purdue, Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., or collectively the Purdue parties, Rhodes Technologies, and Grünenthal GmbH, or collectively the “Purdue litigation plaintiffs”, had commenced patent infringement proceedings, or the Purdue litigation, against us in the U.S. District Court for the District of Delaware (docket number 17-392) in respect of our NDA filing for Oxycodone ER, alleging that our proposed Oxycodone ER infringes 6 out of the 16 patents associated with the branded product OxyContin®, or the OxyContin® patents, listed in the Orange Book.

Subsequent to the above-noted filing of lawsuit, 4 further such patents were listed and published in the Orange Book. On March 16, 2018, we received notice that the Purdue litigation plaintiffs had commenced further such patent infringement proceedings adding the 4 further patents. On April 15, 2020, Purdue filed a new patent infringement suit against the Company relating to additional Paragraph IV certifications lodged against two more listed Purdue patents.

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As a result of the commencement of the first of these legal proceedings, the FDA was stayed for 30 months from granting final approval to our Oxycodone ER product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs received notice of our certification concerning the patents, and would expire on August 24, 2019, unless the stay is earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties. On April 24, 2019, an order was issued, setting a trial date of November 12, 2019 for case number 17-392 in the District of Delaware, and also extending the 30-month stay date for regulatory approval to March 2, 2020.

On or about June 26, 2018, the court issued an order to sever 6 “overlapping” patents from the second Purdue case, but ordered litigation to proceed on the 4 new (2017-issued) patents. An answer and counterclaim was filed on July 9, 2018. On July 6, 2018, the court issued a so-called “Markman” claim construction ruling on the first case. On July 24, 2018, the parties to the case mutually agreed to and did have dismissed without prejudice the infringement claims related to the Grünenthal ‘060 patent, which is one of the six patents included in the original litigation case.

On October 4, 2018, the parties mutually agreed to postpone the scheduled court date pending a case status conference scheduled for December 17, 2018. At that time, further trial scheduling and other administrative matters were postponed pending the Company’s resubmission of the Oxycodone ER NDA to the FDA, which was made on February 28, 2019. On January 17, 2019, the court issued a scheduling order in which the remaining major portions are scheduled. The trial was scheduled for June 2020.

On April 4, 2019, the U.S. Federal Circuit Court of Appeals affirmed the invalidity of one Purdue OxyContin® formulation patent, subject to further appeal to the U.S. Supreme Court.

Following the filing of a bankruptcy stay by Purdue Pharma L.P., the Company’s ongoing litigation case numbers 1:17-cv-00392-RGA and 1:18-cv-00404-RGA-SRF between Purdue Pharma L.P. et al and Intellipharmaceutics were stayed and the existing trial dates in both cases vacated by orders issued in each case by the judge in the District of Delaware on October 3, 2019. With the litigation stay order, the previous 30-month stay date of March 2, 2020 was unchanged.

On or about July 2, 2020 the parties in the cases, numbers 17-cv-392-RGA, 18-cv-404-RGA and 20-cv-515-RGA (the “Litigations”) between Purdue Pharma L.P. et al (“Purdue’) and Intellipharmaceutics entered into a stipulated dismissal of the Litigations. The stipulated dismissal, which was subject to approval by the bankruptcy court presiding over Purdue Pharma’s pending chapter 11 cases, provides for the termination of the patent infringement proceedings. The stipulated dismissal also provides that (i) for a thirty (30) day period following a final approval of the Company’s Aximris XR^TM NDA the parties will attempt to resolve any potential asserted patent infringement claims relating to the NDA and (ii) if the parties fail to resolve all such claims during such period Purdue Pharma will have fifteen (15) days to pursue an infringement action against the Company. The terms of the stipulated dismissal agreement are confidential. On July 28, 2020 the United States District Court for the District of Delaware signed the stipulations of dismissal into order thereby dismissing the claims in the three cases without prejudice. In consideration of the confidential stipulated dismissal agreement and for future saved litigation expenses, Purdue paid an amount to the Company.

In July 2017, three complaints were filed in the U.S. District Court for the Southern District of New York that were later consolidated under the caption Shanawaz v. Intellipharmaceutics Int’l Inc., et al., No. 1:17-cv-05761 (S.D.N.Y.). The lead plaintiffs filed a consolidated amended complaint on January 29, 2018. In the amended complaint, the lead plaintiffs assert claims on behalf of a putative class consisting of purchasers of our securities between May 21, 2015 and July 26, 2017. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements or failing to disclose certain information regarding our NDA for Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The complaint seeks, among other remedies, unspecified damages, attorneys’ fees and other costs, equitable and/or injunctive relief, and such other relief as the court may find just and proper.

In an order entered at the parties request on May 9, 2019, the Court stayed proceedings in the action to permit the parties time to conduct a mediation. As a result of subsequent extensions, the stay was extended through October 10, 2019.  The parties participated in a mediation on August 1, 2019, during which the parties tentatively agreed to the terms of a settlement of the action subject to the satisfaction of certain financial conditions by the Company.

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On November 7, 2019 the Company announced that the parties reached a settlement that is subject to the approval of the court following notice to class members. The stipulation of settlement provides for a settlement payment of US$1.6 million by the Company, which has been paid from available insurance coverage. As part of the settlement, the Company also agreed to contribute to the settlement fund specific anticipated Canadian tax refunds of up to US$400,000 to the extent received within 18 months after the entry of final judgment. The stipulation of settlement acknowledges that the Company and the other defendants continue to deny that they committed any violation of the U.S. securities laws or engaged in any other wrongdoing and that they are entering into the settlement at this time based on the burden, expense, and inherent uncertainty of continuing the litigation.

On December 7, 2020 the court approved the settlement and entered an order and final judgement to that effect, thereby concluding the case.

On February 21, 2019, the Company and its CEO, Dr. Isa Odidi, were served with a Statement of Claim filed in the Superior Court of Justice of Ontario for a proposed class action under the Ontario Class Proceedings Act. The Action was brought by Victor Romita, the proposed representative plaintiff, on behalf of a class of Canadian persons who traded shares of the Company during the period from February 29, 2016 to July 26, 2017. The Statement of Claim, under the caption Victor Romita v. Intellipharmaceutics International Inc. and Isa Odidi, asserted that the defendants knowingly or negligently made certain public statements during the relevant period that contained or omitted material facts concerning Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The plaintiff alleges that he and the class suffered loss and damages as a result of their trading in the Company’s shares during the relevant period. The plaintiff seeks, among other remedies, unspecified damages, legal fees and court and other costs as the Court may permit. On February 26, 2019, the plaintiff delivered a Notice of Motion seeking the required approval from the Court, in accordance with procedure under the Ontario Securities Act, to allow the statutory claims under the Ontario Securities Act to proceed with respect to the claims based upon the acquisition or disposition of the Company’s shares on the TSX during the relevant period. On June 28, 2019, the Court endorsed a timetable for the exchange of material leading to the hearing of the Motion scheduled for January 27-28, 2020. On October 28, 2019, plaintiff’s counsel advised the court that the Plaintiff intended to amend his claim and could not proceed with the Leave Motion scheduled for January 27-28, 2020. As such, the Court released those dates. On January 28, 2020 the plaintiff served a Notice of Motion for leave to amend the Statement of Claim. On April 2, 2020 the plaintiff delivered an Amended Motion Record and Amended Notice of Motion seeking an order for leave to issue a fresh as Amended Statement of Claim including the addition of Christopher Pearce as a Plaintiff (“Amendment Motion”). On May 1, 2020, the court granted the plaintiff’s Amendment Motion. An order for leave to proceed for settlement purposes was granted on 25 June 2021. At a hearing on 12 October 2021, the Court approved the settlement. The stipulation of settlement provides for a settlement payment of CAD$266,000 by the Company, CAD$226,000 was paid from insurance coverage while the Company paid CAD$40,000. Therefore, this action is now settled.

On October 7, 2019, a complaint was filed in the U.S. District Court for the Southern District of New York by Alpha Capital Anstalt (“Alpha”) against the Company, two of its existing officers and directors and its former Chief Financial Officer. In the complaint, Alpha alleges that the Company and the executive officers/directors named in the complaint violated Sections 11, 12(a)(2) and 15 of the U.S. Securities Act of 1933, as amended, by allegedly making false and misleading statements in the Company’s Registration Statement on Form F-1 filed with the U.S. Securities and Exchange Commission on September 20, 2018, as amended, by failing to disclose certain information regarding the resignation of the Company’s then Chief Financial Officer, which was announced several weeks after such registration statement was declared effective.  In the complaint, Alpha seeks unspecified damages, rescission of its purchase of the Company’s securities in the relevant offering, attorneys’ fees and other costs and further relief as the court may find just and proper. On December 12, 2019, the Company and the other defendants in the action filed a motion to dismiss for failure to state a claim. The plaintiff filed an opposition to that motion on February 4, 2020 and a reply brief in further support of the motion to dismiss the action was filed March 6, 2020. In addition, the Court scheduled a mandatory settlement conference with the Magistrate Judge for April 23, 2020 which the Company and its counsel attended. On June 18, 2020, the court largely denied the Company’s motion to dismiss the action. Briefing on these motions was completed on February 19, 2021.In a court order filed July 9, 2021, the District Court issued an opinion and order granting summary judgment in the Company’s favor and ordered the case closed. The judgment was entered on July 12, 2021. On August 10, 2021, the Plaintiff filed a notice of appeal. On October 1, 2021, the Plaintiff filed a notice of voluntary dismissal of the appeal with prejudice, stipulated to by the Company. The Court of Appeals “so ordered” the voluntary dismissal stipulation and the appeal was dismissed. As a result, the matter has been fully resolved in favor of the Company and the named individual Defendants. 

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On or about August 5, 2020 a former employee filed a claim against the Company for wrongful dismissal of employment plus loss of benefits, unpaid vacation pay, interest and costs. The parties have agreed to settlement terms in the matter. The Company has fulfilled the terms and has received a release and consent to dismiss. A dismissal order is pending from the court.

On or about August 9, 2022, a service provider brought to the Company’s attention a Motion Record to seek judgement with respect to amounts owed it by the Company for the principal amount owed, plus pre-judgment interest and costs. We found out then, that a statement of claim dated May 3, 2021 was delivered to the Company’s premises.  The Company did not respond to the claim because it was inadvertently never brought to the attention of management, as a result the Company was noted in default in May 31, 2021. The Company was not aware of the claim and the default before August 9, 2022. The Company has signed a consent which allows the other party to obtain judgement from a court and take steps to enforce judgement if we default on certain conditions.

Dividend Policy

We have not paid any cash dividends on our common shares and do not intend to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Dividend payments in the future may also be limited by loan agreements or covenants contained in other securities we may issue. Any future determination to pay cash dividends will be at the discretion of our Board and depend on our financial condition, results of operations, capital and legal requirements and such other factors as our Board deems relevant.

B. Significant changes

No significant changes occurred since the date of our annual consolidated financial statements included elsewhere in this annual report.

Item 9. The Offer and Listing

Not Applicable, except for Item 9.A.4 and Item 9.C.

Our common shares are currently listed on OTCQB and on TSX under the symbols “IPCIF” and “IPCI”, respectively. Our shares began trading on October 22, 2009, when the transaction with Vasogen was completed. Additional Information. See Item 4.B.

Item 10. Additional Information

A. Share Capital

Following receipt of shareholder approval for a reverse stock split (known as a share consolidation under Canadian law) at our August 15, 2018 shareholders meeting, on September 12, 2018, we filed articles of amendment to effectuate a 1-for-10 reverse split, and our common shares began trading on each of Nasdaq and TSX on a post-reverse split basis on September 14, 2018.In March 2019, a Nasdaq Hearings Panel determined to delist the Company’s common shares from Nasdaq based upon its non-compliance with the $1.00 minimum bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The suspension of trading on Nasdaq took effect at the open of business on March 21, 2019. The Company’s common shares began trading on the OTCQB commencing on March 21, 2019. The Company’s common shares are also listed on the TSX.

Our authorized share capital consists of an unlimited number of common shares, all without nominal or par value and an unlimited number of preference shares issuable in series. At November 30, 2022 and as of June 13, 2023, there were 33,092,665 common shares (November 30, 2021 – 33,092,665; November 30, 2020 – 22,085,856) and no preference shares issued and outstanding.

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The number of shares outstanding as of November 30, 2021 increased as a result of the issuance of 9,414,560 common share upon the completion of a private placement offering.

Common Shares

Each of our common shares entitles the holder thereof to one vote at any meeting of shareholders of the Company, except meetings at which only holders of a specified class of shares are entitled to vote. Subject to the prior rights of the holders of any preference shares, the holders of common shares of the Company are entitled to receive, as and when declared by the Board, dividends in such amounts as shall be determined by the Board of the Company. The holders of common shares of the Company have the right to receive the remaining property of the Company in the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary.

Preference Shares

The preference shares may at any time and from time to time be issued in one or more series. The Board will, by resolution, from time to time, before the issue thereof, fix the rights, privileges, restrictions and conditions attaching to the preference shares of each series. Except as required by law, the holders of any series of preference shares will not as such be entitled to receive notice of, attend or vote at any meeting of the shareholders of the Company. Holders of preference shares will be entitled to preference with respect to payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, on such shares over the common shares and over any other shares ranking junior to the preference shares.

Warrants

At November 30, 2022, an aggregate of 21,160,314 common shares were issuable upon the exercise of outstanding common share purchase warrants, with a weighted average exercise price of $0.76 per common share. As at June 13, 2023, an aggregate of 21,160,314 common shares were issuable upon the exercise of outstanding common share purchase warrants, with a weighted average exercise price of $0.76 per common share.

Options

At November 30, 2022, an aggregate 1,309,000 common shares were issuable upon the exercise of outstanding options, with a weighted average exercise price of $0.35 per common share and up to 2,000,267 additional common shares were reserved for issuance under our Option Plan.

Options outstanding

Options exercisable

Weighted

Weighted

Weighted

Weighted

Weighted

average

average

average

average

average

exercise

remaining

grant

exercise

grant

Exercise

Number

price per

contract

date

Number

price per

date

price

outstanding

share

life (years)

fair value

exercisable

share

fair value

$

$

$

$

$

Under 0 - 1.00

1,309,000

0.35

6.27

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

As of June 13,, 2023, there were 1,309,000 common shares issuable upon the exercise of outstanding options. The weighted average exercise price of these options is $0.35 per common share. As at June 13, 2023, up to 2,000,267 additional common shares were reserved for issuance under our Option Plan.

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Convertible Debentures

In January 2013, we completed a private placement financing of the unsecured 2013 Debenture in the original principal amount of $1.5 million. The 2013 Debenture bears interest at a rate of 12% per annum, payable monthly, is pre-payable at any time at the option of the Company, and is convertible at any time into common shares at a conversion price of $30.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $1.5 million of the proceeds for the 2013 Debenture. In December 2016, a principal repayment of $150,000 was made on the 2013 Debenture and the maturity date was extended until April 1, 2017. Effective March 28, 2017, the maturity date of the 2013 Debenture was extended to October 1, 2017. Effective September 28, 2017, the maturity date of the 2013 Debenture was further extended to October 1, 2018. Effective October 1, 2018, the maturity date for the 2013 Debenture was further extended to April 1, 2019. In December 2018, a principal repayment of $300,000 was made for the 2013 Debenture.

On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture, subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000. The May 2019 Debenture bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share.  Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. The original maturity of the May 2019 Debenture was November 1, 2019. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023.

On September 10, 2018, the Company completed the 2018 Debenture financing. The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, may be prepaid at any time at our option, and is convertible into common shares at any time prior to the maturity date at a conversion price of $3.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $500,000 of proceeds for the 2018 Debenture. The maturity date for the 2018 Debenture was September 1, 2020; it has been extended from time to time and the maturity date for the 2018 Debenture is now August 31, 2023.

On November 15, 2019, the Company issued an unsecured convertible debenture in the principal amount of $250,000 that bears interest at a rate of 12% per annum and is convertible into common shares of the Company at a conversion price of $0.12 per share. The original maturity of the November 2019 Debenture was December 31, 2019. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date for the November 2019 Debenture is now August 31,2 2023.

Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the 2018 Debenture, the May 2019 Debenture and the November 2019 Debenture.

Deferred Share Units

At November 30, 2022, there were no DSUs issued and outstanding. From November 30, 2022 to June 13, 2023, no DSUs were issued.

Restricted Share Units

At November 30, 2022, there were no restricted share units (“RSUs”) issued and outstanding. From November 30, 2022 to the date of this report, no RSUs were issued. At June 13, 2023, 33,000 RSUs are reserved for issuance under our RSU Plan.

Prior Sales

During the 12-month period prior to the date of this annual report, we have issued common shares, or securities convertible into common shares, as follows:

In January 2013, the Company completed the private placement financing of the unsecured convertible 2013 Debenture in the original principal amount of $1.5 million. The 2013 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company and is convertible at any time into common shares at a conversion price of $30.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $1.5 million of the proceeds for the 2013 Debenture. In December 2016, a principal repayment of $150,000 was made on the 2013 Debenture and the maturity date was extended until April 1, 2017. Effective March 28, 2017, the maturity date of the 2013 Debenture was extended to October 1, 2017. Effective September 28, 2017, the maturity date of the 2013 Debenture was further extended to October 1, 2018. Effective October 1, 2018, the maturity date for the 2013 Debenture was further extended to April 1, 2019. Effective April 1, 2019, the maturity date for the 2013 Debenture was further extended to May 1, 2019. In December 2018, a principal repayment of $300,000 was made on the 2013 Debenture.

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On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture, subject to certain conditions being met. As a result of the proposed refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued with a principal amount of $1,050,000, that will mature on November 1, 2019, bear interest at a rate of 12% per annum and be convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023.

On September 10, 2018, the Company issued the 2018 Debenture. The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, may be prepaid at any time at our option, and is convertible into common shares at any time prior to the maturity date at a conversion price of $3.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $500,000 of proceeds for the 2018 Debenture. The maturity date for the 2018 Debenture was originally September 1, 2020. The maturity date for the 2018 Debenture has been extended from time to time and the maturity date for the 2018 Debenture is now August 31, 2023.

On November 15, 2019, we issued to Drs. Isa and Amina Odidi, by way of a private placement, the November 2019 Debenture. The principal amount owing under the November 2019 Debenture is convertible at any time and from time to time into common shares at a conversion price equal to U.S. $0.12 per common share. Up to an aggregate of 2,083,333 common shares may be issued upon conversion of the principal amount owing under the November 2019 Debenture. The November 2019 Debenture bears interest at a rate of 12% per annum (calculated monthly) and, subject to our right to prepay the November 2019 Debenture in whole or in part at any time without penalty, matures on December 31, 2019. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date for the November 2019 Debenture is now August 31, 2023.

In April 2021, the Company completed a private placement offering of an aggregate of 9,414,560 Common Shares at a price of CAD$0.41 per Common Share for total gross proceeds of CAD$3,859,969.60. The Common Shares were subject to a four-month hold period which expired on August 22, 2021 in accordance with applicable securities legislation and the policies of the Toronto Stock Exchange (the “TSX”). The Common Shares were sold only to non-U.S. persons outside of the United States pursuant to Regulation S under the United States Securities Act of 1933 (the “1933 Act”). The Common Shares issued in the Private Placement were not registered under the 1933 Act or the securities laws of any state in the United States and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the 1933 Act) or persons in the United States absent registration or an applicable exemption from such registration requirements.

During the 12-month period ended November 30, 2022, no warrants (including Pre-Funded Warrants) to purchase common shares were exercised.

During the 12-month period ended November 30, 2022, no options were granted, and no options were exercised.

During the 12-month period ended November 30, 2022, no DSUs were granted, and no DSUs were exercised.

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B. Articles and By-laws

The Company was formed under the CBCA by articles of arrangement dated October 22, 2009 (as amended, the “Articles”) in the IPC Arrangement Transaction, as discussed in Item 16. The Company is the successor issuer to Vasogen for reporting purposes under the U.S. Exchange Act. The authorized share capital of the Company consists of an unlimited number of common shares, all without nominal or par value and an unlimited number of preference shares issuable in series.

Following receipt of shareholder approval for a reverse stock split (known as a share consolidation under Canadian law) at our August 15, 2018 shareholders meeting, on September 12, 2018, we filed articles of amendment to effectuate a 1-for-10 reverse split, and our common shares began trading on each of Nasdaq and TSX on a post-reverse split basis on September 14, 2018.In March 2019, a Nasdaq Hearings Panel determined to delist the Company’s common shares from Nasdaq based upon its non-compliance with the $1.00 minimum bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The suspension of trading on Nasdaq took effect at the open of business on March 21, 2019. The Company’s common shares began trading on the OTCQB commencing on March 21, 2019. The Company’s common shares are also listed on the TSX.

Provisions as to the modification, amendment or variation of rights and provisions of each class of shares are contained in the CBCA and the regulations promulgated thereunder. Certain fundamental changes to the Articles will require the approval of at least two-thirds of the votes cast on a resolution submitted to a special meeting of the Company’s shareholders called for the purpose of considering the resolution. These items include (i) certain amendments to the provisions relating to the outstanding capital of the Company, (ii) a sale of all or substantially all of the assets of the Company, (iii) an amalgamation of the Company with another company, other than a subsidiary, (iv) a winding-up of the Company, (v) a continuance of the Company into another jurisdiction, (vi) a statutory court approved arrangement under the CBCA (essentially a corporate reorganization such as an amalgamation, sale of assets, winding-up, etc.), or (vii) a change of name.

Under the CBCA, a corporation cannot repurchase its shares or pay or declare dividends if there are reasonable grounds for believing that (a) the corporation is, or after payment would be, unable to pay its liabilities as they become due, or (b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of (i) its liabilities and (ii) its stated capital of all classes of its securities. Generally, stated capital is the amount paid on the issuance of a share unless the stated capital has been adjusted in accordance with the CBCA.

General

The Articles do not contain any restrictions on the business the Company may carry on.

Directors

The Company’s By-Law No. 1 (a by-law relating generally to the transaction of the business and affairs of the Company) provides for the indemnification of the directors and officers of the Company, former directors and officers of the Company against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Company, subject to certain limitations in By-Law No. 1 and the limitations in the CBCA.

The Company may also indemnify other individuals who act or acted at the Company’s request as a director or officer, or an individual acting in a similar capacity, of another entity.

Annual and Special Meetings

Meetings of shareholders are held at such place, at such time, on such day and in such manner as the Board may, subject to the CBCA and any other applicable laws, determine from time to time. The only persons entitled to attend a meeting of shareholders are those persons entitled to notice thereof, those entitled to vote thereat, the directors, the auditors of the Company and any others who may be entitled or required under the CBCA to be present at the meeting. Under the CBCA, notice of the meeting is required to be given not less than 21 days and not more than 60 days prior to the meeting. Shareholders on the record date are entitled to attend and vote at the meeting. The quorum for the transaction of business at any meeting of shareholders is at least two persons present at the opening of the meeting who are entitled to vote either as shareholders or proxyholders, representing collectively not less than 5% of the outstanding shares of the Company entitled to be voted at the meeting.

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Other

There is no by-law provisions governing the ownership threshold above which shareholder ownership must be disclosed. However, there are disclosure requirements pursuant to applicable Canadian law.

There are no provisions in either the Company’s Articles or By-Law No. 1 that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or its subsidiary.

There are no limitations on the rights to own securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities imposed by foreign law or by the charter or other constituent document of the Company.

C. Material Contracts

Except for contracts entered into in the ordinary course of business and not required to be filed under Canadian securities laws, the only contracts which are regarded as material and which were entered into by the Company within the two years immediately preceding the date of this annual report, are:

On November 21, 2005, the Company entered into the Par agreement (as amended on August 12, 2011 and September 24, 2013), pursuant to which the Company granted Par an exclusive, royalty-free license to make and distribute in the United States all strengths of our generic Focalin XR^® (dexmethylphenidate hydrochloride extended-release) capsules for a period of 10 years from the date of commercial launch (which was November 19, 2013). Under the Par agreement, we made a filing with the FDA for approval to market generic Focalin XR^® capsules in various strengths in the U.S., and are the owner of that Company ANDA, as approved in part by the FDA. We retain the right to make and distribute all strengths of the generic product outside of the U.S. Calendar quarterly profit-sharing payments for its U.S. sales under the Company ANDA are payable by Par to us as calculated pursuant to the Par agreement. Within the purview of the Par agreement, Par also applied for and owns the Par ANDA pertaining to all marketed strengths of generic Focalin XR^®, and is now approved by the FDA, to market generic Focalin XR^® capsules in all marketed strengths in the U.S. As with the Company ANDA, calendar quarterly profit-sharing payments are payable by Par to us for its U.S. sales of generic Focalin XR^® under the Par ANDA as calculated pursuant to the Par agreement. The Company is responsible under the Par agreement for the development of the product and most related costs which, with the applications to and recent approvals by the FDA, the Company now considers to be completed.

In January 2013, the Company completed the private placement financing of the 2013 Debenture, an unsecured debenture in the original principal amount of $1.5 million. The 2013 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares at a conversion price of $30.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $1.5 million of the proceeds for the 2013 Debenture. In December 2016, a principal repayment of $150,000 was made on the 2013 Debenture and the maturity date was extended until April 1, 2017. Effective March 28, 2017, the maturity date of the 2013 Debenture was extended to October 1, 2017. Effective September 28, 2017, the maturity date of the 2013 Debenture was further extended to October 1, 2018. Effective October 1, 2018, the maturity date for the 2013 Debenture was further extended to April 1, 2019. Effective April 1, 2019, the maturity date for the 2013 Debenture was further extended to May 1, 2019. In December 2018, a principal repayment of $300,000 was made on the 2013 Debenture. As a result of a refinancing transaction, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000. The May 2019 Debenture bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. The original maturity of the May 2019 Debenture was November 1, 2019. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023. No interest was paid on the May 2019 Debenture for the year ended November 30, 2022.

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Pursuant to placement agent agreements entered dated March 12, 2018 and March 18, 2018 between the Company and Wainwright, the Company completed, in March 2018, two registered direct offerings. The first offering consisted of 583,333 common shares at a price of $6.00 per share for gross proceeds of approximately $3.5 million. We also issued to the investors unregistered warrants to purchase an aggregate of 291,666 common shares at an exercise price of $6.00 per share. The warrants became exercisable six months following the closing date and will expire 30 months after the date they became exercisable. After commissions and offering expenses, we received net proceeds of approximately $3.0 million. We also issued to the placement agents warrants to purchase 29,166 common shares at an exercise price of $7.50 per share. In the second registered direct offering, we issued 300,000 common shares at a price of $6.00 per share for gross proceeds of $1.8 million. We also issued to the investors unregistered warrants to purchase an aggregate of 150,000 common shares at an exercise price of $6.00 per share. The warrants became exercisable six months following the closing date and will expire 30 months after the date they became exercisable. After commissions and offering expenses, we received net proceeds of approximately $1.6 million. We also issued to the placement agents warrants to purchase 15,000 common shares at an exercise price of $7.50 per share.

On September 10, 2018, the Company issued the 2018 Debenture. The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, may be prepaid at any time at our option, and is convertible into common shares at any time prior to the maturity date at a conversion price of $3.00 per common share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of our Company, provided us with the original $500,000 of proceeds for the 2018 Debenture. The maturity date for the 2018 Debenture was originally September 1, 2020. The maturity date has been extended from time to time and the maturity date is now August 31, 2023. No interest was paid on the May 2019 Debenture for the year ended November 30, 2022.

On August 15, 2019, we announced we had entered into a license and commercial supply agreement with Tris Pharma, by which we granted Tris Pharma an exclusive license to market, sell and distribute in the United States, Quetiapine ER in the 50, 150, 200, 300 and 400 mg strengths approved for sale in the U.S. market by the FDA. Several other generic versions of these licensed products are currently available in the market. Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement.

On September 5, 2019, we announced we had entered into a license and commercial supply agreement with Tris Pharma, by which we granted Tris Pharma an exclusive license to market, sell and distribute in the United States, Desvenlafaxine Succinate ER in the 50 and 100 mg strengths approved for sale in the U.S. market by the FDA. Several other generic versions of these licensed products are currently available in the market. Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement.

In September 2019, the Company issued two unsecured, non-interest bearing promissory notes, with no fixed repayment terms, in the amounts of US$6,500 and CDN$203,886, to Dr. Isa Odidi and Dr. Amina Odidi, shareholders, directors and executive officers of the Company. The proceeds from such notes were used for working capital and general corporate purposes.

On November 15, 2019 the Company issued the November 2019 Debenture. The November 2019 Debenture is an unsecured convertible debenture in the principal amount of $250,000, bears interest at a rate of 12% per annum and is convertible into 2,083,333 common shares of the Company, at a conversion price of $0.12 per common share. The Company used the proceeds from the November 2019 Debenture for working capital and general corporate purposes. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the November 2019 Debenture. The original maturity of the November 2019 Debenture was December 31, 2019. The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date is now August 31, 2023. No interest was paid on the May 2019 Debenture for the year ended November 30, 2022.

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On November 25, 2019, we announced that we had entered into a license and commercial supply agreement with Tris Pharma, by which we granted Tris Pharma an exclusive license to market, sell and distribute in the United States, Venlafaxine ER in the 37.5, 75, and 150 mg strengths approved for sale in the US market by the FDA. Several other generic versions of these licensed products are currently available in the market. Product was never supplied nor distributed under this license. Effective May 5, 2021 the Company and Tris Pharma mutually terminated the license agreement.

On August 20, 2020, The Company extended its lease for the premises (30 Worcester Road) that it currently operates from, for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021.Effective December 1, 2021, the Company extended its lease for the premises (30 Worcester Road) for one year with an option to renew for another yea, which option was exercised for a one year lease effective December 1, 2022 . The basic rent is $237,500 per year.

In August 2022 the Company entered into a license and supply agreement with Taro Pharmaceuticals Inc. (“Taro”), by which the Company has granted Taro an exclusive license to market, sell and distribute in Canada, Desvenlafaxine Extended-release Tablets in the 50 mg and 100 mg strengths (the “licensed product”) approved for sale in the Canadian market by the Pharmaceutical Drugs Directory (PDD) of Health Canada.

In October 2022, the Company issued an unsecured, 10% annual interest bearing promissory note, with a fixed repayment term of 6 months, in the amount of US$200,000 to Actimus Bio. The proceeds from such notes were used for working capital and general corporate purposes. Effective April 6, 2023, the promissory note was further extended to October 6, 2023.

D. Exchange Controls

Canada has no system of currency exchange controls. There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital, including but not limited to, foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-resident holders of the Company’s securities.

E. Taxation

United States Taxation

Certain Material United States Federal Income Tax Considerations

The following discussion is a general summary of certain material United States federal income tax considerations applicable to a U.S. holder arising from and relating to the consequences of the ownership and disposition of our common shares and warrants that are generally applicable to a United States person that holds our common shares as capital assets (a “U.S. Holder”) within the meaning of Section 1221 of the Code. This discussion does not address holders of other securities. This discussion assumes that we are not a “controlled foreign corporation” for U.S. federal income tax purposes. The following discussion does not purport to be a complete analysis of all of the potential United States federal income tax considerations that may be relevant to particular holders of our common shares or warrants in light of their particular circumstances nor does it deal with persons that are subject to special tax rules, such as brokers, dealers in securities or currencies, financial institutions, insurance companies, tax-exempt organizations, persons liable for alternative minimum tax, U.S. expatriates, partnerships or other pass-through entities, U.S. Holders who own (directly, indirectly or by attribution) ten percent or more of either (i) the total combined voting power of all classes of stock entitled to vote or (ii) the value of all of our outstanding stock, persons holding our common shares as part of a straddle, hedge or conversion transaction or as part of a synthetic security or other integrated transaction, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, holders whose “functional currency” is not the United States dollar, and holders who are not U.S. Holders. In addition, the discussion below does not address the tax consequences of the law of any state, locality or foreign jurisdiction or United States federal tax consequences (e.g., estate or gift tax) other than those pertaining to the income tax. There can be no assurance that the IRS will take a view similar to those described in this summary as to any of the tax consequences discussed below.

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The following is based on currently existing provisions of the Code, existing and proposed Treasury regulations under the Code and current administrative rulings and court decisions. The applicable statutes, regulations, court precedents and other authorities may change, possibly on a retroactive basis, and any change could affect the continuing validity of this discussion. We cannot predict whether, when, or to what extent U.S. federal tax laws will be changed, or regulations, interpretations, or rulings will be issued or revoked, nor is the long-term impact of the significant changes made to the Code in 2017 or thereafter known at this time.

Each U.S. Holder and each holder of common shares that is not a U.S. Holder should consult its tax adviser regarding the United States federal income tax consequences of holding our common shares applicable to such holder in light of its particular situation, as well as any tax consequences that may arise under the laws of any other relevant foreign, state, local, or other taxing jurisdiction.

As used in this section, the term “United States person” means a beneficial owner of our common shares that is:

(i)	a citizen or an individual resident of the United States;
(ii)	a corporation (or an entity taxable as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision of the United States;
(iii)	an estate the income of which is subject to United States federal income taxation regardless of its source; or
(iv)	a trust which (A) is subject to the supervision of a court within the United States and the control of a United States person as described in Section 7701(a)(30) of the Code; or (B) is subject to a valid election under applicable Treasury Regulations to be treated as a United States person.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) holds our common shares, the United States federal income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. A United States person that is a partner of the partnership holding our common shares should consult its own tax adviser.

Passive Foreign Investment Company Considerations (PFIC)

Special, generally unfavorable, U.S. federal income tax rules apply to a U.S. Holder’s ownership and disposition of the stock or warrants of a PFIC. As discussed below, however, a U.S. Holder of our common shares (but not our warrants) may be able to mitigate these consequences by making a timely and effective QEF Election or by making a timely and effective mark-to-market election with respect to our common shares that are owned by such holder.

For U.S. federal income tax purposes, a foreign corporation is classified as a PFIC for each taxable year in which, applying the relevant look-through rules, either:

at least 75% of its gross income for the taxable year consists of specified types of “passive” income (referred to as the “income test”); or

at least 50% of the average value of its assets during the taxable year is attributable to certain types of assets that produce passive income or are held for the production of passive income (referred to as the “asset test”).

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For purposes of the income and asset tests, if a foreign corporation owns directly or indirectly at least 25% (by value) of the stock of another corporation, that foreign corporation will be treated as if it held its proportionate share of the assets of the other corporation and received its proportionate share of the income of that other corporation. Under regulations proposed in 2020, similar rules would apply to a foreign corporation’s proportionate shares of the assets and income of a partnership in which it held, directly or indirectly, at least a 25% interest (measured by value). Also, for purposes of the income and asset tests, passive income does not include any income that is an interest, dividend, rent or royalty payment if it is received or accrued from a related person to the extent that amount is properly allocable to the active income of the related person. Under applicable attribution rules, if the Company is a PFIC, U.S. Holders of common shares will be treated as holding stock of the Company’s subsidiaries that are PFICs in certain circumstances. In these circumstances, certain dispositions of, and distributions on, stock of such subsidiaries may have consequences for U.S. Holders under the PFIC rules.

We believe that we were not a PFIC during our 2022 taxable year and are unlikely to be a PFIC during our 2023 taxable year. Because PFIC status is based on our income, assets and activities for the entire taxable year, and our market capitalization, it is not possible to determine whether we will be characterized as a PFIC for the 2023 taxable year until after the close of the taxable year. The tests for determining PFIC status are subject to a number of uncertainties. These tests are applied annually, and it is difficult to accurately predict the composition of our future income and assets and the nature of our future activities relevant to this determination. In addition, because the market price of our common shares is likely to fluctuate, the market price may affect the determination of whether we will be considered a PFIC. Accordingly, no assurance can be given that we will not constitute a PFIC in the current (or any future) tax year or that the IRS will not challenge any determination made by us concerning our PFIC status. Absent one of the elections described below, if we are a PFIC for any taxable year during which a U.S. Holder holds our common shares, such U.S. Holder’s share of our income for such year will continue to be subject to the regime described below, regardless of whether we cease to meet the PFIC tests in one or more subsequent years.

If we are a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the ownership and disposition of our shares will depend on whether such U.S. Holder makes a QEF or mark-to-market election. Unless otherwise provided by the IRS, a U.S. Holder of our shares is generally required to file an informational return annually to report its ownership interest in us during any year in which we are a PFIC.

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC.

The “No Election” Alternative – Taxation of Excess Distributions

If we are classified as a PFIC for any year during which a U.S. Holder has held common shares or warrants and, in the case of our common shares, that U.S. Holder has not made a QEF Election or a mark-to-market election, special rules may subject that U.S. Holder to increased tax liability, including loss of favorable capital gains rates and the imposition of an interest charge upon the sale or other disposition of the common shares or warrants or upon the receipt of any excess distribution (as defined below). Under these rules:

the gain, if any, realized on such disposition will be allocated ratably over the U.S. Holder’s holding period;

the amount of gain allocated to the current taxable year and any year prior to the first year in which we are a PFIC will be taxed as ordinary income in the current year;

the amount of gain allocated to each of the taxable years other than the year in which the excess distribution occurs and pre-PFIC years will be subject to tax at the highest ordinary income tax rate for corporations or individuals, as the case may be, in effect for that year; and

an interest charge for the deemed deferral benefit will be imposed with respect to the resulting tax attributable to each of such other taxable years.

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These rules will continue to apply to the U.S. Holder even after we cease to meet the definition of a PFIC, unless the U.S. Holder elects to be treated as having sold our common shares on the last day of the last taxable year in which we qualified as a PFIC.

An “excess distribution,” in general, is any distribution on common shares received in a taxable year by a U.S. Holder that is greater than 125% of the average annual distributions received by that U.S. Holder with respect to those shares in the three preceding taxable years or, if shorter, during that U.S. Holder’s holding period for common shares.

Any portion of a distribution paid to a U.S. Holder that does not constitute an excess distribution will be treated as ordinary dividend income to the extent of our current and accumulated earnings and profits (as computed for U.S. federal income tax purposes). Such dividends generally will not qualify for any dividends-received deduction otherwise available to U.S. corporations. Any amounts paid by a PFIC that are treated as dividends generally will not constitute “qualified dividend income” within the meaning of Section 1(h)(11) of the Code and will, therefore, not be eligible for the preferential 20% U.S. federal income tax rate for such income generally in effect for individuals under current law. Any such amounts in excess of our current and accumulated earnings and profits will be applied against the U.S. Holder’s tax basis in the common shares and, to the extent in excess of such tax basis, will be treated as gain from a sale or exchange of such shares. It is possible that any such gain may be treated as an excess distribution.

The QEF Election Alternative

A U.S. Holder of common shares (but not warrants) who elects (an “Electing U.S. Holder”) under Section 1295 of the Code, in a timely manner to treat us as a QEF would generally include in gross income (and be subject to current U.S. federal income tax on) its pro rata share of (a) the Company’s ordinary earnings, as ordinary income, and (b) our net capital gains, as long-term capital gain. An Electing U.S. Holder will generally be subject to U.S. federal income tax on such amounts for each taxable year in which we are classified as a PFIC, regardless of whether such amounts are actually distributed to the Electing U.S. Holder. An Electing U.S. Holder may further elect, in any given taxable year, to defer payment of U.S. federal income tax on such amounts to the extent they remain undistributed, subject to certain limitations. However, if payment of such tax is deferred, the taxes ultimately paid will be subject to an interest charge calculated from the due date of the tax return for the relevant year with respect to which the QEF election applies until the date the tax is paid.

A U.S. Holder may not make a QEF election with respect to its warrants to acquire our common shares. As a result, if a U.S. Holder sells or otherwise disposes of such warrants (other than upon exercise of such warrants), any gain recognized generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were a PFIC at any time during the period the U.S. Holder held the warrants. If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly acquired common shares (or has previously made a QEF election with respect to our common shares), the QEF election will apply to the newly acquired common shares, but the adverse tax consequences attributable to the period prior to exercise of the warrants, adjusted to take into account the current income inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired common shares (which generally will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless the U.S. Holder makes a purging election under the PFIC rules. The purging election causes the U.S. Holder making such election to be treated as selling such common shares at their fair market value as of the effective date of the election (either the last day of the last year that the Company was a PFIC or the first day of the first taxable year for which a QEF election is in effect). The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U.S. Holder will have a new basis and holding period in the common shares acquired upon the exercise of the warrants for purposes of the PFIC rules.

A U.S. Holder may make a QEF Election only if the Company furnishes the U.S. Holder with certain tax information. If the Company should determine that it is a PFIC, it is anticipated that it will attempt to timely and accurately disclose the relevant information to its U.S. Holders and provide U.S. Holders with information reasonably required to make such election.

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A U.S. Holder that makes a QEF Election with respect to the Company generally (a) may receive a tax-free distribution from the Company to the extent that such distribution is considered to be paid out of “earnings and profits” of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) increases the tax basis in his, her or its common shares by the amount included in income and reduces that tax basis by any amount treated as a tax-free distribution as a result of the QEF Election.

Similarly, if any of our non-U.S. subsidiaries were classified as PFICs, a U.S. Holder that makes a timely QEF Election with respect to any of such subsidiaries would be subject to the QEF rules as described above with respect to the Holder’s pro rata share of the ordinary earnings and net capital gains of any of the subsidiaries with respect to which the election is made. Our earnings (or earnings of any of our subsidiaries) attributable to distributions from any of our subsidiaries that had previously been included in the income of an Electing U.S. Holder under the QEF rules would generally not be taxed to the Electing U.S. Holder again.

Upon the sale or other disposition of common shares, an Electing U.S. Holder who makes a QEF Election for the first taxable year for which we are a PFIC in which it owns common shares (which election remains in effect throughout such U.S. Holder’s ownership of common shares) will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the net amount realized on the disposition and the U.S. Holder’s adjusted tax basis in the common shares. Such gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in the common shares is more than one year, otherwise it will be short-term capital gain or loss. The deductibility of capital losses is subject to certain limitations. A U.S. Holder’s gain realized upon the disposition of shares generally will be treated as U.S. source income, and losses from the disposition generally will be allocated to reduce U.S. source income.

A QEF Election must be made in a timely manner as specified in applicable Treasury Regulations. Generally, the QEF Election must be made by filing the appropriate QEF election documents at the time such U.S. Holder timely files its U.S. federal income tax return for the first taxable year of the Company during which it was a PFIC or, if such holder has made a purging election, for the first taxable year of the Company during which it was a PFIC following the period covered by such purging election.

Each U.S. Holder should consult its own tax advisor regarding the availability of, procedure for making, and consequences of a QEF Election with respect to the Company.

Mark-to-Market Election Alternative

Assuming that our common shares are treated as marketable stock (as defined for these purposes), a U.S. Holder that does not make a QEF Election may avoid the application of the excess distribution rules, at least in part, by electing, under Section 1296 of the Code, to mark the common shares to market annually. Consequently, the U.S. Holder will generally recognize as ordinary income or loss each year an amount equal to the difference as of the close of the taxable year between the fair market value of its common shares and the U.S. Holder’s adjusted tax basis in the common shares. Any mark-to-market loss is treated as an ordinary deduction, but only to the extent of the net mark-to-market gain that the Holder has included pursuant to the election in prior tax years. Such U.S. Holder’s basis in its common shares would be adjusted to reflect any of these income or loss amounts. Any gain on a disposition of our common shares by a U.S. Holder that has made such a mark-to-market election would be treated as ordinary income. Currently, a mark-to-market election may not be made with respect to warrants.

For purposes of making this election, stock of a foreign corporation is “marketable” if it is “regularly traded” on certain “qualified exchanges”. Under applicable Treasury Regulations, a “qualified exchange” includes a national securities exchange that is registered with the SEC or the national market system established pursuant to Section 11A of the U.S. Exchange Act, and certain foreign securities exchanges. Currently, our common shares are traded on a “qualified exchange.” Under applicable Treasury Regulations, PFIC stock traded on a qualified exchange is “regularly traded” on such exchange for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. Special rules apply if an election is made after the beginning of the taxpayer’s holding period in PFIC stock.

To the extent available, a mark-to-market election applies to the taxable year in which such mark-to-market election is made and to each subsequent taxable year, unless the Company’s common shares cease to be “marketable stock” or the IRS consents to revocation of such election. In addition, a U.S. Holder that has made a mark-to-market election does not include mark-to-market gains, or deduct mark-to-market losses, for years when the Company is not classified as a PFIC.

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The mark-to-market rules generally do not appear to prevent the application of the excess distribution rules in respect of stock of any of our non-U.S. subsidiaries in the event that any of such subsidiaries were considered PFICs. Accordingly, if we and any of our non-U.S. subsidiaries were both considered PFICs and a U.S. Holder made a mark-to-market election with respect to its common shares, the U.S. Holder may remain subject to the excess distribution rules described above with respect to the shares of stock in our non-U.S. subsidiaries that such holder owns indirectly.

U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE POSSIBLE APPLICABILITY OF THE PFIC RULES AND THE AVAILABILITY OF, PROCEDURES FOR MAKING, AND CONSEQUENCES OF A QEF ELECTION OR MARK-TO-MARKET ELECTION WITH RESPECT TO THE COMPANY’S COMMON SHARES.

Ownership and Disposition of Common Shares and Warrants to the Extent that the PFIC Rules do not Apply

Distributions on Common Shares

If we are not a PFIC, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to our common shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes. Any amount considered to be a dividend received by a U.S. Holder who is an individual should be eligible for the 20% maximum rate of U.S. federal income tax under Section 1(h)(11) of the Code. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares. (See “Sale or Other Taxable Disposition of Common Shares” below). However, the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should (unless advised to the contrary) therefore assume that any distribution by the Company with respect to the common shares will constitute ordinary dividend income. Dividends received on common shares generally will not be eligible for any “dividends received deduction” otherwise available to certain less-than 10%U.S. corporate shareholders. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Adjustments to Warrants

The terms of a warrant may provide for an adjustment to the number of common shares for which the warrant may be exercised or to the exercise price of the warrant in certain events. An adjustment which has the effect of preventing dilution generally is not taxable. However, the U.S. Holders of our warrants would be treated as receiving a constructive distribution from us if, for example, the adjustment increases the warrant holders’ proportionate interest in our assets or earnings and profits (e.g., through an increase in the number of common shares that would be obtained upon exercise) as a result of a related distribution of cash to the holders of our common shares which is taxable to the U.S. Holders of such common shares as described under “Distributions on Common Shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holders of the warrants received a cash distribution from us equal to the fair market value of such increased interest in our assets or earnings and profits.

Sale or Other Taxable Disposition of Common Shares

Upon the sale, exchange or other taxable disposition of common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the U.S. dollar value of cash received plus the fair market value of any property received and such U.S. Holder’s tax basis in such common shares sold or otherwise disposed of. A U.S. Holder’s tax basis in common shares that are not subject to the PFIC rules discussed above generally will be such Holder’s U.S. dollar cost for such common shares.

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Gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for more than one year. The long-term capital gains realized by non-corporate U.S. Holders are generally subject to a lower marginal U.S. federal income tax rate than ordinary income other than qualified dividend income, as defined above. Currently, the maximum rate on long-term capital gains is 20% (possibly supplemented by the 3.8% Medicare surtax on net investment income described under “Additional Considerations” below), although the actual rates may be higher due to the phase out of certain tax deductions, exemptions and credits. However, given the uncertain economic conditions in the United States and the size of the federal deficit, tax rates are subject to change. The deductibility of losses may be subject to limitations. As a result of the complexities in the rules and the uncertainty as to their future application, prospective U.S. Holders should consult their tax advisors.

Warrants

Generally, no U.S. federal income tax will be imposed upon the U.S. Holder of a warrant upon exercise of such warrant to acquire our common shares. A U.S. Holder’s tax basis in a warrant will generally be the price paid for the warrant or, with respect to a warrant acquired as part of an investment unit, the portion of the investment unit purchase price that is allocated to the warrant. Upon exercise of a warrant, the tax basis of the new common shares would be equal to the sum of the tax basis of the warrants in the hands of the U.S. Holder plus the exercise price paid, and the holding period of the new common shares would begin on the date that the warrants are exercised. If a warrant lapses without exercise, the U.S. Holder will generally realize a capital loss equal to its tax basis in the warrant. Prospective U.S. Holders should consult their tax advisors regarding the tax consequences of acquiring, holding and disposing of warrants.

The tax consequences of a cashless exercise of a warrant are not clear under current tax law. A cashless exercise may be tax-free, either because the exercise is not a gain realization event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-free situation, a U.S. Holder’s basis in the common shares received upon exercise would equal the U.S. holder’s basis in the warrant. If the cashless exercise were treated as not being a gain realization event, a U.S. Holder’s holding period in the common shares so acquired would be treated as commencing on the date following the date of exercise of the warrant. If the cashless exercise were treated as a recapitalization, the holding period of the common shares would include the holding period of the warrant. It is also possible that a cashless exercise could be treated as a taxable exchange in which gain or loss would be recognized. In such event, a U.S. Holder could be deemed to have surrendered warrants equal to the number of common shares having a value equal to the exercise price for the total number of warrants to be exercised. The U.S. Holder would recognize capital gain or loss in an amount equal to the difference between the fair market value of the common shares represented by the warrants deemed surrendered and the U.S. Holder’s tax basis in the warrants deemed surrendered. If taxable exchange treatment applied, a U.S. Holder’s tax basis in the common shares received would equal the sum of the fair market value of the common shares represented by the warrants deemed surrendered and the U.S. Holder’s tax basis in the warrants exercised. A U.S. Holder’s holding period for the common shares would commence on the date following the date of exercise of the warrant. Due to the absence of authority on the U.S. federal income tax treatment of a cashless exercise, there can be no assurance which, if any, of the alternative tax consequences and holding periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding the tax consequences of a cashless exercise.

Additional Considerations

Tax-Exempt Investors

Special considerations apply to U.S. persons that are pension plans and other investors that are subject to tax only on their unrelated business taxable income. Such a tax-exempt investor’s income from an investment in our common shares or warrants generally will not be treated as resulting in unrelated business taxable income under current law, so long as such investor’s acquisition of common shares or warrants is not debt-financed. Tax-exempt investors should consult their own tax advisors regarding an investment in our common shares or warrants.

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Additional Tax on Net Investment Income

Certain individuals, estates and trusts whose income exceeds certain thresholds will generally be required to pay a 3.8% Medicare surtax on the lesser of (1) the U.S. Holder’s “net investment income” for the relevant taxable year and (2) the excess of the U.S. Holder’s modified gross income for the taxable year over a certain threshold (which, in the case of individuals, will generally be between U.S.$125,000 and U.S.$250,000 depending on the individual’s circumstances). A U.S. Holder’s “net investment income” may generally include, among other items, certain interest, dividends, gain, and other types of income from investments, minus the allowable deductions that are properly allocable to that gross income or net gain. U.S. Holders are urged to consult with their own tax advisors regarding the effect, if any, of this tax on their ownership and disposition of common shares or warrants.

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of common shares or warrants, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). A U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, subject to the limitations described in the next paragraph, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and generally applies to all foreign income taxes paid (whether directly or through withholding) or accrued by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability (determined before application of the foreign tax credit) that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. Holder should generally be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty or if an election is properly made under the Code. However, due to differences between Canadian and U.S. income tax rules, the amount of a distribution with respect to the common shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a potentially reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.

State and Local Tax

In addition to the U.S. federal income tax discussed above, U.S. Holders may also be subject to state and local income taxation for amounts received on the disposition of common shares and on dividends received. Amounts paid to U.S. Holders will not have state and local tax amounts withheld from payments and U.S. Holders should consult with a tax advisor regarding the state and local taxation implications of such amounts received.

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Information Reporting

In general, U.S. Holders of common shares are subject to certain information reporting under the Code relating to their purchase and/or ownership of stock of a foreign corporation such as the Company. Failure to comply with these information reporting requirements may result in substantial penalties.

For example, U.S. federal income tax information reporting rules generally require certain individuals who are U.S. Holders to file Form 8938 to report the ownership of specified foreign financial assets if the total value of those assets exceeds an applicable threshold amount (subject to certain exceptions). For these purposes, a specified foreign financial asset includes not only a financial account (as defined for these purposes) maintained by a foreign financial institution, but also any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign entity, provided that the asset is not held in an account maintained by a financial institution. The minimum applicable threshold amount is generally U.S. $50,000 in the aggregate, but this threshold amount varies depending on whether the individual lives in the U.S., is married, files a joint income tax return with his or her spouse, and on certain other factors. Certain domestic entities that are U.S. Holders may also be required to file Form 8938 if both (i) such entities are owned at least 80% by an individual who is a U.S. citizen or U.S. tax resident (or, in some cases, by a nonresident alien who meets certain criteria) or are trusts with beneficiaries that are such individuals and (ii) more than 50% of their income consists of certain passive income or more than 50% of their assets is held for the production of such income. U.S. Holders are urged to consult with their tax advisors regarding their reporting obligations, including the requirement to file IRS Form 8938.

In addition, in certain circumstances, a U.S. Holder of common shares who disposes of such common shares in a transaction resulting in the recognition by such Holder of losses in excess of certain significant threshold amounts may be obligated to disclose its participation in such transaction in accordance with the Treasury Regulations governing tax shelters and other potentially tax-motivated transactions or tax shelter regulations. Potential purchasers of common shares should consult their tax advisors concerning any possible disclosure obligation under the tax shelter rules with respect to the disposition of their common shares.

Backup Withholding

Generally, information reporting requirements will apply to distributions on our common shares or proceeds on the disposition of our common shares or warrants paid within the U.S. (and, in certain cases, outside the U.S.) to U.S. Holders. Such payments will generally be subject to backup withholding tax at the rate of 24% if: (a) a U.S. Holder fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number to the payor (generally on Form W-9), as required by the Code and Treasury Regulations, (b) the IRS notifies the payor that the U.S. Holder’s taxpayer identification number is incorrect, (c) a U.S. Holder is notified by the IRS that it has previously failed to properly report interest and dividend income, or (d) a U.S. Holder fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number. However, certain exempt persons generally are excluded from these information reporting and backup withholding rules.

Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. Each U.S. Holder should consult its own tax advisor regarding the backup withholding rules.

Canadian Federal Income Tax Considerations

Taxation

The following summary describes the principal Canadian federal income tax considerations generally applicable to a holder of the Company’s common shares who, for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and the Canada – United States Tax Convention (the “Treaty”) and at all relevant times, is resident in the United States and was not and is not resident in Canada nor deemed to be resident in Canada, deals at arm’s length and is not affiliated with the Company, holds the Company’s common shares as capital property, does not use or hold and is not deemed to use or hold the Company’s common shares in or in the course of carrying on business in Canada and who otherwise qualifies for the full benefit of the Treaty (a “United States Holder”). Special rules which are not discussed in this summary may apply to a United States Holder that is a financial institution, as defined in the Canadian Tax Act, or an insurer carrying on business in Canada and elsewhere.

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This following summary is based on the current provisions of the Treaty, the Canadian Tax Act and the regulations thereunder, all specific proposals to amend the Canadian Tax Act and the regulations announced by the Minister of Finance (Canada) prior to the date hereof and the Company’s understanding of the administrative practices published in writing by the Canada Revenue Agency prior to the date hereof. This summary does not take into account or anticipate any other changes in the governing law, whether by judicial, governmental or legislative decision or action, nor does it take into account the tax legislation or considerations of any province, territory or non-Canadian (including U.S.) jurisdiction, which legislation or considerations may differ significantly from those described herein.

All amounts relevant in computing a United States Holder’s liability under the Canadian Tax Act are to be computed in Canadian currency based on the relevant exchange rate applicable thereto.

This summary is of a general nature only and is not intended to be, and should not be interpreted as legal or tax advice to any prospective purchaser or holder of the Company’s common shares and no representation with respect to the Canadian federal income tax consequences to any such prospective purchaser is made. Accordingly, prospective purchasers and holders of the Company’s common shares should consult their own tax advisors with respect to their particular circumstances.

Dividends on the Company’s Common Shares

Generally, dividends paid or credited by Canadian corporations to non-resident shareholders are subject to a withholding tax of 25% of the gross amount of such dividends. Pursuant to the Treaty, the withholding tax rate on the gross amount of dividends paid or credited to United States Holders is reduced to 15% or, in the case of a United States Holder that is a U.S. corporation that beneficially owns at least 10% of the voting stock of the Canadian corporation paying the dividends, to 5% of the gross amount of such dividends.

Pursuant to the Treaty, certain tax-exempt entities that are United States Holders may be exempt from Canadian withholding taxes, including any withholding tax levied in respect of dividends received on the Company’s common shares.

Disposition of the Company’s Common Shares

In general, a United States Holder will not be subject to Canadian income tax on capital gains arising on the disposition or deemed disposition of the Company’s common shares, unless such shares are “taxable Canadian property” within the meaning of the Canadian Tax Act. Generally, a share listed on a designated stock exchange for purposes of the Canadian Tax Act (which includes the TSX and Nasdaq) will not be “taxable Canadian property” to a United States Holder unless, at any particular time during the 60 month period immediately preceding the disposition (i) 25% or more of the issued shares of any class or series of the particular corporation were owned by: (a) such United States Holder, (b) by persons with whom the United States Holder did not deal at arm’s length, (c) a partnership in which the United States Holder, or persons with whom the United States Holder did not deal at arm’s length, holds a membership interest directly or indirectly through one or more partnerships, or (d) any combination thereof, and (ii) the shares derived more than 50% of their fair market value directly or indirectly from one or any combination of real property situated in Canada, “timber resource property”, “Canadian resource property” (each as defined under the Canadian Tax Act), or options in respect of, or interests or rights in any of the foregoing.

The value of the Company’s common shares is not now, and is not expected to be in the future, derived more than 50% from any of these properties. Consequently, any gain realized by a United States Holder upon the disposition of the Company’s common shares should be exempt from tax under the Canadian Tax Act.

F. Dividends and Paying Agents.

Not Applicable

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G. Statement by Experts

Not Applicable

H. Documents on Display

Copies of the documents referred to in this annual report may be inspected, during normal business hours, at the Company’s headquarters located at 30 Worcester Road, Toronto, Ontario, M9W 5X2, Canada.

We are required to file reports and other information with the SEC under the U.S. Exchange Act. Reports and other information filed by us with the SEC may be inspected and copied at the SEC’s public reference facilities located at 100 F Street, N.E. in Washington D.C. The SEC also maintains a website at http://www.sec.gov that contains certain reports and other information that we file electronically with the SEC. As a foreign private issuer, we are exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content of proxy statements and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the U.S. Exchange Act. Under the U.S. Exchange Act, as a foreign private issuer, we are not required to publish financial statements as frequently or as promptly as United States companies.

We also make our periodic reports, as well as other information filed with or furnished to the SEC, available free of charge through our website, at www.intellipharmaceutics.com, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. The information on our website is not incorporated by reference in this report.

I. Subsidiary Information

See Item 4.C of this annual report.

Item 11. Qualitative and Quantitative Disclosures about Market Risk

We are exposed to interest rate risk, which is affected by changes in the general level of interest rates. Due to the fact that the Company’s cash is deposited with major financial institutions in an interest savings account, we do not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates given their relative short-term nature.

Trade accounts receivable potentially subjects the Company to credit risk. The Company provides an allowance for doubtful accounts equal to the estimated losses expected to be incurred in the collection of accounts receivable.

The following table sets forth details of the aged accounts receivable that are not overdue as well as an analysis of overdue amounts and the related allowance for doubtful accounts:

	November 30,		November 30,
	2022		2021
	$		$
Accounts receivable		602		-
Less allowance for doubtful accounts		-		-
Total trade and other receivables, net		602		-
Not past due		602		-
Past due for more than 31 days
but no more than 120 days		-		-
Past due for more than 120 days		-		-
Total trade and other receivables, gross		602		-

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Financial instruments that potentially subject the Company to concentration of credit risk consist principally of uncollateralized accounts receivable. The Company’s maximum exposure to credit risk is equal to the potential amount of financial assets. For the year ended November 30, 2022, three customers accounted for all the revenues and one customer accounted for all the accounts receivable of the Company recognized as other receivable within trade and other receivables in the Company’s consolidated balance sheet as at November 30, 2022.

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank. The Company’s cash is not subject to any external restrictions.

Foreign exchange risk

We are exposed to changes in foreign exchange rates between the Canadian and U.S. dollar which could affect the value of our cash. The Company had no foreign currency hedges or other derivative financial instruments as of November 30, 2022. The Company did not enter into financial instruments for trading or speculative purposes and does not currently utilize derivative financial instruments.

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a foreign exchange loss while a weakening U.S. dollar will lead to a foreign exchange gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

Balances denominated in foreign currencies that are considered financial instruments are as follows:

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet its commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

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The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at November 30, 2022:

	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		to 1 year		1 year		Total
	$		$		$		$		$		$
Accounts payable		3,764,692		-		-		-		-		3,764,692
Accrued liabilities		2,821,506		-		-		-		-		2,821,506
Employee costs payable		3,067,578		-		-		-		-		3,067,578
Operating lease liabiity		45,891		45,891		45,891		45,891		-		183,564
Convertible debentures (Note 7)		1,800,000		-		-		-		-		1,800,000
Promissory notes payable (Note 7)		360,514		-		-		-		-		360,514
Total contractual obligations		11,860,181		45,891		45,891		45,891		-		11,997,854

Limitations:

The above discussion includes only those exposures that existed as of November 30, 2022, and, as a result, does not consider exposures or positions that could arise after that date. The Company’s ultimate realized gain or loss with respect to interest rate and exchange rate fluctuations would depend on the exposures that arise during the period and interest and foreign exchange rates.

Item 12. Description of Securities Other than Equity Securities.

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

None.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

There have been no material defaults in the payment of any principal, but the Company has not made interest payments on any related party Debentures since July 2019. The holders of the Debentures have waived any penalty related to the delayed payment of the interest due. Neither the Company nor its subsidiaries has any preferred shares outstanding.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

There has been no material modification of the instruments defining the rights of holders of any class of registered securities. There has been no withdrawal or substitution of assets securing any class of registered securities.

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Item 15. Controls and Procedures

Internal Control over Financial Reporting

The management of our Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company’s internal control over financial reporting using the 1992 Internal Control-Integrated Framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of November 30, 2022.

In the second quarter of 2017, we initiated the transition from the COSO 1992 Internal Control - Integrated Framework to the COSO 2013 Internal Control - Integrated Framework. Management has completed the business risk and information technology components and is working towards completion of controls over financial reporting as well as fraud risk.  We currently expect the transition to this new framework to continue through fiscal 2023. Although we do not expect to experience significant changes in internal control over financial reporting as a result of our transition, we may identify significant deficiencies or material weaknesses and incur additional costs in the future as a result of our transition.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and the acting Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2022. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in the reports it files or submits under securities legislation is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow required disclosures to be made in a timely fashion. Based on that evaluation, management has concluded that these disclosure controls and procedures were effective as of November 30, 2022.

Changes in Internal Control over Financial Reporting

During the year ended November 30, 2022, there were no changes made to the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting, and specifically, there were no changes in accounting functions, board or related committees and charters, or auditors; no functions, controls or financial reporting processes of any constituent entities were adopted as the Company’s functions, controls and financial processes; and no other significant business processes were implemented.

Attestation of Internal Control over Financial Reporting

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting for the Company. As the Company is a non-accelerated filer, management’s report is not subject to attestation by our independent registered public accounting firm pursuant to SOX Section 404(c).

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Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert.

Our Audit Committee is comprised of Norman Betts, Shawn Graham and Bahadur Madhani, each of whom is considered independent and financially literate (as such terms are defined under National Instrument 52-110 – Audit Committee). The members of the Audit Committee have selected a Chair from amongst themselves, being Mr. Madhani.

Under the SEC rules implementing SOX, Canadian issuers filing reports in the United States must disclose whether their audit committees have at least one “audit committee financial expert”. Additionally, under Nasdaq Listing Rule 5605(c)(2)(A), Nasdaq requires that one member of the audit committee have “past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer, or other senior officer with financial oversight responsibilities.” The Board has determined that Mr. Madhani qualifies as an Audit Committee financial expert under the SEC rules and as financially sophisticated under the Nasdaq rules.

See also Item 6.A.

Item 16B. Code of Ethics.

The Code of Business Conduct and Ethics (the “Code of Ethics”) has been implemented and it applies to all directors, officers, employees of the Company and its subsidiaries. It may be viewed on our website at www.intellipharmaceutics.com. During the year ended November 30, 2022, no waivers or requests for exemptions from the Code of Ethics were either requested or granted.

Item 16C. Principal Accountant Fees and Services.

Our current auditor is MNP LLP (“MNP”), Independent Registered Public Accounting Firm, 111 Richmond Street West, Suite 300, Toronto, ON M5H 2G4. MNP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario, the rules and standards of the Public Company Accounting Oversight Board (United States) and the securities laws and regulations administered by the SEC.

The following table summarizes the total fees paid or accrued by the Company for audit and other services provided by MNP, the Company’s external auditor since July 27, 2016, in relation to the fiscal year ended November 30, 2022 and 2021:

	2022		2021
Audit Fees(1)	C$132,000		C$128,400
Audit-Related Fees(2)	C$64,200		C$101,650
Tax Fees(3)	C$-		C$2,782
All Other Fees(4)		-		-
Total Fees	C$196,200		C$232,832

Notes:

(1)	Audit fees consist of fees related to the audit of the Company’s consolidated financial statements.
(2)	Audit-related fees consist of consultation on accounting and disclosure matters and reviews of quarterly interim financial statements, prospectus and base shelf activities and Form 20-F reviews.
(3)	Tax fees consist of fees for tax consultation, tax advice and tax compliance services for the Company and its subsidiaries.
(4)	All other fees related to internal control reviews.

112

Under applicable Canadian securities regulations, the Company is required to disclose whether its Audit Committee has adopted specific policies and procedures for the engagement of non-audit services and to prepare a summary of these policies and procedures. The Audit Committee’s responsibility is to approve all audit engagement fees and terms as well as reviewing policies for the provision of non-audit services by the external auditors and, when required, the framework for pre-approval of such services. The Audit Committee delegates to its Chairman the pre-approval of such non-audit fees. For each of the years ended November 30, 2022 and 2021, all of the non-audit services provided by the Company’s external auditor were approved by the Chairman of the Audit Committee.

Item 16D. Exemptions from the Listing Standards for Audit Committees.

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Neither the Company nor, to our knowledge, any affiliated purchaser has made any purchases of our registered shares during the last financial year.

Item 16F.  Change in Registrant’s Certifying Accountant.

The disclosure related to Item 16-F was previously reported, as that term is defined in Rule 12b-2 under the U.S. Exchange Act, in our Form 20-F filed on February 28, 2017.

Item 16G. Corporate Governance.

Not applicable.

Item 16H. Mine Safety Disclosure.

Not applicable.

113

PART III

Item 17. Financial Statements.

See Item 18 below.

Item 18. Financial Statements.

114

Consolidated financial statements of

Intellipharmaceutics

International Inc.

November 30, 2022, 2021 and 2020

Intellipharmaceutics International Inc.

November 30, 2022, 2021 and 2020

Table of contents

Report of Independent Registered Public Accounting Firm (MNP LLP, PCAOB ID: 1930)	F-1
Consolidated balance sheets	F-4
Consolidated statements of operations and comprehensive loss	F-5
Consolidated statements of shareholders’ equity (deficiency)	F-6
Consolidated statements of cash flows	F-7
Notes to the consolidated financial statements	8-31

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Intellipharmaceutics International Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Intellipharmaceutics International Inc. (the Company) as of November 30, 2022 and 2021, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity (deficiency), and cash flows for each of the years in the three-year period ended November 30, 2022, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of November 30, 2022 and 2021, and the results of its consolidated operations and its consolidated cash flows for each of the years in the three-year period ended November 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. This matter is also described in the “Critical Audit Matters” section of our report.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

Going Concern

Critical Audit Matter Description

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net working capital deficiency as at November 30, 2022 that raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is ultimately dependent on its product candidates receiving approval from the Food and Drug Administration, Health Canada and the regulatory authorities of other countries in which its products are proposed to be sold and whether it is able to successfully market the approved products. Management intends to continue to fund its business by way of licensing agreements, cost savings, equity and debt financing and new strategic partnership agreements. However, the Company has not concluded that these plans alleviate the substantial doubt related to its ability to continue as a going concern. This matter is also described in the “Material Uncertainty Related to Going Concern” section of our report.

We identified the Company’s ability to continue as a going concern as a critical audit matter because auditing the Company’s going concern assessment is complex and involves a high degree of auditor judgment to assess the reasonableness of the cash flow forecasts.

Audit Response

We responded to this matter by performing procedures over management’s assessment of the Company’s ability to continue as a going concern. Our audit work in relation to this included, but was not restricted to, the following:

·         We evaluated management’s process for preparing the business plan with forecasted cash flows included in the going concern assessment;

·         We assessed the completeness, accuracy, and relevance of underlying data used in management’s forecast;

·         We evaluated the reasonableness of the underlying assumptions included in the forecasted cash flows used by management in their business plan considering the Company’s current and past performance, the consistency with external market and industry data, and whether these assumptions were consistent with evidence obtained in other areas of the audit; and

·         We assessed the adequacy of the going concern disclosures included in Note 1 of the consolidated financial statements and considered if these are appropriate to reflect the assessments that management has performed.

Signed: MNP LLP

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2016.

Toronto, Canada

June 05, 2023

F-3

Intellipharmaceutics International Inc.
Consolidated balance sheets
(Stated in U.S. dollars)
	November 30,			November 30,
	2022			2021
	$			$
Assets
Current
Cash		83,722			771,945
Trade and other receivables, net		602			-
Investment tax credits		268,179			268,179
Prepaid expenses and other assets (Note 5)		140,008			62,192
		492,511			1,102,316
Property and equipment, net (Note 6)		788,050			994,109
Right-of-use asset (Note 10)		151,471			-
		1,432,032			2,096,425
Liabilities
Current
Accounts payable		3,764,692			3,779,550
Accrued liabilities (Note 7)		2,821,506			2,272,610
Employee costs payable (Note 9)		3,067,578			2,263,944
Operating lease liability (Note 10)		165,441			-
Income tax payable (Note 16)		29,036			18,178
Promissory notes payable (Note 8)		360,514			165,878
Convertible debentures (Note 8)		1,800,000			1,751,483
		12,008,767			10,251,643
Shareholders' deficiency
Capital stock (Note 11)
Authorized
Unlimited common shares without par value
Unlimited preference shares
Issued and outstanding
33,092,665 common shares		49,175,630			49,175,630
(November 30, 2020 - 23,678,105)
Additional paid-in capital		45,097,313			44,626,436
Accumulated other comprehensive income		284,421			284,421
Accumulated deficit		(105,134,099	)		(102,241,705	)
		(10,576,735	)		(8,155,218	)
Contingencies (Note 17)
		1,432,032			2,096,425
Going Concern (Note 1)
On behalf of the Board:
/s/ Dr. Isa Oidid	/s/ Bahadur Madhani
Dr. Isa Odidi, Chairman of the Board	Bahadur Madhani, Director
See accompanying notes to consolidated financial statements

F-4

Intellipharmaceutics International Inc.
Consolidated statements of operations and comprehensive loss
For the years ended November 30, 2022, 2021 and 2020
(Stated in U.S. dollars)
	2022			2021			2020
	$			$			$
Revenue
Licensing (Note 3)		29,682			-			1,401,517
Up-front fees (Note 3)		19,068			-			-
Other Services		16,978			-			-
		65,728			-			1,401,517
Expenses
Research and development		2,149,126			2,661,875			3,517,018
Selling, general and administrative		561,050			1,249,676			2,147,432
Depreciation (Note 6)		206,059			261,525			415,375
		2,916,235			4,173,076			6,079,825
Loss from operations		(2,850,507	)		(4,173,076	)		(4,678,308	)
Net foreign exchange gain (loss)		210,634			(22,465	)		(168,568	)
Interest expense		(291,619	)		(549,299	)		(969,653	)
Gain on settlement		-			-			2,500,000
Gain (loss) on disposal of property and equipment		44,435			-			(41,603	)
Impairment of fixed asset (Note 6)		-			(514,502	)		-
Net loss before income taxes		(2,887,057	)		(5,259,342	)		(3,358,132	)
Provision for income taxes (Note 16)
Current tax expense / (recovery)		10,858			(20,333	)		32,833
Deferred tax recovery		(5,521	)		(93,854	)		-
Net loss and comprehensive loss		(2,892,394	)		(5,145,155	)		(3,390,965	)
Loss per common share, basic and diluted		(0.09	)		(0.17	)		(0.14	)
Weighted average number of common
shares outstanding, basic and diluted		33,092,665			29,430,014			23,561,949
See accompanying notes to consolidated financial statements

F-5

Intellipharmaceutics International Inc.
Consolidated statements of shareholders' equity (deficiency)
For the years ended November 30, 2022, 2021 and 2020
(Stated in U.S. dollars)
								Accumulated					Total
						Additional		other					shareholders'
			Capital stock			paid-in		comprehensive		Accumulated			equity
	Number		amount			capital		income		deficit			(deficiency)
			$			$		$		$			$
Balance, November 30, 2019		22,085,856		45,561,222			44,167,721		284,421		(93,705,585	)		(3,692,221	)
Stock options to employees (Note 12)		-		-			71,645		-		-			71,645
Shares issued upon exercise of 2018 Pre-Funded Warrants (Note 15)		1,592,249		583,180			(583,180
Beneficial conversion feature related to Debentures (Note 8)							697,952							697,952
Net loss		-		-			-		-		(3,390,965	)		(3,390,965	)
Balance, November 30, 2020		23,678,105		46,144,402			44,354,138		284,421		(97,096,550	)		(6,313,589	)
Stock options to employees (Note 12)		-		-			11,985		-		-			11,985
Proceeds from private placemtn financing (Note 11)		9,414,560		3,069,448			-		-		-			3,069,448
Cost of private placement financing (Note 11)				(38,220	)		-		-		-			(38,220	)
Beneficial conversion feature related to Debentures (Note 8)							354,167							354,167
Deferred tax expense related to beneficial conversion feature (Note 16)							(93,854							(93,854
Net loss		-		-			-		-		(5,145,155	)		(5,145,155	)
Balance, November 30, 2021		33,092,665		49,175,630			44,626,436		284,421		(102,241,705	)		(8,155,218	)
Beneficial conversion feature related to Debentures (Note 8)							20,833							20,833
Deferred tax expense related to beneficial conversion feature (Note 16)							(5,521							(5,521
Proceeds from sale of equipment (Note 6)		-		-			455,565		-		-			455,565
Net loss		-		-			-		-		(2,892,394	)		(2,892,394	)
Balance, November 30, 2022		33,092,665		49,175,630			45,097,313		284,421		(105,134,099	)		(10,576,735	)
See accompanying notes to consolidated financial statements

F-6

Intellipharmaceutics International Inc.
Consolidated statements of cash flows
For the years ended November 30, 2022, 2021 and 2020
(Stated in U.S. dollars)
	2022			2021			2020
	$			$			$
Net loss		(2,892,394	)		(5,145,155	)		(3,390,965	)
Items not affecting cash
Depreciation (Note 6)		206,059			261,525			415,375
Stock-based compensation (Note 12)		-			11,985			71,645
Accreted interest on convertible debentures (Note 8)		69,351			313,865			744,930
Deferred income tax recovery (Note 16)		(5,521	)		(93,854	)		-
Write-down of inventory		-			112,672			236,459
Write-down of investment tax credits		-			-			233,377
(Gain) loss on disposal of property and equipment		(44,435	)		-			41,603
Non-cash lease expense		14,366			138,051			19,855
Write down on impaired fixed assets (Note 6)		-			514,502			-
Unrealized foreign exchange (gain) loss		(5,761	)		1,995			62,658
Change in non-cash operating assets & liabilities
Accounts receivable		(602	)		566,384			(389,182	)
Investment tax credits		-			213,956			60,244
Prepaid expenses, sundry and other assets		(77,816	)		53,558			40,866
Accounts payable, accrued liabilities and employee costs payable		1,337,672			609,520			1,932,410
Income tax payable		10,858			(20,333	)		32,833
Cash flows (used in) provided from operating activities		(1,388,223	)		(2,461,329	)		112,108
Financing activities
Proceeds from promissory notes payable (Note 8)		200,000			-			-
Proceeds from private placement (Note 11)		-			3,069,448			-
Share issuance cost (Note 11)		-			(38,220	)		-
Cash flows provided from financing activities		200,000			3,031,228			-
Investing activity
Sale of property and equipment (Note 6)		500,000			-			29,191
Purchase of property and equipment (Note 6)		-			-			(3,875	)
Cash flows provided from investing activities		500,000			-			25,316
(Decrease) increase in cash		(688,223	)		569,899			137,424
Cash, beginning of year		771,945			202,046			64,622
Cash, end of year		83,722			771,945			202,046
Supplemental cash flow information
Interest paid		-			-			-
Taxes paid		-			-			-
See accompanying notes to consolidated financial statements

F-7

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

1. Nature of operations 

Intellipharmaceutics International Inc. (the “Company”) is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs.

On October 22, 2009, IntelliPharmaCeutics Ltd. (“IPC Ltd. “) and Vasogen Inc. completed a court approved plan of arrangement and merger (the “IPC Arrangement Agreement”), resulting in the formation of the Company, which is incorporated under the laws of Canada. The Company’s common shares are traded on the Toronto Stock Exchange (“TSX”) and the OTCQB Venture Market.

The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing and cost-plus payments on sales of resulting products. In November 2013, the U.S. Food and Drug Administration (“FDA”) granted the Company final approval to market the Company’s first product, the 15 mg and 30 mg strengths of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules. In 2017, the FDA granted final approval for the remaining 6 (six) strengths, all of which have been launched. In May 2017, the FDA granted the Company final approval for its second commercialized product, the 50, 150, 200, 300 and 400 mg strengths of generic Seroquel XR® (quetiapine fumarate extended release) tablets, and the Company commenced shipment of all strengths that same month. In November 2018, the FDA granted the Company final approval for its venlafaxine hydrochloride extended-release capsules in the 37.5, 75, and 150 mg strengths.

Going concern

The consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. The Company has incurred losses from operations since inception and has reported losses of $2,892,394 for the year ended November 30, 2022 (2021 – $5,145,155; 2020 – $3,390,965) and has an accumulated deficit of $105,134,099 as at November 30, 2022 (November 30, 2021 - $102,241,705). The Company has a working capital deficiency of $11,516,252 as atNovember 30, 2022 (November 30, 2021–working capital deficiency of $9,149,327). The Company has funded its research and development (“R&D”) activities principally through the issuance of securities, loans from related parties, funds from the IPC Arrangement Agreement, and funds received under development agreements. There is no certainty that such funding will be available going forward. These conditions raise substantial doubt about its ability to continue as a going concern and realize its assets and pay its liabilities as they become due.

In order for the Company to continue as a going concern and fund any significant expansion of its operation or R&D activities, the Company will require significant additional capital. Although there can be no assurances, such funding may come from revenues from the sales of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules, from revenues from the sales of the Company’s generic Seroquel XR® (quetiapine fumarate extended-release) tablets and from potential partnering opportunities. Other potential sources of capital may include payments from licensing agreements, cost savings associated with managing operating expense levels, other equity and/or debt financings, and/or new strategic partnership agreements which fund some or all costs of product development. The Company’s ultimate success will depend on whether its product candidates receive the approval of the FDA, Health Canada, and the regulatory authorities of the other countries in which its products are proposed to be sold and whether it is able to successfully market approved products. The Company cannot be certain that it will receive FDA, Health Canada, or such other regulatory approval for any of its current or future product candidates, or that it will reach the level of sales and revenues necessary to achieve and sustain profitability, or that the Company can secure other capital sources on terms or in amounts sufficient to meet its needs, or at all.

The availability of equity or debt financing will be affected by, among other things, the results of the Company’s R&D, its ability to obtain regulatory approvals, its success in commercializing approved products with its commercial partners and the market acceptance of its products, the state of the capital markets generally, the delisting from Nasdaq (as defined below), strategic alliance agreements, and other relevant commercial considerations.

F-8

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

1. Nature of operations (continued)

Going concern (continued)

In addition, if the Company raises additional funds by issuing equity securities, its then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict its operations. In the event that the Company does not obtain sufficient additional capital, it will raise substantial doubt about the Company’s ability to continue as a going concern, realize its assets and pay its liabilities as they become due. The Company’s cash outflows are expected to consist primarily of internal and external R&D, legal and consulting expenditures to advance its product pipeline and selling, general and administrative expenses to support its commercialization efforts. Depending upon the results of the Company’s R&D programs, the impact of the litigation against the Company and the availability of financial resources, the Company could decide to accelerate, terminate, or reduce certain projects, or commence new ones. Any failure on its part to successfully commercialize approved products or raise additional funds on terms favorable to the Company or at all, may require the Company to significantly change or curtail its current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in the Company not taking advantage of business opportunities, in the termination or delay of clinical trials or the Company not taking any necessary actions required by the FDA or Health Canada for one or more of the Company’s product candidates, in curtailment of the Company’s product development programs designed to identify new product candidates, in the sale or assignment of rights to its technologies, products or product candidates, and/or its inability to file Abbreviated New Drug Applications (“ANDAs”), Abbreviated New Drug Submissions (“ANDSs”) or New Drug Applications (“NDAs”) at all or in time to competitively market its products or product candidates.

The consolidated financial statements do not include any adjustments that might result from the outcome of uncertainties described above. If the going concern assumption no longer becomes appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments could be material.

2. Basis of presentation

(a)Basis of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiaries, IPC Ltd., Intellipharmaceutics Corp., and Vasogen Corp.

References in these consolidated financial statements to share amounts, per share data, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the 1-for-10 reverse stock split (known as a share consolidation under Canadian law) (the “reverse split”) which became effective on each of The Nasdaq Stock Market LLC (“Nasdaq”) and TSX at the opening of the market on September 14, 2018. The term “share consolidation” is intended to refer to such reverse split and the terms “pre-consolidation” and “post-consolidation” are intended to refer to “pre-reverse split” and “post-reverse split”, respectively.

In September 2018, the Company announced the reverse split. At a special meeting of the Company’s shareholders held on August 15, 2018, the Company’s shareholders granted the Company’s Board of Directors discretionary authority to implement a share consolidation of the issued and outstanding common shares of the Company on the basis of a share consolidation ratio within a range from five (5) pre-consolidation common shares for one (1) post-consolidation common share to fifteen (15) pre-consolidation common shares for one (1) post-consolidation common share. The Board of Directors selected a share consolidation ratio of ten (10) pre-consolidation shares for one (1) post-consolidation common share. On September 12, 2018, the Company filed an amendment to the Company’s articles ("Articles of Amendment") to implement the 1-for-10 reverse split.

F-9

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

2. Basis of presentation (continued)

(a) Basis of consolidation (continued)

The Company’s common shares began trading on each of Nasdaq and TSX on a post-split basis under the Company’s existing trade symbol “IPCI” at the opening of the market on September14, 2018. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the change was applied retroactively.

These consolidated financial statements have been prepared using the same accounting policies and methods as those used by the Company in the annual audited consolidated financial statements for the year ended November 30, 2021.

All inter-company accounts and transactions have been eliminated on consolidation.

(b) Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

Areas where significant judgment is involved in making estimates are the determination of the functional currency; the fair values of financial assets and liabilities, valuation of convertible debt; the determination of units of accounting for revenue recognition; the accrual of licensing and milestone revenue; and forecasting future cash flows for assessing the going concern assumption.

From late 2019 the Company has had to reduce development activities and staffing levels significantly due to ongoing financial problems which have continued, coupled with the effects of the Covid-19 pandemic. It is not possible to reliably estimate the length and severity of the developments and impact on the future financial results and condition of the Company. The challenges and uncertainties could impair the Company’s ability to raise capital,postpone research activities, impact our ability to maintain operations and launch new products; it could also impair the value of our shares, our long-lived assets, and materially adversely impact our ability to generate potential future revenue.

3. Significant accounting policies

(a) Cash and cash equivalents

The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. Cash equivalent balances consist of bankers’ acceptances and bank accounts with variable market rates of interest. The financial risks associated with these instruments are minimal and the Company has not experienced any losses from investments in these securities. The carrying amount of cash approximates its fair value due to its short-term nature.

As at November 30, 2022 and 2021, the Company had no cash equivalents.

F-10

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

3. Significant accounting policies (continued)

(b) Accounts receivable

The Company reviews its sales and accounts receivable aging and determines whether an allowance for doubtful accounts is required.

(c) Financial instruments

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are classified as liabilities, the derivative instrument is initially recorded at its fair value using the appropriate valuation methodology and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss.

(d) Investment tax credits

The investment tax credits (“ITC") receivable are amounts considered recoverable from the Canadian federal and provincial governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The amounts claimed under the program represent the amounts based on management estimates of eligible research and development costs incurred during the year. Realization is subject to government approval. Any adjustment to the amounts claimed will be recognized in the year in which the adjustment occurs. Refundable ITCs claimed relating to capital expenditures are credited to property and equipment. Refundable ITCs claimed relating to current expenditures are netted against research and development expenditures.

(e) Property and equipment

Property and equipment are recorded at cost. Equipment acquired under capital leases are recorded net of imputed interest, based upon the net present value of future payments. Assets under capital leases are pledged as collateral for the related lease obligation. Repairs and maintenance expenditures are charged to operations; major betterments and replacements are capitalized. Depreciation bases and rates are as follows:

Assets	Basis	Rate
Computer equipment	Declining balance		30	%
Computer software	Declining balance		50	%
Furniture and fixtures	Declining balance		20	%
Laboratory equipment	Declining balance		20	%
Leasehold improvements	Straight line	Over term of lease

Leasehold improvements and assets acquired under capital leases are depreciated over the term of their useful lives or the lease period, whichever is shorter. The charge to operations resulting from depreciation of assets acquired under capital leases is included with depreciation expense.

(f) Impairment of long-lived assets

Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. For assets that are to be held and used, impairment is recognized when the sum of estimated undiscounted cash flows associated with the asset or group of assets is less than its carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.

(g) Warrants

The Company previously issued warrants as described in Notes 11 and 15. In fiscal 2013, the outstanding warrants were presented as a liability because they did not meet the criteria of Accounting Standard Codification (“ASC”) Topic 480 Distinguishing Liabilities from Equity for equity classification. Subsequent changes in the fair value of the warrants were recorded in the consolidated statements of operations and comprehensive loss. The Company changed its functional currency effective December 1, 2013 such that these warrants met the criteria for

F-11

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

3. Significant accounting policies (continued)

(g) Warrants (continued)

prospective equity classification in ASC Topic 480, and the U.S. dollar translated amount of the warrant liability at December 1, 2013 became the amount reclassified to equity.

(h) Revenue recognition

The Company accounts for revenue in accordance with the provisions of ASC Topic 606 Revenue from Contracts with Customers. Under ASC Topic 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation(s). The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing payments on sales of resulting products.

The relevant revenue recognition accounting policy is applied to each separate unit of accounting.

Licensing

The Company recognizes revenue from the licensing of the Company's drug delivery technologies, products and product candidates. Under the terms of the licensing arrangements, the Company provides the customer with a right to access the Company’s intellectual property with regards to the license which is granted. Revenue arising from the license of intellectual property rights is recognized over the period the Company transfers control of the intellectual property.

The Company has a license and commercialization agreement with Par Pharmaceutical Inc. (“Par”). Under the exclusive territorial license rights granted to Par, the agreement requires that Par manufacture, promote, market, sell and distribute the product. Licensing revenue amounts receivable by the Company under this agreement are calculated and reported to the Company by Par, with amounts generally based upon net product sales and net profit which include estimates for chargebacks, rebates, product returns, and other adjustments. Licensing revenue payments received by the Company from Par under this agreement are not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this arrangement and the guidance per ASC Topic 606, the Company records licensing revenue over the period the Company transfers control of the intellectual property in the consolidated statements of operations and comprehensive loss.

Milestones

For milestone payments that are not contingent on sales-based thresholds, the Company applies a most-likely amount approach on a contract-by-contract basis. Management makes an assessment of the amount of revenue expected to be received based on the probability of the milestone outcome. Variable consideration is included in revenue only to the extent that it is probable that the amount will not be subject to a significant reversal when the uncertainty is resolved (generally when the milestone outcome is satisfied).

Research and development

Under arrangements where the license fees and research and development activities can be accounted for as a separate unit of accounting, non-refundable upfront license fees are deferred and recognized as revenue on a straight-line basis over the expected term of the Company's continued involvement in the research and development process.

F-12

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

3. Significant accounting policies (continued)

(i) Revenue recognition (continued)

Deferred revenue

Deferred revenue represents the funds received from clients, for which the revenues have not yet been earned, as the milestones have not been achieved, or in the case of upfront fees for drug development, where the work remains to be completed. As of November 30, 2022, the Company has recorded a deferred revenue balance of $Nil (November 30, 2021 - $Nil) due to the termination of its license and commercial supply agreement with Mallinckrodt.

(j) Research and development costs

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC Topic 730 Research and Development. However, materials and equipment are capitalized and amortized over their useful lives if they have alternative future uses.

(k) Income taxes

The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for losses and tax credit carry forwards. Significant judgment is required in determining whether deferred tax assets will be realized in full or in part. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the date of enactments. A valuation allowance is provided for the portion of deferred tax assets that is more likely than not to remain unrealized.

The Company accounts for income taxes in accordance with ASC Subtopic 740-10 Income Taxes - Overall. This ASC Subtopic requires that uncertain tax positions are evaluated in a two-step process, whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The cumulative effects of the application of the provisions of ASC Subtopic 740-10 are described in Note 16.

The Company records any interest related to income taxes in interest expense and penalties in selling, general and administrative expense.

(l) Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

(m) Translation of foreign currencies

Transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss.

The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.

F-13

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

3. Significant accounting policies (continued)

(n) Stock-based compensation

The Company has a stock-based compensation plan which authorizes the granting of various equity-based incentives including stock options and restricted share units (“RSU”s). The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the year is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation expense is recorded in the consolidated statements of operations and comprehensive loss under research and development expense and under selling, general and administration expense. Note 12 provides supplemental disclosure of the Company's stock options.

(o) Deferred Share Units

Deferred Share Units (“DSU”s) are valued based on the trading price of the Company’s common shares on the Toronto Stock Exchange. The Company records the value of the DSU’s owing to non-management board members in the consolidated statements of shareholders’ equity (deficiency).

Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase common shares of the Company during fiscal 2022, 2021, and 2020, respectively, were not included in the computation of diluted EPS because the Company has incurred a loss for each of the years ended November 30, 2022, 2021 and 2020 and the effect would be anti-dilutive.

(q)Comprehensive loss

The Company follows ASC Topic 220 Income Statement – Reporting Comprehensive Income. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity (deficiency). Other than foreign exchange gains and losses arising from cumulative translation adjustments, the Company has no other comprehensive loss items.

(r) Fair value measurement

Under ASC Topic 820 Fair Value Measurement, fair value is defined as 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 (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels to the hierarchy based on the reliability of inputs, as follows:

F-14

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

3. Significant accounting policies (continued)

(r) Fair value measurement (continued)

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

· Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

· Level 3 - Unobservable inputs for the asset or liability.

The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

(t) Lease

On December 1, 2019, the Company adopted ASC Topic 842 Leases using the modified retrospective transition method, applying the new standard to all leases existing at the date of initial application. In addition, the Company elected the package of practical expedients in transition, which permitted the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs on leases that commenced prior to adoption of the new standard. The Company also elected the ongoing practical expedient not to recognize operating lease right-of-use assets and operating lease liabilities for short-term leases. As a result of adopting the new standard, the Company didn’t recognize any right-of-use (“ROU”) assets or lease liabilities in the consolidated balance sheet, as the Company only had one lease which had a term of less than 12 months on the date of adoption of Topic 842. There was no impact to opening accumulated deficit on the date of adoption.

The ROU assets are initially measured at cost and amortized using the straight-line method through the end of the lease term. The lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate.

4. Trade and other receivables

The Company currently has no debt agreements in place whereby any amount of receivables serve as collateral. The Company has no off-balance-sheet credit exposures and has no foreclosed or repossessed assets. Trade and other receivables are carried on the consolidated balance sheets net of allowance for doubtful accounts. This provision is established based on the Company’s best estimates regarding the ultimate recovery of balances for which collection is uncertain. As at November 30, 2022, the Company has a trade and other receivables balance of $602 (2021 - $Nil) and an allowance for doubtful accounts of $Nil (2021 - $Nil). Risks and uncertainties and credit quality information related to trade and other receivables have been disclosed in Note 18.

5.Prepaids expenses and other assets

	November 30, 2022		November 30, 2021
HST Receivable		120,602		48,155
Professional Fees		7,403		-
Other		12,003		14,037
		140,008		62,192

F-15

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

6. Property and equipment

	Computer equipment		Computer software		Furniture and fixtures		Laboratory equipment			Leasehold improvements		Total
	$		$		$		$			$		$
Cost
Balance at November 30, 2020		631,334		156,059		172,498		5,576,359			1,441,452		7,977,702
Impairment of asset		-		-		-		(514,502	)		-		(514,502	)
Balance at November 30, 2021		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Balance at November 30, 2022		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Accumulated depreciation
Balance at November 30, 2020		536,697		152,942		145,614		3,930,860			1,441,452		6,207,565
Depreciation		28,391		1,558		5,377		226,200			-		261,526
Balance at November 30, 2021		565,088		154,500		150,991		4,157,060			1,441,452		6,469,091
Depreciation		19,874		925		4,301		180,959			-		206,059
Balance at November 30, 2022		584,962		155,425		155,292		4,338,019			1,441,452		6,675,150
Net book value at:
November 30, 2021		66,246		1,559		21,507		904,797			-		994,109
November 30, 2022		46,372		634		17,206		723,838			-		788,050

During the year ended November 30, 2022, the Company sold equipment that were not in use for the amount of $500,000 and recognized a gain on sale of that equipment in the amount of $44,435, and the remainder allocated to additional paid in capital as a capital contribution. This equipment was sold to a related Company, which is controlled by a shareholder of the Company.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is assessed by comparing the carrying amount of an asset with the sum of the undiscounted cash flows expected from its use and disposal, and as such requires the Company to make significant estimates on expected revenues from the commercialization of its products and services and the related expenses. The Company records a write-down for long-lived assets which have been abandoned and do not have any residual value. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is assessed by comparing the carrying amount of an asset with the sum of the undiscounted cash flows expected from its use and disposal, and as such requires the Company to make significant estimates on expected revenues from the commercialization of its products and services and the related expenses. The Company records a write-down for long-lived assets which have been abandoned and do not have any residual value. During the year ended November 30, 2022, the Company recorded a write-down of long-lived assets of $Nil (2021 - $514,502).

F-16

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

7. Accrued liabilities

	November 30,		November 30,
	2022		2021
	$		$
Professional fees		120,308		106,417
Board of Directors fees		276,178		189,220
Litigation settlement fee (Note 17)		-		400,000
Interest		678,216		472,357
Federal Drug Administration fees		1,500,940		914,277
Other		245,864		190,339
		2,821,506		2,272,610

8. Convertible debentures and promissory notes payable

(a) Convertible debentures

Amounts due to the related parties are payable to two shareholders who are also officers and directors of the Company.

	November 30,		November 30,
	2022		2021
Convertible debenture payable to two directors and officers of the Company, unsecured, 10% annual interest rate, payable monthly (“2018 Debenture”)	$	500,000	$	500,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“May 2019 Debenture”)		1,050,000		1,050,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“November 2019 Debenture”)		250,000		201,483
	$	1,800,000	$	1,751,483

On September 10, 2018, the Company completed a private placement financing of the unsecured convertible 2018 Debenture in the principal amount of $0.5 million. The 2018 Debenture matured on September 1, 2020. The 2018 Debenture bore interest at a rate of 10% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares of the Company at a conversion price of $3.00 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company provided the Company with the $0.5 million of the proceeds for the 2018 Debenture.

At issuance, as the conversion price was lower than the market share price, the beneficial conversion feature valued at September 10, 2018 of $66,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the 2018 Debenture was accreted over the remaining life of the 2018 Debenture using an effective rate of interest of 7.3%. Effective September 1, 2020, the maturity date for the 2018 Debenture was further extended to November 30, 2020. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the 2018 Debenture was further extended to August 31, 2023.

Effective May 31, 2022, the maturity date for the May 2019 Debenture was further extended to November 30, 2022. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of

F-17

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

8. Convertible debentures and promissory notes payable

(a) Convertible debentures (continued)

the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the May 2019 Debenture was further extended to August 31, 2023.

Effective May 31, 2022, the maturity date for the November 2019 Debenture was further extended to November 30, 2022. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC paragraph 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the November 2019 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the November 2019 Debenture was further extended to August 31, 2023.

(b) Promissory notes payable

	November 30,		November 30,
	2022		2021
	$		$
Promissory notes payable to two directors and officers
of the Company, unsecured, no annual interest
rate on the outstanding loan balance		157,437		165,878
Promissory notes payable to third party
unsecured, 10% annual interest
rate on the outstanding loan balance		203,077		-
		360,514		165,878

In September 2019, the Company issued two unsecured, non-interest bearing promissory notes, with no fixed repayment terms, in the amounts of US$6,500 and CDN$203,886, to Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company.

In October 2023, the Company issued an unsecured, 10% annual interest bearing promissory note, with a 6 month fixed repayment term, in the amount of US$200,000.

9.Employee costs payable

As at November 30, 2022, the Company had $3,067,578 (2021 - $2,263,944) accrued salaries, accrued vacation and severance payable to certain employees. This balance is due on demand and therefore presented as current liabilities.

10.Lease

On December 1, 2015, the Company entered into a new lease agreement for the premises that it currently operates from, as well the adjoining property, which is owned by the same landlord, for a 5-year term with a 5-year renewal option. On June 21, 2020, the Company entered into a lease surrender agreement and vacated one of its premises on June 30, 2020. On August 20, 2020, The Company extended its lease for the premises that it currently operates from, for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021.This operating lease was capitalized under ASC Topic 842 effective on the August 20, 2020 date of extension.

F-18

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

10.Lease (continued)

The gross amounts of assets and liabilities related to operating leases were as follows:

	November 30, 2022
Assets:
Operating lease right-of-use asset	$	151,471
Liabilities:
Current:
Operating lease liability	$	165,441
Total lease liability	$	165,441

Operating lease costs, net of Canada Emergency Rent Subsidy (CERS) received, amounted to $115,784 for the year ended November 30, 2021 respectively and have been recorded in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

For the year ended November 30, 2022, lease payments of $169,072 (2021 - $169,552) were paid in relation to the operating lease liability. For the year ended November 30, 2021, these payments have been offset by $34,709 received as part of the CERS COVID-19 relief program for net cash lease payments of $134,843.

Lease terms and discount rates are as follows:

	November 30, 2022
Remaining lease term (months)		12
Estimated incremental borrowing rate		11.4	%

The approximate future minimum lease payments for the operating lease as at November 30, 2022 were as follows:

	November 30, 2022
Lease payments from December 1, 2022 - November 30, 2023	$	175,821
Less imputed interest (December 1, 2022 - November)		10,380
Present value of lease liabilities	$	165,441

11. Capital stock

Authorized, issued and outstanding

(a) The Company is authorized to issue an unlimited number of common shares, all without nominal or par value and an unlimited number of preference shares. As at November 30, 2022, the Company had 33,092,665 (November 30, 2021 – 33,092,665) common shares issued and outstanding and no preference shares issued and outstanding. Two officers and directors of the Company owned directly and through their family holding company 578,131 (November 30, 2021 – 578,131) common shares or approximately 1.7% (November 30, 2021 – 1.7%) of the issued and outstanding common shares of the Company as at November 30, 2022.

Each common share of the Company entitles the holder thereof to one vote at any meeting of shareholders of the Company, except meetings at which only holders of a specified class of shares are entitled to vote.

Holders of common shares of the Company are entitled to receive, as and when declared by the board of directors of the Company, dividends in such amounts as shall be determined by the board.

The holders of common shares of the Company have the right to receive the remaining property of the Company in the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary.

F-19

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

11. Capital stock

Authorized, issued and outstanding

The preference shares may at any time and from time to time be issued in one or more series. The board of directors will, by resolution, from time to time, before the issue thereof, fix the rights, privileges, restrictions and conditions attaching to the preference shares of each series. Except as required by law, the holders of any series of preference shares will not as such be entitled to receive notice of, attend or vote at any meeting of the shareholders of the Company. Holders of preference shares will be entitled to preference with respect to payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, on such shares over the common shares of the Company and over any other shares ranking junior to the preference shares.

(b) In April 2021, the Company completed a private placement offering of an aggregate of 9,414,560 common shares at a price of CAD$0.41 per Common Share. The Company recorded $3,069,448 44as the value of common shares under Capital stock in 3. The direct costs related to the issuance of the common shares were $38,220. These direct costs were recorded as an offset against the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency).

12. Options

All grants of options to employees after October 22, 2009 are made from the Employee Stock Option Plan (the “Employee Stock Option Plan”). The maximum number of common shares issuable under the Employee Stock Option Plan is limited to 10% of the issued and outstanding common shares of the Company from time to time, or 3,309,267 based on the number of issued and outstanding common shares as at November 30, 2021. As at November 30, 2022, 1,309,000 options are outstanding and there were2,000,267 options available for grant under the Employee Stock Option Plan. Each option granted allows the holder to purchase one common share at an exercise price not less than the closing price of the Company's common shares on the TSX on the last trading day prior to the grant of the option. Options granted under these plans typically have a term of 5 years with a maximum term of 10 years and generally vest over a period of up to three years.

In the year ended November 30, 2022, Nil (2021 – Nil; 2020 - Nil) stock options were granted to management and other employees and Nil (2021 – Nil; 2020 - Nil) stock options were granted to members of the Board of Directors.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model, consistent with the provisions of ASC Topic 718. Compensation—Stock Compensation Option pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The Company calculates expected volatility based on historical volatility of the Company’s own volatility for options that have an expected life of less than ten years. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on the historical average of the term and historical exercises of the options. The risk-free rate assumed in valuing the options is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the option.

The expected dividend yield percentage at the date of grant is Nil as the Company is not expected to pay dividends in the foreseeable future.

F-20

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

12. Options (continued)

Details of stock option transactions in Canadian dollars (“C$”) are as follows:

	November 30, 2022							November 30, 2021							November 30, 2020
				Weighted							Weighted							Weighted
				average		Weighted					average		Weighted					average		Weighted
				exercise		average					exercise		average					exercise		average
	Number of			price per		grant date		Number of			price per		grant date		Number of			price per		grant date
	options			share		fair value		options			share		fair value		options			share		fair value
				$		$					$		$					$		$
Outstanding,
beginning of year		1,489,500			2.40		1.80		1,697,638			2.92		1.99		2,353,829			8.35		4.30
Granted		-			-		-		-			-		-		-			-		-
Cancelled		-			-		-		(156,572	)		1.05		0.57		(101,182	)		1.53		0.78
Forfeiture		-			-		-		(6,666	)		0.35		0.22		(225,315	)		0.35		0.22
Expired		(180,500	)		17.16		12.81		(44,900	)		27.60		13.74		(329,694	)		42.84		19.68
Balance,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,697,638			2.92		1.99
Options
exercisable,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,231,309			3.90		2.64

As of November 30, 2022, the exercise prices, weighted average remaining contractual life of outstanding options and weighted average grant date fair values were as follows in Canadian dollars (“C$”):

Options outstanding

Options exercisable

Weighted

Weighted

Weighted

Weighted

Weighted

average

average

average

average

average

exercise

remaining

grant

exercise

grant

Exercise

Number

price per

contract

date

Number

price per

date

price

outstanding

share

life (years)

fair value

exercisable

share

fair value

$

$

$

$

$

$

$

$

Under 0 - 1.00

1,309,000

0.35

6.27

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

Total unrecognized compensation cost relating to the unvested performance-based stock options at November 30, 2022 is $Nil (2021- $Nil; 2020 - $Nil).

For the year ended November 30, 2022, 2021 and 2020, no options were exercised.

The following table summarizes the components of stock-based compensation expense.

	November 30,		November 30,		November 30,
	2022		2021		2020
			$		$
Research and development		-		9,719		60,446
Selling, general and administrative		-		2,266		11,199
		-		11,985		71,645

The Company has estimated its stock option forfeitures to be approximately 4% for year ended November 30, 2022 (2021–4%; 2020 – 4%).

F-21

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

13. Deferred share units

Effective May 28, 2010, the Company’s shareholders approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its non-management directors and reserved a maximum of 11,000 common shares for issuance under the plan. The DSU Plan permits certain non-management directors to defer receipt of all or a portion of their board fees until termination of the board service and to receive such fees in the form of common shares at that time. A DSU is a unit equivalent in value to one common share of the Company based on the trading price of the Company's common shares on the TSX.

Upon termination of board service, the director will be able to redeem DSUs based upon the then market price of the Company's common shares on the date of redemption in exchange for any combination of cash or common shares as the Company may determine.

During the year ended November 30, 2021 and 2020, no non-management board members elected to receive director fees in the form of DSUs under the Company’s DSU Plans. As at November 30, 2022, Nil (2021 – Nil; 2020 – Nil) DSUs were outstanding and 11,000 (2021 – 11,000; 2020–11,000) DSUs were available for grant under the DSU Plan.

During the year ended November 30, 2022, Nil (2021 – Nil; 2020 – Nil) DSU’s were exercised and the Company recorded a charge of $Nil (2021 – $Nil; 2020 – $Nil) from Additional paid-in capital to common shares under Capital stock.

14.Restricted share units

Effective May 28, 2010, the Company’s shareholders approved a Restricted Share Unit (“RSU”) Plan for officers and employees of the Company and reserved a maximum of 33,000 common shares for issuance under the plan. The RSU Plan will form part of the incentive compensation arrangements available to officers and employees of the Company and its designated affiliates. An RSU is a unit equivalent in value to one common share of the Company. Upon vesting of the RSUs and the corresponding issuance of common shares to the participant, or on the forfeiture and cancellation of the RSUs, the RSUs credited to the participant’s account will be cancelled. No RSUs have been issued under the plan.

15. Warrants

All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480.Topic 480 Distinguishing Liabilities from Equity. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms.

The following table provides information on the 21,160,314 warrants, including 2018 Firm Warrants, outstanding and exercisable as of November 30, 2022:

	Exercise		Number			Shares issuable
Warrant	price ($)		outstanding		Expiry	upon exercise
2018 Firm Warrants		0.75		20,000,000	October 16, 2023		20,000,000
October 2018 Placement Agent Warrants		0.9375		1,160,314	October 16, 2023		1,160,314
				21,160,314			21,160,314

During the years ended November 30, 2022 and 2021, there were no cash exercises in respect of warrants and no cashless exercise of warrants, resulting in the issuance of Nil common shares, respectively.

Details of warrant transactions for the years ended November 30, 2022 and 2021 are as follows:

	Outstanding,  December 1, 2021		Issued		Expired		Exercised		Outstanding,  November 30,  2022
2018 Firm Warrants		20,000,000		-		-		-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-		-		1,160,314
		21,160,314		-		-		-		21,160,314

F-22

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

15. Warrants (continued)

	Outstanding,  December 1, 2020		Issued		Expired			Exercised		Outstanding,  November 30,  2021
June 2016 Warrants		277,478		-		(277,478	)		-		-
March 2018 Warrants		441,666		-		(441,666	)		-		-
March 2018 Placement
Agent Warrants		44,166		-		(44,166	)		-		-
2018 Firm Warrants		20,000,000		-		-			-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-			-		1,160,314
		21,923,624		-		(763,310	)		-		21,160,314

16. Income taxes

The Company files Canadian income tax returns for its Canadian operations. Separate income tax returns are filed as locally required.

The total provision for income taxes differs from the amount which would be computed by applying the Canadian income tax rate to loss before income taxes. The reasons for these differences are as follows:

	November 30,			November 30,			November 30,
	2022			2021			2020
	%			%			%
Statutory income tax rate		26.5			26.5			26.5
		$			$			$
Statutory income tax recovery		(765,070	)		(1,393,726	)		(889,905	)
Increase (decrease) in income taxes
Non-deductible expenses/
non-taxable income		(41,921	)		53,470			47,287
Change in valuation allowance		815,181			540,925			843,877
Financing costs booked to equity		-			(10,128	)		-
Difference in foreign tax rates		(2,844	)		(98	)		-
Tax loss expired and other		(9	)		695,370			(9,069	)
Global intangible low-taxed income (GILTI)		-			-			40,643
Income tax expense (recovery)		5,337			(114,187	)		-
The Company's income tax expense (recovery) is allocated as follows:
Current tax expense		10,858			(20,333	)		32,833
Deferred tax recovery		(5,521	)		(93,854	)		-

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and certain carry-forward balances

Significant temporary differences and carry-forwards are as follows:

F-23

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

16. Income taxes (continued)

	November 30,			November 30,
	2022			2021
	$			$
Deferred tax assets
Non-capital loss carry-forwards		16,560,810			16,323,553
Book and tax basis differences
on assets and liabilities		1,582,397			1,527,791
Other		2,120,034			1,509,122
Investment tax credit		2,850,496			2,850,496
Undeducted research and
development expenditures		4,227,211			4,227,211
Capital loss carryforwards		318,915			318,915
Share issuance cost		6,077			227,253
		27,665,940			26,984,341
Deferred tax liabilities
Unrealized foreign exchange gain		(271,913	)		(271,913	)
Convertible debentures		-			(12,857	)
		(271,913	)		(284,770	)
Valuation allowances for
deferred tax assets		(27,394,027	)		(26,699,571	)
Net deferred tax assets		-			-

Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset.

Movement in net deferred tax assets (liabilities):

	2022			2021
		$			$
Balance at the beginning of the year		-			-
Recognized in profit/loss		(5,521	)		(93,854	)
Recognized in shareholders' equity		5,521			93,854
Balance at the end of the year		-			-

At November 30, 2022, the Company had cumulative operating losses available to reduce future years’ income for income tax purposes:

Canadian income tax losses expiring
in the year ended November 30,	Federal
2029		614,200
2030		3,717,403
2031		6,154,180
2032		6,410,970
2033		4,984,768
2034		149,927
2035		2,634,823
2036		3,404,504
2037		4,328,444
2038		11,231,494
2039		9,891,661
2040		3,111,826
2041		4,968,817
2042		890,607
		62,493,624

F-24

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

The Company has had no taxable income under the Federal and Provincial tax laws of Canada for the year ended November 30, 2022. The Company has non-capital loss carry-forwards at November 30, 2022, totaling $62,493,624 in Canada that must be offset against future taxable income. If not utilized, the loss carry-forwards will expire between 2029 and 2042.

16. Income taxes (continued)

At November 30, 2022, the Company had a cumulative carry-forward pool of Canadian Federal Scientific Research & Experimental Development expenditures in the amount of $15,951,739 (2021 - $15,951,739) which can be carried forward indefinitely.

At November 30, 2022, the Company had approximately $2,933,013 (2021 - $2,933,013) of unclaimed Investment Tax Credits which expire from 2025 to 2039. These credits are subject to a full valuation allowance as they are not more likely than not to be realized.

The net deferred tax assets have been fully offset by a valuation allowance because it is not more likely than not the Company will realize the benefit of these deferred tax assets. The Company does not have any recognized tax benefits as of November 30, 2022 or November 30, 2021.

The Company files unconsolidated federal income tax returns domestically and in foreign jurisdictions. The Company has open tax years from 2009 to 2021 with tax jurisdictions including Canada and the U.S. These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations, as they relate to amount, timing, or inclusion of revenues and expenses.

The Company had accrued interest and penalties as of November 30, 2022 of $38,673 (2021 - $Nil and 2020 - $Nil).

17. Contingencies

From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As at November 30, 2022, and continuing as at May 31, 2023, the Company is not aware of anypending or threatenedmateriallitigation claimsagainst the Company, other than as described below.

In November 2016, the Company filed an NDA for its Oxycodone ER product candidate, relying on the 505(b)(2) regulatory pathway, which allowed the Company to reference data from Purdue Pharma L.P's (“Purdue”) file for its OxyContin^® extended release oxycodone hydrochloride. The Oxycodone ER application was accepted by the FDA for further review in February 2017. The Company certified to the FDA that it believed that its Oxycodone ER product candidate would not infringe any of the OxyContin® patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly

known as the “Orange Book”, or that such patents are invalid, and so notified Purdue and the other owners of the subject patents listed in the Orange Book of such certification.

On April 7, 2017, the Company received notice that Purdue Pharma L.P., Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., or collectively the Purdue parties, Rhodes Technologies, and Grünenthal GmbH, or collectively the Purdue litigation plaintiffs, had commenced patent infringement proceedings against the Company in the U.S. District Court for the District of Delaware (docket number 17-392) in respect of its NDA filing for Oxycodone ER, alleging that its proposed Oxycodone ER infringes six out of the 16 patents associated with the branded product OxyContin^®, or the OxyContin^® patents, listed in the Orange Book.

Subsequent to the above-noted filing of lawsuit, four further such patents were listed and published in the Orange Book. On March 16, 2018, the Company received notice that the Purdue litigation plaintiffs had commenced further such patent infringement proceedings adding the four further patents. On April 15, 2020, Purdue filed a new patent infringement suit against the Company relating to additional Paragraph IV certifications lodged against two more listed Purdue patents.

As a result of the commencement of the first of these legal proceedings, the FDA was stayed for 30 months from granting final approval to the Company’s Oxycodone ER product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs received notice of the Company’s certification concerning the patents, and were to expire on August 24, 2019, unless the stay was earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties. On April 24, 2019, an order was issued, setting a trial date of

F-25

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

17. Contingencies(continued)

November 12, 2019 for case number 17-392 in the District of Delaware, and also extending the 30-month stay date for regulatory approval to March 2, 2020.

On or about June 26, 2018, the court issued an order to sever 6 “overlapping” patents from the second Purdue case, but ordered litigation to proceed on the 4 new (2017-issued) patents. An answer and counterclaim was filed on July 9, 2018. On July 6, 2018, the court issued a so-called “Markman” claim construction ruling on the first case. On July 24, 2018, the parties to the case mutually agreed to and did

have dismissed without prejudice the infringement claims related to the Grünenthal ‘060 patent, which is one of the six patents included in the original litigation case.

On October 4, 2018, the parties mutually agreed to postpone the scheduled court date pending a case status conference scheduled for December 17, 2018. At that time, further trial scheduling and other administrative matters were postponed pending the Company’s resubmission of the Oxycodone ER NDA to the FDA, which was made on February 28, 2019. On January 17, 2019, the court issued a scheduling order in which the remaining major portions are scheduled. The trial was scheduled for June 2020.

On April 4, 2019, the U.S. Federal Circuit Court of Appeals affirmed the invalidity of one Purdue OxyContin® formulation patent, subject to further appeal to the U.S. Supreme Court.

Following the filing of a bankruptcy stay by Purdue Pharma L.P., the Company’s ongoing litigation case numbers 1:17-cv-00392-RGA and 1:18-cv-00404-RGA-SRF between Purdue Pharma L.P. et al and The Company were stayed and the existing trial dates in both cases vacated by orders issued in each case by the judge in the District of Delaware on October 3, 2019. With the litigation stay order, the previous 30-month stay date of March 2, 2020 was unchanged.

On or about July 2, 2020 the parties in the cases, numbers 17-cv-392-RGA, 18-cv-404-RGA and 20-cv-515-RGA (the “Litigations”) between Purdue Pharma L.P. et al (“Purdue’) and Intellipharmaceutics entered into a stipulated dismissal of the Litigations. The stipulated dismissal, which was subject to approval by the bankruptcy court presiding over Purdue Pharma’s pending chapter 11 cases, provides for the termination of the patent infringement proceedings. The stipulated dismissal also provides that (i) for a thirty (30) day period following a final approval of the Company’s Aximris XRTM NDA the parties will attempt to resolve any potential asserted patent infringement claims relatingto the NDA and (ii) if the parties fail to resolve all such claims during such periodPurdue Pharma will have fifteen (15) days to pursue an infringement action against the Company.The terms of the stipulated dismissal agreement are confidential.

On July 28, 2020 theU.S.District Court for the District of Delaware signed the stipulations of dismissal into order thereby dismissing the claims in the three cases without prejudice.In consideration of the confidential stipulated dismissal agreement andfor future saved litigation expenses, Purduepaidan amount to the Company.

In July 2017, three complaints were filed in the U.S. District Court for the Southern District of New York that were later consolidated under the caption Shanawaz v. Intellipharmaceutics Int’l Inc., et al., No. 1:17-cv-05761 (S.D.N.Y.). The lead plaintiffs filed a consolidated amended complaint on January 29, 2018. In the amended complaint, the lead plaintiffs assert claims on behalf of a putative class consisting of purchasers of the Company’s securities between May 21, 2015 and July 26, 2017. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements or failing to disclose certain information regarding the Company’s NDA for Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The complaint seeks, among other remedies, unspecified damages, attorneys’ fees and other costs, equitable and/or injunctive relief, and such other relief as the court may find just and proper.

F-26

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

On November 7, 2019, the Company announced that the parties reached a settlement that is subject to the approval of the court following notice to class members. The stipulation of settlement provides for a settlement payment of US$1.6 million by the Company, which has been paid from available insurance coverage.

17. Contingencies(continued)

As part of the settlement, the Company also agreed to contribute to the settlement fund specific anticipated Canadian tax refunds of up to US$400,000 to the extent received within 18 months after the entry of final judgment. The stipulation of settlement acknowledges that the Company and the other defendants continue to deny that they committed any violation of the U.S. securities laws or engaged in any other wrongdoing and that they are entering into the settlement at this time based on the burden, expense, and inherent uncertainty of continuing the litigation. On December 7, 2020 the court approved the settlement and entered an order and final judgement to that effect, thereby concluding the case.

On February 21, 2019, the Company and its CEO, Dr. Isa Odidi (“Defendants”), were served with a Statement of Claim filed in the Superior Court of Justice of Ontario (“Court”) for a proposed class action under the Ontario Class Proceedings Act (“Action”). The Action was brought by Victor Romita, the proposed representative plaintiff (“Plaintiff”), on behalf of a class of Canadian persons (“Class”) who traded shares of the Company during the period from February 29, 2016 to July 26, 2017 (“Period”). The Statement of Claim, under the caption Victor Romita v. Intellipharmaceutics International Inc. and Isa Odidi, asserted that the defendants knowingly or negligently made certain public statements during the relevant period that contained or omitted material facts concerning Oxycodone ER abuse-deterrent oxycodone hydrochloride extended-release tablets. The plaintiff alleges that he and the class suffered loss and damages as a result of their trading in the Company’s shares during the relevant period. The plaintiff seeks, among other remedies, unspecified damages, legal fees and court and other costs as the Court may permit. On February 26, 2019, the plaintiff delivered a Notice of Motion seeking the required approval from the Court, in accordance with procedure under the Ontario Securities Act, to allow the statutory claims under the Ontario Securities Act to proceed with respect to the claims based upon the acquisition or disposition of the Company’s shares on the TSX during the Period (“Motion”). On June 28, 2019, the Court endorsed a timetable for the exchange of material leading to the hearing of the Motion scheduled for January 27-28, 2020. On October 28, 2019, plaintiff’s counsel advised the court that the Plaintiff intended to amend his claim and could not proceed with the Leave Motion scheduled for January 27-28, 2020. As such, the Court released those dates. On January 28, 2020 the plaintiff served a Notice of Motion for leave to amend the Statement of Claim. On April 2, 2020 the plaintiff delivered an Amended Motion Record and Amended Notice of Motion seeking an order for leave to issue a fresh as Amended Statement of Claim including the addition of Christopher Pearce as a Plaintiff (“Amendment Motion”).

On May 1, 2020, the court granted the plaintiff’s Amendment Motion. An order for leave to proceed for settlement purposes was granted on 25 June 2021. At a hearing on October 12,2021, the Court approved the settlement. The stipulation of settlement provides for a settlement payment of CAD$266,000 by the Company, CAD$226,000 was paid from insurance coverage while the Company paid CAD$40,000. Therefore, this action is now settled.

On October 7, 2019, a complaint was filed in the U.S. District Court for the Southern District of New York by Alpha Capital Anstalt (“Alpha”) against the Company, two of its existing officers and directors and its former Chief Financial Officer. In the complaint, Alpha alleged that the Company and the executive officers/directors named in the complaint violated Sections 11, 12(a)(2) and 15 of the U.S. Securities Act of 1933, as amended, by allegedly making false and misleading statements in the Company’s Registration Statement on Form F-1 filed with the U.S. Securities and Exchange Commission on September 20, 2018, as amended (the “Registration Statement”) by failing to disclose certain information regarding the resignation of the Company’s then Chief Financial Officer, which was announced several weeks after such registration statement was declared effective. In the complaint, Alpha seeks unspecified damages, rescission of its purchase of the Company’s securities in the relevant offering, attorneys’ fees and other costs and further relief as the court may find just and proper. On December 12, 2019, the Company and the other defendants in the action filed a motion to dismiss for failure to state a claim. The plaintiff filed an opposition to that motion on February 4, 2020 and a reply brief in further support of the motion to dismiss the action was filed March 6, 2020. In addition, the Court scheduled a mandatory settlement conference with the Magistrate Judge for April 23, 2020 which the Company and its counsel attended. On June 18, 2020, the court largely denied the Company’s motion to dismiss the action. Briefing on these motions was completed on February 19, 2021. In a court order filed July 9, 2021, the District Court issued an opinion and order granting summary judgment in the Company’s favor and ordered the case closed. The judgment was entered on July 12, 2021. On August 10, 2021, the Plaintiff filed a notice of appeal. On October 1, 2021, the Plaintiff filed a notice of voluntary dismissal of the appeal with prejudice, stipulated to by the Company. The Court of Appeals “so ordered” the voluntary dismissal stipulation and the appeal was

F-27

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

17. Contingencies(continued)

dismissed. As a result, the matter has been fully resolved in favor of the Company and the named individual Defendants.

On or about August 5, 2020 a former employee filed a claim against the Company for wrongful dismissal of employment plus loss of benefits, unpaid vacation pay, interest and costs. The parties have agreed to settlement terms in the matter. The Company has fulfilled the terms and has received a release and consent to dismiss. A dismissal order is pending from the court.

On or about August 9, 2022, a service provider brought to the Company’s attention a Motion Record to seek judgement with respect to amounts owed it by the Company for the principal amount owed, plus pre-judgment interest and costs. We found out then, that a statement of claim dated May 3, 2021 was delivered to the Company’s premises. The Company did not respond to the claim because it was inadvertently never brought to the attention of management, as a result the Company was noted in default in May 31, 2021. The Company was not aware of claim and the default before August 9, 2022. The Company has signed a consent which allows the other party to obtain judgement from a court and take steps to enforce judgement if we default on certain conditions.

18. Financial instruments

(a) Fair values

The Company follows ASC Topic 820 Fair Value Measurement (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC Topic 820 apply to other accounting pronouncements that require or permit fair value measurements. ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

(i) The Company calculates fair value of the options and warrants using its own historical volatility (Level 1).

(ii) The Company calculates the interest rate for the conversion option based on the Company’s estimated cost of raising capital (Level 2).

F-28

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

An increase/decrease in the volatility and/or a decrease/increase in the discount rate would have resulted in an increase/decrease in the fair value of the conversion option and warrants.

18. Financial instruments (continued)

(a) Fair values (continued)

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis are as follows:

	November 30, 2022				November 30, 2021
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	$		$		$		$
Financial Liabilities
Convertible debentures(i)		1,800,000		1,753,406		1,751,483		1,783,882
Promissory notes payable(i)		360,514		360,514		165,878		165,878

(i) The Company calculates the interest rate for the Debentures and promissory notes payable based on the Company’s estimated cost of raising capital and uses the discounted cash flow model to calculate the fair value of the Debentures and the promissory notes payable.

The carrying values of cash, accounts receivable, accounts payable, accrued liabilities and employee cost payable approximates their fair values because of the short-term nature of these instruments.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and the convertible debenture due to the short-term nature of these obligations. Trade accounts receivable potentially subjects the Company to credit risk. The Company provides an allowance for doubtful accounts equal to the estimated losses expected to be incurred in the collection of accounts receivable.

The following table sets forth details of the aged accounts receivable that are not overdue as well as an analysis of overdue amounts and the related allowance for doubtful accounts:

	November 30,		November 30,
	2022		2021
	$		$
Accounts receivable		602		-
Less allowance for doubtful accounts		-		-
Total trade and other receivables, net		602		-
Not past due		602		-
Past due for more than 31 days
but no more than 120 days		-		-
Past due for more than 120 days		-		-
Total trade and other receivables, gross		602		-

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of uncollateralized accounts receivable. The Company’s maximum exposure to credit risk is equal to the potential amount of financial assets. For the year ended November 30, 2022, three customers accounted for all the revenues and one customer accounted for all the accounts receivable of the Company recognized as other receivable within trade and other receivables in the Company’s consolidated balance sheet as at November 30, 2022.

F-29

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank. The Company’s cash is not subject to any external restrictions.

18. Financial instruments (continued)

(c)Foreign exchange risk

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a foreign exchange loss while a weakening U.S. dollar will lead to a foreign exchange gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet its commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at November 30, 2022:

	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		to 1 year		1 year		Total
	$		$		$		$		$		$
Accounts payable		3,764,692		-		-		-		-		3,764,692
Accrued liabilities		2,821,506		-		-		-		-		2,821,506
Employee costs payable		3,067,578		-		-		-		-		3,067,578
Operating lease liabiity		45,891		45,891		45,891		45,891		-		183,564
Convertible debentures (Note 8)		1,800,000		-		-		-		-		1,800,000
Promissory notes payable (Note 8)		360,514		-		-		-		-		360,514
Total contractual obligations		11,860,181		45,891		45,891		45,891		-		11,997,854

19. Segmented information

The Company's operations comprise a single reportable segment engaged in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for revenue, loss for the period, depreciation and total assets also represent segmented amounts. In addition, all of the Company's long-lived assets are in Canada. The Company’s license and commercialization agreement with Par accounts for substantially all of the revenue of the Company.

F-30

Intellipharmaceutics International Inc.

Notes to the consolidated financial statements

November 30, 2022, 2021 and 2020

(Stated in U.S. dollars)

	November 30,		November 30,		November 30,
	2022		2021		2020
	$		$		$
Revenue
United States		29,682		-		1,401,517
Canada		19,068		-		-
Other		16,978		-		-
		65,728		-		1,401,517
Total assets
Canada		1,432,032		2,096,425		3,387,055
Total property and equipment
Canada		788,050		994,109		1,770,137

F-31

Item 19. Exhibits.

EXHIBIT INDEX

Number	Exhibit
1.1	Articles of Incorporation of the Company and certain Amendments thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Annual Report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
1.2	Articles of Amendment to the Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 13, 2018)
1.3	By-Laws of the Company (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
2(1)	Description of Securities
4.1	IPC Arrangement Agreement (incorporated herein by reference to Exhibit 4.1to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
4.2	The acknowledgement and agreement of the Company dated October 22, 2009 to be bound by the performance based stock option agreement dated September 10, 2004 pursuant to which Drs. Isa and Amina Odidi are entitled to purchase up to 276,394 of the Company’s shares upon payment of $36.20 per share, subject to satisfaction of the performance vesting conditions (incorporated herein by reference to Exhibit 4.2 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
4.3	The amended and restated promissory note dated October 22, 2009 for up to $2,300,000 issued by Intellipharmaceutics Corp. to Isa Odidi and Amina Odidi (incorporated herein by reference to Exhibit 4.3 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
4.4	Registration rights agreement for February 1, 2011 private placement (incorporated herein by reference to Exhibit 4.52 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2010 as filed on May 31, 2011).
4.5	Form of Subscription Agreement (incorporated by reference to Exhibit A attached to Exhibit 99.1 to the Company’s report on Form 6-K for the month of March 2012 as filed on March 9, 2012).
4.6	12% convertible term debenture dated January 10, 2013 in principal amount of $1,500,000 (incorporated herein by reference to Exhibit 4.56 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2012 as filed on January 31, 2013)
4.7	Extension of Debenture Maturity Date dated October 1, 2014 to that certain 12% convertible term debenture dated January 10, 2013 in principal amount of $1,500,000 (incorporated herein by reference to Exhibit 4.66 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2014 as filed on February 27, 2015)
4.8	Extension of Debenture Maturity Date dated as of June 29, 2015 to that certain 12% convertible term debenture dated January 10, 2013 in principal amount of $1,500,000 (incorporated herein by reference to Exhibit 4.68 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2015 as filed on March 21, 2016)
4.9	Extension of Debenture Maturity Date dated as of December 8, 2015 to that certain 12% convertible term debenture dated January 10, 2013 in principal amount of $1,500,000 (incorporated herein by reference to Exhibit 4.69 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2015 as filed on March 21, 2016)
4.10	Extension of Debenture Maturity Date dated as of May 26, 2016 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.72 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2016 as filed on February 28, 2017)
4.11	Extension of Debenture Maturity Date dated as of December 1, 2016 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.73 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2016 as filed on February 28, 2017)
4.12	Extension of Debenture Maturity Date dated as of March 28, 2017 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.79 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2017 as filed on March 1, 2018)
4.13	Extension of Debenture Maturity Date dated as of September 28, 2017 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.80 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2017 as filed on March 1, 2018)
4.14	Extension of Debenture Maturity Date dated as of October 1, 2018 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.29 to Amendment No. 1 to the Company's Registration Statement on Form F-1 as filed on October 5, 2018 (Registration No. 333-227448)
4.15	Extension of Debenture Maturity Date dated as of October 1, 2019 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.15 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)

115

Number	Exhibit
4.16	Extension of Debenture Maturity Date dated as of April1, 2019 to that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.16 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.17	12% convertible term debenture dated May 1, 2019 in principal amount of $1,050,000refinancing of that certain 12% convertible term debenture dated January 10, 2013 (incorporated herein by reference to Exhibit 4.17to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.18	Extension of Debenture Maturity Date dated as of November 1, 2019 to that certain 12% convertible term debenture dated May 1, 2019 (incorporated herein by reference to Exhibit 4.18to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.19	Extension of Debenture Maturity Date dated as of December 31, 2020 to that certain 12% convertible term debenture dated May 1, 2019 (incorporated herein by reference to Exhibit 4.19 to the Company's annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.20	Extension of Debenture Maturity Date dated as of January31, 2020 to that certain 12% convertible term debenture dated May 1, 2019 (incorporated herein by reference to Exhibit 4.20to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.26	Equity Distribution Agreement between Intellipharmaceutics International Inc. and Roth Capital Partners, LLC, dated November 27, 2013 (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of November 2013 as filed on November 27, 2013)
4.27(†)	License and Commercialization Agreement dated as of November 21, 2005, between Intellipharmaceutics Corp., and Par Pharmaceutical, Inc., as amended by the First Amendment To License and Commercialization Agreement dated as of August 12, 2011, and as further amended by the Second Amendment to License and Commercialization Agreement dated as of September 24, 2013(incorporated herein by reference to Exhibit 4.64 to the Company’s Amendment No. 1 on Form 20-F/A for the fiscal year ended November 30, 2013 as filed on April 14, 2014)
4.28	Indenture of Lease dated as of December 1, 2015 between Finley W. McLachlan Properties Inc. and Dufferin Lumber And Supply Company Limited, and Intellipharmaceutics Corp. for premises at 22 Worcester Road and 30 Worcester Road, Toronto, Ontario, Canada(incorporated herein by reference to Exhibit 4.67 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2015 as filed on March 21, 2016)
4.29	Form of Common Share Purchase Warrant (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of May 2016 as filed on May 27, 2016)
4.30(†)	License and Commercial Supply Agreement dated effective October 11, 2016, between Mallinckrodt LLC and Intellipharmaceutics Corp.(incorporated herein by reference to Exhibit 4.74 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2016 as filed on February 28, 2017)
4.31	Form of Securities Purchase Agreement, dated October 11, 2017, by and between Intellipharmaceutics International Inc. and the purchaser named therein(incorporated herein by reference toExhibit 99.1 to the Company’s report on Form 6-K for the month of October 2017 as filed on October 12, 2017)
4.32	Form of Warrant (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of October 2017 as filed on October 12, 2017)
4.33	Form of Wainwright Warrant (incorporated herein by reference to Exhibit 99.3 to the Company’s report on Form 6-K for the month of October 2017 as filed on October 12, 2017)

116

Number	Exhibit
4.34	Engagement Letter between Intellipharmaceutics International Inc. and H.C. Wainwright & Co., LLC, dated as of October 10, 2017 (incorporated herein by reference to Exhibit 99.4 to the Company’s report on Form 6-K for the month of October 2017 as filed on October 12, 2017)
4.35	Form of Securities Purchase Agreement dated March 13, 2018, by and between Intellipharmaceutics International Inc. and the purchasers (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 16, 2018)
4.36	Form of Warrant (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 16, 2018)
4.37	Form of Wainwright Warrant (incorporated herein by reference to Exhibit 99.3 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 16, 2018)
4.38	Engagement Letter by and between Intellipharmaceutics International Inc.and H.C. Wainwright & Co., LLC dated March 18, 2018 (incorporated herein by reference to Exhibit 99.4 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 16, 2018)
4.39	Form of Securities Purchase Agreement dated March 19, 2018, by and between Intellipharmaceutics International Inc. and the purchasers (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 20, 2018)
4.40	Form of Warrant (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 20, 2018)
4.41	Form of Wainwright Warrant (incorporated herein by reference to Exhibit 99.3 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 20, 2018)
4.42	Engagement Letter by and between Intellipharmaceutics International Inc.and H.C. Wainwright & Co., LLC dated March 18, 2018 (incorporated herein by reference to Exhibit 99.4 to the Company’s report on Form 6-K for the month of March 2018 as filed on March 20, 2018)
4.43	Form of Notice to Warrant Holders pursuant to that certain Underwriting Agreement by and between the Company and Dawson James Securities, Inc., dated May 27, 2016 (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.44	Form of Notice to Warrant Holders pursuant to that certain Engagement Agreement by and between the Company and H.C. Wainwright & Co., LLC, dated October 10, 2017 (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.45	Form of Notice to Warrant Holders pursuant to that certain Securities Purchase Agreement by and among the Company and the purchasers named therein, dated October 11, 2017 (incorporated herein by reference to Exhibit 99.3 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.46	Form of Notice to Warrant Holders pursuant to that certain Engagement Letter by and between the Company and H.C. Wainwright & Co., LLC, dated March 12, 2018 (incorporated herein by reference to Exhibit 99.4 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.47	Form of Notice to Warrant Holders pursuant to that certain Securities Purchase Agreement by and among the Company and the purchasers named therein, dated March 13, 2018 (incorporated herein by reference to Exhibit 99.5 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.48	Form of Notice to Warrant Holders pursuant to that certain Engagement Letter by and between the Company and H.C. Wainwright & Co., LLC, dated March 18, 2018 (incorporated herein by reference to Exhibit 99.6 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.49	Form of Notice to Warrant Holders pursuant to that certain Securities Purchase Agreement by and among the Company and the purchasers named therein, dated March 19, 2018 (incorporated herein by reference to Exhibit 99.7 to the Company’s report on Form 6-K for the month of September 2018 as filed on September 21, 2018)
4.50	Underwriting Agreement between Intellipharmaceutics International Inc. and H.C. Wainwright & Co., LLC, dated October 12, 2018 (incorporated herein by reference to Exhibit 99.1 to the Company’s report on Form 6-K for the month of October 2018 as filed on October 12, 2018)

117

Number	Exhibit
4.51	Form of Warrant (incorporated herein by reference to Exhibit 99.2 to the Company’s report on Form 6-K for the month of October 2018 as filed on October 12, 2018)
4.52	Form of Pre-Funded Warrant (incorporated herein by reference to Exhibit 99.3 to the Company’s report on Form 6-K for the month of October 2018 as filed on October 12, 2018)
4.53	Form of Underwriter Warrant (incorporated herein by reference to Exhibit 99.4 to the Company’s report on Form 6-K for the month of October 2018 as filed on October 12, 2018)
4.54	10% convertible term debenture dated September 10, 2018 in principal amount of $500,000 (incorporated herein by reference to Exhibit 4.25 to the Company’s Registration Statement on Form F-1 as filed on September 20, 2018 (Registration No. 333-227448))
4.57(*)	License and Commercial Supply Agreement dated effective August 15, 2019, between Tris Pharma, Inc. and Intellipharmaceutics Corp (incorporated herein by reference to Exhibit 4.50 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.58(*)	License and Commercial Supply Agreement dated effective September 2, 2019, between Tris Pharma, Inc. and Intellipharmaceutics Corp (incorporated herein by reference to Exhibit 4.51 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.59(*)	License and Commercial Supply Agreement dated effective November 1, 2019, between Tris Pharma, Inc. and Intellipharmaceutics Corp (incorporated herein by reference to Exhibit 4.52 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.60	Promissory note dated September 5, 2019 for up to $6,500 issued by IntellipharmaceuticsInternational Inc. to Isa Odidi and Amina Odidi (incorporated herein by reference to Exhibit 4.53to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.61	Promissory note dated September 13, 2019 for up to CDN$203,886 issued by IntellipharmaceuticsInternational Inc. to Isa Odidi and Amina Odidi (incorporated herein by reference to Exhibit 4.54to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.62	12% convertible term debenture dated November 15, 2019 in principal amount of $250,000 (incorporated herein by reference to Exhibit 4.55 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.63	Extension of Debenture Maturity Date dated as of January31, 2020 to that certain 12% convertible term debenture dated November 15, 2019 (incorporated herein by reference to Exhibit 4.56to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2019 as filed on March 30, 2020)
4.64	Extension of Debenture Maturity Date dated as of March 31, 2020 to that certain 12% convertible term debenture dated November 15, 2019
4.65	Extension of Debenture Maturity Date dated as of May 15, 2020 to that certain 12% convertible term debenture dated November 15, 2019
4.66	Extension of Debenture Maturity Date dated as of June 12, 2020 to that certain 12% convertible term debenture dated November 15, 2019
4.67	Extension of Debenture Maturity Date dated as of July 15, 2020 to that certain 12% convertible term debenture dated November 15, 2019
4.68	Extension of Debenture Maturity Date dated as of December 31, 2020 to that certain 12% convertible term debenture dated November 15, 2019
4.69	Extension of Debenture Maturity Date dated as of March 31, 2020 to that certain 12% convertible term debenture dated May 1, 2019
4.70	Extension of Debenture Maturity Date dated as of May 15, 2020 to that certain 12% convertible term debenture dated May 1, 2019
4.71	Extension of Debenture Maturity Date dated as of June 12, 2020 to that certain 12% convertible term debenture dated May 1, 2019
4.65	Extension of Debenture Maturity Date dated as of July 15, 2020 to that certain 12% convertible term debenture dated May 1, 2019
4.65	Extension of Debenture Maturity Date dated as of December 31, 2020 to that certain 12% convertible term debenture dated May 1, 2019
4.66	Extension of Debenture Maturity Date dated as of September 1, 2020 to that certain 10% convertible term debenture dated September 10, 2018
4.67	Extension of Debenture Maturity Date dated as of November 30, 2020 to that certain 10% convertible term debenture dated September 10, 2018
4.68	Indenture of Lease dated as of August 20, 2020 between Finley W. McLachlan Properties Inc. and Dufferin Lumber And Supply Company Limited, and Intellipharmaceutics Corp. for premises at 30 Worcester Road, Toronto, Ontario, Canada
4.69	Extension of Debenture Maturity Date dated as of May 31, 2021 to that certain 12% convertible term debenture dated May 1, 2019

118

Number	Exhibit
4.70	Extension of Debenture Maturity Date dated as of July 31, 2021 to that certain 12% convertible term debenture dated May 1, 2019
4.71	Extension of Debenture Maturity Date dated as of October 31, 2021 to that certain 12% convertible term debenture dated May 1, 2019
4.72	Extension of Debenture Maturity Date dated as of February 28, 2022 to that certain 12% convertible term debenture dated May 1, 2019
4.73	Extension of Debenture Maturity Date dated as of May 31, 2022 to that certain 12% convertible term debenture dated May 1, 2019
4.74	Extension of Debenture Maturity Date dated as of May 31, 2021 to that certain 10% convertible term debenture dated September 10, 2018
4.75	Extension of Debenture Maturity Date dated as of July 31, 2021 to that certain 10% convertible term debenture dated September 10, 2018
4.76	Extension of Debenture Maturity Date dated as of October 31, 2021 to that certain 10% convertible term debenture dated September 10, 2018
4.77	Extension of Debenture Maturity Date dated as of February 28, 2022 to that certain 10% convertible term debenture dated September 10, 2018
4.78	Extension of Debenture Maturity Date dated as of May 31, 2022 to that certain 10% convertible term debenture dated September 10, 2018
4.79	Extension of Debenture Maturity Date dated as of May 31, 2021 to that certain 12% convertible term debenture dated November 15, 2019
4.80	Extension of Debenture Maturity Date dated as of July 31, 2021 to that certain 12% convertible term debenture dated November 15, 2019
4.81	Extension of Debenture Maturity Date dated as of October 31, 2021 to that certain 12% convertible term debenture dated November 15, 2019
4.82	Extension of Debenture Maturity Date dated as of February 28, 2022 to that certain 12% convertible term debenture dated November 15, 2019
4.83	Extension of Debenture Maturity Date dated as of May 31, 2022 to that certain 12% convertible term debenture dated November 15, 2019
4.84	Extension of Debenture Maturity Date dated as of November 30, 2022 to that certain 12% convertible term debenture dated May 1, 2019
4.85	Extension of Debenture Maturity Date dated as of November 30, 2022 to that certain 10% convertible term debenture dated September 10, 2018
4.86	Extension of Debenture Maturity Date dated as of November 30, 2022 to that certain 12% convertible term debenture dated November 15, 2019
4.87	License and supply agreement effective August 2022 between Taro Pharmaceuticals Inc. and Intellipharmaceutics Corp.

119

Number	Exhibit
4.88	Promissory note dated October 5, 2022 for up to $200,000 issued by Intellipharmaceutics International Inc. to Actimus Inc.
4.89	Extension of the Promissory note date October 5, 2022 issued by Intellipharmaceutics International Inc. to Actimus Inc.
8.1(1)	List of subsidiaries
11.1	Code of Business Conduct and Ethics (incorporated herein by reference to Exhibit 11.1 to the Company’s annual report on Form 20-F for the fiscal year ended November 30, 2009 as filed on June 1, 2010)
12.1(1)	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
12.2(1)	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange
13.1(1)	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2(1)	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1(1)	Consent of Independent Registered Public Accounting Firm (MNP LLP)
101(1)(2)	(i) Consolidated balance sheets as at November 30, 2022 and 2021
	(ii) Consolidated statements of operations and comprehensive loss for the years ended November 30, 2022, 2021 and 2020
	(iii) Consolidated statements of shareholders’ equity (deficiency) for the years ended November 30, 2022, 2021 and 2020
	(iv) Consolidated statements of cash flows for the years ended November 30, 2022, 2021 and 2020
	(v) Notes to the consolidated financial statements
(1)	Filed as exhibits to this annual report on Form 20-F for the fiscal year ended November 30, 2022.
(2)	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the U.S. Exchange Act, as amended, and otherwise is not subject to liability under these sections. (†) Confidential treatment has been granted for certain portions of this exhibit. Omitted portions have been filed separately with the SEC (*) Portions of this exhibit (indicated by asterisks) have been omitted as the Registrant has determined that (i) the omitted information is not material and (ii) the omitted information would likely cause competitive harm to the Registrant if publicly disclosed.

120

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Intellipharmaceutics International Inc.

/s/ Dr. Amina Odidi

Dr. Amina Odidi

Acting Chief Financial Officer (Principal Financial Officer)

Intellipharmaceutics International Inc.

June 14, 2023

121

EX-2.1

EXHIBIT 2.1

DESCRIPTION OF SECURITIES

Authorized and Outstanding Share Capital

The following is a summary of material terms and provisions of the common shares (“Common Shares”) and other outstanding securities issued by Intellipharmaceutics International Inc. (the “Company”) as well as certain provisions of the articles of arrangement dated October 22, 2009, as amended (the “Articles”), and by-laws (“By-Laws”) of the Company.

The Company’s authorized share capital consists of an unlimited number of Company’s common shares (“Common Shares”), all without nominal or par value and an unlimited number of Preference Shares (as defined below) issuable in series. At November 30, 2022, there were 33,092,665 Common Shares and no Preference Shares issued and outstanding.  As of June 13, 2023, there were 33,092,665 Common Shares and no Preference Shares issued and outstanding.

Following receipt of shareholder approval for a reverse stock split (known as a share consolidation under Canadian law) at the Company’s August 15, 2018 shareholders meeting, on September 12, 2018, the Company filed articles of amendment to effectuate a 1-for-10 reverse split (the “reverse split”), and the Company’s Common Shares began trading on each of Nasdaq and Toronto Stock Exchange (“TSX”) on a post-reverse split basis on September 14, 2018. In March 2019, a Nasdaq Hearings Panel determined to delist the Company’s Common Shares from Nasdaq based upon its non-compliance with the $1.00 minimum bid price requirement, as set forth in Nasdaq Listing Rule 5550(a)(2). The suspension of trading on Nasdaq took effect at the open of business on March 21, 2019. The Company’s Common Shares began trading on the OTCQB Venture Market (“OTCQB”), which is operated by the OTC Markets Group Inc., commencing on March 21, 2019.  The Company’s Common Shares are also listed on the TSX.  

Unless the context otherwise requires, references herein to share amounts, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the reverse split.

Common Shares

Each of the Company’s Common Shares entitles the holder thereof to one vote at any meeting of shareholders of the Company, except meetings at which only holders of a specified class of shares are entitled to vote. Subject to the prior rights of the holders of any Preference Shares (as defined below), the holders of Common Shares of the Company are entitled to receive, as and when declared by the Company’s board of directors (the “Board”), dividends in such amounts as shall be determined by the Board Subject to the prior rights of the holders of any Preference Shares, the holders of Common Shares of the Company have the right to receive the remaining property of the Company in the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary.

Preference Shares

Preference shares (“Preference Shares”) may at any time and from time to time be issued in one or more series. The Board will, by resolution, from time to time, before the issue thereof, fix the rights, privileges, restrictions and conditions attaching to the Preference Shares of each series. Except as required by law, the holders of any series of Preference Shares will not as such be entitled to receive notice of, attend or vote at any meeting of the shareholders of the Company. Holders of Preference Shares will be entitled to preference with respect to payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, on such shares over the Common Shares and over any other shares ranking junior to the Preference Shares.

Warrants

At November 30, 2022, an aggregate of 21,160,314 common shares were issuable upon the exercise of outstanding common share purchase warrants, with a weighted average exercise price of $0.76 per common share. As at June 13, 2022, an aggregate of 21,160,314 common shares were issuable upon the exercise of outstanding common share purchase warrants, with a weighted average exercise price of $0.76 per common share.

October 2018 Firm Warrants and Pre-Funded Warrants

In October 2018, the Company completed an underwritten public offering in the United States, resulting in the sale to the public of 827,970 units (“October 2018 Units”) at $0.75 per October 2018 Unit, which were comprised of one Common Share and one warrant (the “October 2018 Unit Warrants”) exercisable at $0.75 per share. The Company concurrently sold an additional 1,947,261 Common Shares and warrants to purchase 2,608,695 Common Shares exercisable at $0.75 per share (the “October 2018 Option Warrants”) pursuant to the over-allotment option exercised in part by the underwriter. The price for the Common Shares issued in connection with exercise of the overallotment option was $0.74 per share and the price for the warrants issued in connection with the exercise of the overallotment option was $0.01 per warrant, less in each case the underwriting discount. In addition, the Company issued 16,563,335 pre-funded units (“October 2018 Pre-Funded Units”), each October 2018 Pre-Funded Unit consisting of one pre-funded warrant (an “October 2018 Pre-Funded Warrant”) to purchase one Common Share and one warrant (an “October 2018 Warrant”, and together with the October 2018 Unit Warrants and the October 2018 Option Warrants, the “October 2018 Firm Warrants”) to purchase one Common Share. The October 2018 Pre-Funded Units were offered to the public at $0.74 each and an October 2018 Pre-Funded Warrant is exercisable at $0.01 per share. Each October 2018 Firm Warrant was exercisable immediately and has a term of five (5) years and each October 2018 Pre-Funded Warrant was exercisable immediately and until all October 2018 Pre-Funded Warrants are exercised. The Company also issued warrants to the placement agents to purchase 1,160,314 Common Shares at an exercise price of $0.9375 per share (the “October 2018 Placement Agent Warrants”), which were exercisable immediately upon issuance. In aggregate, in October 2018, the Company issued 2,775,231 Common Shares, 16,563,335 October 2018 Pre-Funded Warrants and 20,000,000 October 2018 Firm Warrants in addition to 1,160,314 October 2018 Placement Agent Warrants.

October 2018 Firm Warrants

The following is a summary of material terms and provisions of the October 2018 Firm Warrants.

Exercisability. Each October 2018 Firm Warrant included in the October 2018 Units and October 2018 Pre-Funded Units has an exercise price equal to $0.75 per Common Share. The October 2018 Firm Warrants may be exercised until five (5) years from the date of issuance. The exercise price and number of Common Shares issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s Common Shares and the exercise price. The October 2018 Firm Warrants were issued separately from the Common Shares or October 2018 Pre-Funded Warrants sold as part of the Units or Pre-Funded Units, as the case may be, and may be transferred separately. The October 2018 Firm Warrants were issued in certificated form only. The October 2018 Firm Warrants are exercisable, at the option of each holder, in whole or in part, by delivering to the Company a duly executed exercise notice accompanied by payment in full for the number of Common Shares purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the October 2018 Firm Warrant to the extent that the holder would own more than 4.99% of the outstanding Common Shares immediately after exercise, except that upon at least sixty-one (61) days’ prior notice from the holder to the Company, the holder may increase the amount of ownership of outstanding Common Shares after exercising the holder’s October 2018 Firm Warrants up to 9.99% of the number of Common Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the October 2018 Firm Warrants.  If at the time a holder exercises its October 2018 Firm Warrants, a registration statement registering the issuance of the Common Shares underlying the October 2018 Firm Warrants under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), is not then effective, or the prospectus contained therein is not available for an issuance of the Common Shares underlying the October 2018 Firm Warrants to the holder, then in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of Common Shares determined according to a formula set forth in the October 2018 Firm Warrant.  No fractional Common Shares will be issued upon the exercise of the October 2018 Firm Warrants. Rather, the number of Common Shares to be issued will be rounded up to the nearest whole number.

Transferability. Subject to applicable laws, the October 2018 Firm Warrants may be transferred at the option of the holder upon surrender of the October 2018 Firm Warrants to the Company together with the appropriate instruments of transfer.

No Listing. There is no established trading market for the October 2018 Firm Warrants on any securities exchange or nationally recognized trading system.

Fundamental Transactions. In the event of any fundamental transaction, as described in the October 2018 Firm Warrants and generally including any merger with or into another entity, sale of all or substantially all of the Company’s assets, tender offer or  exchange offer, or reclassification of the Company’s Common Shares, then upon any subsequent exercise of an October 2018 Firm Warrants, the holder will have the right to receive as alternative consideration, for each Common Share that the holder would have received upon such holder’s exercise of the October 2018 Firm Warrants immediately prior to the occurrence of such fundamental transaction, the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of Common Shares for which the holder would have received upon such holder’s exercise of the October 2018 Firm Warrants on the date of the consummation of such fundamental transaction.

Rights as a Shareholder. Except as otherwise provided in the October 2018 Firm Warrants or by virtue of the holder’s ownership of Common Shares, such holder of October 2018 Firm Warrants does not have the rights or privileges of a holder of Common Shares, including any voting rights, until such holder exercises such holder’s October 2018 Firm Warrants. 

Waivers and Amendments. No term of a October 2018 Firm Warrant may be amended or waived without the written consent of the holder of such October 2018 Firm Warrant.

October 2018 Pre-Funded Warrants

The following is a summary of material terms and provisions of the October 2018 Pre-Funded Warrants.

Exercisability. Each October 2018 Pre-Funded Warrant has an exercise price per share equal to $0.01. The October 2018 Pre-Funded Warrants are immediately exercisable and may be exercised at any time until the Pre-Funded Warrants are exercised in full. The exercise price and number of Common Shares issuable upon exercise are subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting the Company’s Common Shares and the exercise price. The October 2018 Pre-Funded Warrants were issued separately from the accompanying October 2018 Firm Warrants included in the Pre-Funded Units and may be transferred separately.  The October 2018 Pre-Funded Warrants are exercisable, at the option of each holder, in whole or in part, by delivering to the Company a duly executed exercise notice accompanied by payment in full for the number of Common Shares purchased upon such exercise (except in the case of a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the October 2018 Pre-Funded Warrant to the extent that the holder would own more than 4.99% of the outstanding Common Shares immediately after exercise, except that upon at least sixty-one (61) days’ prior notice from the holder to the Company, the holder may increase the amount of ownership of outstanding Common Shares after exercising the holder’s October 2018 Pre-Funded Warrants up to 9.99% of the number of Common Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the October 2018 Pre-Funded Warrants. Purchasers of October 2018 Pre-Funded Units were also able to elect prior to the issuance of the October 2018 Pre-Funded Warrants to have the initial exercise limitation set at 9.99% of the Company’s outstanding Common Shares.  If, at the time a holder exercises its October 2018 Pre-Funded Warrants, a registration statement registering the issuance of the Common Shares issuable upon exercise of the October 2018 Pre-Funded Warrants under the U.S. Securities Act is not then effective, or the prospectus contained therein is not available for an issuance of the Common Shares underlying the October 2018 Pre-Funded Warrants to the holder, then in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate exercise price, the holder may elect instead to exercise its October 2018 Pre-Funded Warrants on a cashless basis and receive upon such exercise (either in whole or in part) the net number of Common Shares determined according to a formula set forth in the October 2018 Pre-Funded Warrants. No fractional Common Shares will be issued upon the exercise of the October 2018 Pre-Funded Warrants. Rather, the number of Common Shares to be issued will be rounded up to the nearest whole number. 

Transferability. Subject to applicable laws, an October 2018 Pre-Funded Warrant may be transferred at the option of the holder upon surrender of the October 2018 Pre-Funded Warrant to the Company together with the appropriate instruments of transfer. 

No Listing. There is no established trading market for the October 2018 Pre-Funded Warrants on any securities exchange or nationally recognized trading system.

Fundamental Transactions. In the event of any fundamental transaction, as described in the October 2018 Pre-Funded Warrants and generally including any merger with or into another entity, sale of all or substantially all of the Company’s assets, tender offer or exchange offer, or reclassification of Common Shares, then upon any subsequent exercise of an October 2018 Pre-Funded Warrant, the holder will have the right to receive as alternative consideration, for each Common Share that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of common shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable upon or as a result of such transaction by a holder of the number of Common Shares for which the October 2018 Pre-Funded Warrant is exercisable immediately prior to such event. 

Rights as a Shareholder. Except as otherwise provided in the October 2018 Pre-Funded Warrants or by virtue of the holder’s ownership of Common Shares, such holder of October 2018 Pre-Funded Warrants does not have the rights or privileges of a holder of Common Shares, including any voting rights, until such holder exercises such holder’s October 2018 Pre-Funded Warrants.

March 2018 Warrants

In March 2018, the Company closed two registered direct offerings. The first offering consisted of 583,333 Common Shares at a price of $6.00 per share. The Company also issued to the investors unregistered warrants to purchase an aggregate of 291,666 Common Shares at an exercise price of $6.00 per share (the “Initial March 2018 Warrants”). The Company also issued to the placement agents warrants to purchase 29,166 Common Shares at an exercise price of $7.50 per share. In the second registered direct offering, the Company issued 300,000 Common Shares at a price of $6.00 per share. The Company also issued to the investors unregistered warrants to purchase an aggregate of 150,000 Common Shares at an exercise price of $6.00 per share (the “Additional  March 2018 Warrants” and collectively with the Initial March 2018 Warrants, the “March 2018 Warrants”)). The Company also issued to the placement agents warrants to purchase 15,000 Common Shares at an exercise price of $7.50 per share. The following is a summary of material terms and provisions of the March 2018 Warrants.

Exercisability. The exercise price of the March 2018 Warrants is [$6.00] per full Common Share. The exercise price is subject to appropriate adjustment in the event of certain share dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the Company’s Common Shares. The March 2018 Warrants were issued as individual warrants to each of the investors in the March 2008 offerings. The March 2018 Warrants became exercisable six (6) months following the closing date and will expire thirty (30) months after the date they became exercisable. The March 2018 Warrants are exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and by payment in full in immediately available funds for the number of Common Shares purchased upon such exercise. A holder will not have the right to exercise any portion of the March 2018 Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of the Company’s Common Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the March 2018 Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until sixty-one (61) days after such notice to the Company. If a registration statement registering the issuance of the Common Shares underlying the March 2018 Warrants under the U.S. Securities Act is not then effective or available, the holder may exercise the March 2018 Warrants through a cashless exercise, in whole or in part, in which case the holder would receive upon such exercise the net number of Common Shares determined according to the formula set forth in the March 2018 Warrants. No fractional Common Shares will be issued in connection with the exercise of any March 2018 Warrants. In lieu of fractional shares, the Company will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.

Transferability. Subject to applicable laws and as set forth therein, the March 2018 Warrants may be offered for sale, sold, transferred or assigned without the Company’s consent.

No Listing. There is no established trading market for the March 2018 Warrants. on any securities exchange or any other nationally recognized trading system.

Fundamental Transactions. In the event of a fundamental transaction, as described in the March 2018 Warrants and generally including any reorganization, recapitalization or reclassification of the Company’s Common Shares, the sale, transfer or other disposition of all or substantially all of the Company’s properties or assets, the Company’s consolidation or merger with or into another person, the holders of the March 2018 Warrants will, except as otherwise described therein, be entitled to receive upon exercise of the March 2018 Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the March 2018 Warrants immediately prior to such fundamental transaction.

Rights as a Shareholder. Except as otherwise provided in the March 2018 Warrants or by virtue of such holder’s ownership of Common Shares, the holder of March 2018 Warrants does not have the rights or privileges of a holder of the Company’s Common Shares, including any voting rights, until the holder exercises the March 2018 Warrants.

October 2017 Warrants

In October 2017, the Company completed a registered direct offering consisting of 363,636 Common Shares at a price of $11.00 per share. The Company also issued to the investors in the offering unregistered  warrants (the “October 2017 Warrants”) to purchase an aggregate of 181,818 Common Shares. The October 2017 Warrants were offered in a private placement and, along with the Common Shares underlying the warrants, have not been registered under the U.S. Securities Act. The Company also issued to the placement agents warrants to purchase 18,181 Common Shares at an exercise price of $13.75 per share.

The following is a summary of material terms and provisions of the October 2017 Warrants.

Exercisability. The exercise price per Common Share purchasable upon exercise of the October 2017 Warrants issued to the investors is $12.50 per full Common Share. The exercise price is subject to appropriate adjustment in the event of certain share dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the Company’s Common Shares. The October 2017 Warrants were issued as individual warrants to each of the investors. The October 2017 Warrants became exercisable six (6) months following the closing date and will expire thirty (30) months after the date they became exercisable. The October 2017 Warrants are exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and by payment in full in immediately available funds for the number of Common Shares purchased upon such exercise. A holder will not have the right to exercise any portion of the October 2017 Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of the Company’s Common Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the October 2017 Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until sixty-one (61) days after such notice to the Company. If a registration statement registering the issuance of the Common Shares underlying the October 2017 Warrants under the U.S. Securities Act is not then effective or available, the holder may exercise the October 2017 Warrants through a cashless exercise, in whole or in part, in which case the holder would receive upon such exercise the net number of Common Shares determined according to the formula set forth in the October 2017 Warrants. No fractional Common Shares will be issued in connection with the exercise of any October 2017 Warrants. In lieu of fractional shares, the Company will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.

Transferability. Subject to applicable laws and as set forth therein, the October 2017 Warrants may be offered for sale, sold, transferred or assigned without the Company’s consent.

No Listing. There is no established trading market for the October 2017 Warrants on any securities exchange or any other nationally recognized trading system.

Fundamental Transactions. In the event of a fundamental transaction, as described in the October 2017 Warrants and generally including any reorganization, recapitalization or reclassification of the Company’s Common Shares, the sale, transfer or other disposition of all or substantially all of the Company’s properties or assets, the Company’s consolidation or merger with or into another person, the holders of the October 2017 Warrants will, except as otherwise described therein, be entitled to receive upon exercise of the October 2017 Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the October 2017 Warrants immediately prior to such fundamental transaction.

Rights as a Shareholder. Except as otherwise provided in the October 2017 Warrants or by virtue of such holder’s ownership of Common Shares, the holder of October 2017 Warrants does not have the rights or privileges of a holder of the Company’s Common Shares, including any voting rights, until the holder exercises the October 2017 Warrants.

June 2016 Warrants

In June 2016, the Company completed an underwritten public offering of 322,981 units of Common Shares and warrants (“June 2016 Warrants”), at a price of $16.10 per unit. The June 2016 Warrants are currently exercisable, have a term of five (5) years and an exercise price of $19.30 per Common Share. The Company issued to the investors at the initial closing of the offering an aggregate of 322,981 Common Shares and June 2016 Warrants to purchase an additional 161,490 Common Shares. The underwriter also purchased at such closing additional June 2016 Warrants to acquire 24,223 Common Shares pursuant to the over-allotment option exercised in part by the underwriter. The Company subsequently sold an aggregate of 45,946 additional Common Shares and June 2016 Warrants at the public offering price of $16.10 per share in connection with subsequent partial exercises of the underwriter’s over-allotment option.

The following is a summary of material terms and provisions of the June 2016 Warrants.

Exercisability. The exercise price per Common Share purchasable upon exercise of the June 2016 Warrants is $19.30 per full Common Share. The exercise price is subject to appropriate adjustment in the event of certain share dividends and distributions, share splits, share combinations, reclassifications or similar events affecting the Company’s Common Shares. The June 2016 Warrants were issued as individual warrants to each of the investors. The June 2016 Warrants are exercisable at any time after the date of issuance, and at any time up to the date that is five (5) years from the date of issuance, at which time any unexercised June 2016 Warrants will expire and cease to be exercisable. The June 2016 Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to the Company a duly executed exercise notice and by payment in full in immediately available funds for the number of Common Shares purchased upon such exercise. A holder will not have the right to exercise any portion of the June 2016 Warrants if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of the Company’s Common Shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the June 2016 Warrants. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until sixty-one (61) days after such notice to the Company. If a registration statement registering the issuance of the Common Shares underlying the June 2016 Warrants under the U.S. Securities Act is not then effective or available, the holder may exercise the June 2016 Warrants through a cashless exercise, in whole or in part, in which case the holder would receive upon such exercise the net number of Common Shares determined according to the formula set forth in the June 2016 Warrants. No fractional common shares will be issued in connection with the exercise of any June 2016 Warrants. In lieu of fractional shares, the Company will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.

Transferability. Subject to applicable laws, the June 2016 Warrants may be offered for sale, sold, transferred or assigned without the Company’s consent.

No Listing. There is no established trading market for the June 2016 Warrants on any securities exchange or any other nationally recognized trading system.

Fundamental Transactions. In the event of a fundamental transaction, as described in the June 2016 Warrants and generally including any reorganization, recapitalization or reclassification of the Company’s Common Shares, the sale, transfer or other disposition of all or substantially all of the Company’s properties or assets, the Company’s consolidation or merger with or into another person, the holders of the June 2016 Warrants will be entitled to receive upon exercise of the June 2016 Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the June 2016 Warrants immediately prior to such fundamental transaction.

Rights as a Shareholder. Except as otherwise provided in the June 2016 Warrants or by virtue of such holder’s ownership of Common Shares, the holder of a June 2016 Warrant does not have the rights or privileges of a holder of the Company’s Common Shares, including any voting rights, until the holder exercises the June 2016 Warrants.

Options

An option plan (the “Option Plan”) was adopted effective October 22, 2009 as part of an arrangement transaction approved by the shareholders of the Company’s predecessor, at the meeting of shareholders on October 19, 2009.  Subject to the requirements of the Option Plan, the Board, with the assistance of the Compensation Committee, has the authority to select those directors, officers, employees and consultants to whom options will be granted, the number of options to be granted to each person and the price at which common shares of the Company may be purchased. Grants are determined based on individual and aggregate performance as determined by the Board.  At November 30, 2022, an aggregate of 1,309,000 common shares were issuable upon the exercise of outstanding options, with a weighted average exercise price of $2.40 per common share and up to 2,000,267 additional common shares were reserved for issuance under our Option Plan for the benefit of certain officers, directors, employees and consultants of the Company.

As of June 13, 2023, there were 1,309,000 common shares issuable upon the exercise of outstanding options. The weighted average exercise price of these options is $2.40 per common share. As at June 13, 2023, up to 2,000,267 additional common shares were reserved for issuance under our Option Plan.

Convertible Debentures

In January 2013, the Company completed a private placement financing of an unsecured convertible debenture in the original principal amount of $1.5 million (the “2013 Debenture”). The 2013 Debenture bears interest at a rate of 12% per annum, payable monthly, is pre-payable at any time at the option of the Company, and is convertible at any time into Common Shares at a conversion price of $30.00 per Common Share at the option of the holder. Drs. Isa and Amina Odidi, who are directors, executive officers and shareholders of the Company, provided the Company with the original $1.5 million of the proceeds for the 2013 Debenture.

In December 2016, a principal repayment of $150,000 was made on the 2013 Debenture and the maturity date was extended until April 1, 2017. Effective March 28, 2017, the maturity date of the 2013 Debenture was extended to October 1, 2017. Effective September 28, 2017, the maturity date of the 2013 Debenture was further extended to October 1, 2018. Effective October 1, 2018, the maturity date for the 2013 Debenture was further extended to April 1, 2019. In December 2018, a principal repayment of $300,000 was made on the 2013 Debenture.

On April 4, 2019, tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture, subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by a new debenture on May 1, 2019 (the “May 2019 Debenture”). The May 2019 Debenture was issued in the principal amount of $1,050,000. The May 2019 Debenture will mature on March 31, 2020, bears interest at a rate of 12% per annum and is convertible into 1,779,661 Common Shares of the Company at a conversion price of $0.59 per Common Share.  The original maturity of the May 2019 Debenture was November 1, 2019.  The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023.

On September 10, 2018, the Company completed a private placement financing of an unsecured convertible debenture in the principal amount of $0.5 million (the “2018 Debenture”). The 2018 Debenture bears interest at a rate of 10% per annum, payable monthly, may be prepaid at any time at the Company’s option, and is convertible into Common Shares at any time prior to the maturity date at a conversion price of $3.00 per Common Share at the option of the holder. The maturity date for the May 2019 Debenture has been extended from time to time and the maturity date for the May 2019 Debenture is now August 31, 2023.

On August 26, 2019, the Company completed a private placement financing of an unsecured debenture in the principal amount of $140,800 (the “August 2019 Debenture”). The August 2019 Debenture was scheduled to mature on August 26, 2020, bore interest at a rate of 8% per annum, was pre-payable at any time at the option of the Company up to 180 days from date of issuance with pre-payment penalties ranging from 5% - 30% and was convertible at the option of the holder into Common Shares after 180 days at a conversion price equal to 75% of the market price (as defined).  In November 2019, the August 2019 Debenture was fully paid.

On November 15, 2019, the Company issued an unsecured convertible debenture in the principal amount of $250,000 (the “November 2019 Debenture”) that is now scheduled to mature on March 31, 2020, bears interest at a rate of 12% per annum and is convertible into Common Shares of the Company at a conversion price of $0.12 per share.  The maturity date for the November 2019 Debenture has been extended from time to time and the maturity date for the November 2019 Debenture is now August 31, 2023.

Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, held the 2013 Debenture and are the holders of the 2018 Debenture, the May 2019 Debenture and the November 2019 Debenture.

Deferred Share Units

Effective May 28, 2010, the Company’s shareholders approved a Deferred Share Unit (“DSU”) Plan (the “DSU Plan”) and the reservation of 11,000 Common Shares for issuance thereunder for DSU grants to the Company’s non-management directors. The DSU Plan permits certain non-management directors to defer receipt of all or a portion of their Board fees until termination of the Board service and to receive such fees in the form of Common Shares at that time. A DSU is a unit equivalent in value to one of the Company’s Common Shares based on the trading price of the Company’s Common Shares on the TSX. The DSU Plan is administered by the Board or a committee thereof. At November 30, 2022, there were no DSUs issued and outstanding. From November 30, 2022 to June 13, 2023, no additional DSUs have been issued.

Restricted Share Units

The Company established the restricted share unit (“RSU”) Plan (the “RSU Plan”) and the reservation of 33,000 Common Shares of issuance thereunder to form part of its incentive compensation arrangements available for officers and employees of the Company and its designated affiliates as of May 28, 2010, when the RSU Plan received shareholder approval. Employees and officers, including both full-time and part-time employees, of the Company and any designated affiliate of the Company, but not any directors of the Company who are not also serving as employees or officers, are eligible to participate in the RSU Plan.  Prior to April 5, 2018, the terms of the RSU Plan specifically named Dr. Isa Odidi and Dr. Amina Odidi as not eligible to participate; however, the Board, on the recommendation of the Compensation Committee, amended the terms of the RSU Plan to remove this restriction with the result being that Dr. Isa Odidi and Dr. Amina Odidi will be eligible to be awarded RSUs so long as they are officers of the Company or any designated affiliate of the Company. The RSU Plan is administered by the Board or a committee thereof, which will determine, from time to time, who may participate in the RSU Plan, the number of RSUs to be awarded and the terms of each RSU, all such determinations to be made in accordance with the terms and conditions of the RSU Plan, based on individual and/or corporate performance factors as determined by the Board. At November 30, 2022une 13, 2023, 33,000 RSUs are reserved for issuance under the Company’s restricted share unit plan.

Articles and By-Laws

The Company was formed pursuant to the Articles under the Canada Business Corporations Act (“CBCA”). The Company is the successor issuer to Vasogen Inc. for reporting purposes under the U.S. Securities Exchange Act of 1934, as amended. As noted above, the authorized share capital of the Company consists of an unlimited number of Common Shares, all without nominal or par value and an unlimited number of Preference Shares issuable in series.

Provisions as to the modification, amendment or variation of rights and provisions of each class of shares are contained in the CBCA and the regulations promulgated thereunder. Certain fundamental changes to the Articles will require the approval of at least two-thirds of the votes cast on a resolution submitted to a special meeting of the Company’s shareholders called for the purpose of considering the resolution. These items include: (i) certain amendments to the provisions relating to the outstanding capital of the Company; (ii) a sale of all or substantially all of the assets of the Company; (iii) an amalgamation of the Company with another company, other than a subsidiary; (iv) a winding-up of the Company; (v) a continuance of the Company into another jurisdiction; (vi) a statutory court approved arrangement under the CBCA (essentially a corporate reorganization such as an amalgamation, sale of assets, winding-up, etc.); or (vii) a change of name.

Under the CBCA, a corporation cannot repurchase its shares or pay or declare dividends if there are reasonable grounds for believing that: (a) the corporation is, or after payment would be, unable to pay its liabilities as they become due; or (b) after the payment, the realizable value of the corporation’s assets would be less than the aggregate of (i) its liabilities and (ii) its stated capital of all classes of its securities. Generally, stated capital is the amount paid on the issuance of a share unless the stated capital has been adjusted in accordance with the CBCA.

General

The Articles do not contain any restrictions on the business the Company may carry on.

Directors

The Company’s By-Law No. 1 (a By-Law relating generally to the transaction of the business and affairs of the Company) provides for the indemnification of the directors and officers of the Company, former directors and officers of the Company against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Company, subject to certain limitations in By-Law No. 1 and the limitations in the CBCA.

The Company may also indemnify other individuals who act or acted at the Company’s request as a director or officer, or an individual acting in a similar capacity of another entity.

Annual and Special Meetings

Meetings of shareholders are held at such place, at such time, on such day and in such manner as the Board may, subject to the CBCA and any other applicable laws, determine from time to time. The only persons entitled to attend a meeting of shareholders are those persons entitled to notice thereof, those entitled to vote thereat, the directors, the auditors of the Company and any others who may be entitled or required under the CBCA to be present at the meeting.

Under the CBCA, notice of the meeting is required to be given not less than twenty-one (21) days and not more than sixty (60) days prior to the meeting. Shareholders on the record date are entitled to attend and vote at the meeting.

The quorum for the transaction of business at any meeting of shareholders is at least two persons present at the opening of the meeting who are entitled to vote either as shareholders or proxyholders, representing collectively not less than 5% of the outstanding shares of the Company entitled to be voted at the meeting.

Other Matters

There is no By-Law provision governing the ownership threshold above which shareholder ownership must be disclosed. However, there are disclosure requirements pursuant to applicable Canadian law.

There are no provisions in either the Company’s Articles or By-Law No. 1 that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or its subsidiary.

There are no limitations on the rights to own securities, including the rights of non-resident or foreign shareholders, to hold or exercise voting rights on the securities imposed by foreign law or by the charter or other constituent document of the Company.

EX-4.84

EXHIBIT 4.84

Extension of Debenture Maturity Date

TO Intellipharmaceutics International Inc. (the "Company")

RE: Debenture dated May 1, 2019, for a face amount of US $1,050,000 issued by the Company to Isa Odidi and Amina Odidi (the "Debenture") and the Maturity Date (as defined in the Debenture and as extended from time to time) of such Debenture

The undersigned hereby agree that the current Maturity Date of the Debenture (currently May 31, 2022) is extended to November 30, 2022.

DATED as of May 31, 2022.

/s/ Isa Odidi	/s/ Amina Odidi
Isa Odidi	Amina Odidi

EX-4.85

EXHIBIT 4.85

Extension of Debenture Maturity Date

TO Intellipharmaceutics International Inc. (the "Company")

RE: Debenture dated September 10, 2018 with an original face amount of US$500,000 issued by the Company to Dr. Isa Odidi and Dr. Amina Odidi (the "Debenture") and the Maturity Date (as defined in the Debenture) of such Debenture

The undersigned hereby agree that the Maturity Date of the Debenture (currently May 31, 2022) is extended to November 30, 2022.

DATED effective May 31, 2022.

/s/ Isa Odidi	/s/ Amina Odidi
Isa Odidi	Amina Odidi

EX-4.86

EXHIBIT 4.86

Extension of Debenture Maturity Date

TO Intellipharmaceutics International Inc. (the "Company")

RE: Debenture dated November 15, 2019, for a face amount of US $250,000 issued by the Company to Isa Odidi and Amina Odidi (the "Debenture") and the Maturity Date (as defined in the Debenture and as extended from time to time) of such Debenture

The undersigned hereby agree that the current Maturity Date of the Debenture (currently May 31, 2022) is extended to November 30, 2022.

DATED as of May 31, 2022.

/s/ Isa Odidi	/s/ Amina Odidi
Isa Odidi	Amina Odidi

EX-4.87

EXHIBIT 4.87

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

[*****] indicates the redacted confidential portions of this exhibit.

Execution Version

TARO PHARMACEUTICALS INC.

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INTELLIPHARMACEUTICS, CORP.

LICENCE AND SUPPLY AGREEMENT

Desvenlafaxine Extended-Release Tablets

(50 mg and 100 mg desvenlafaxine succinate)

FOR SALE IN CANADA

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LICENSE AND SUPPLY AGREEMENT

THIS AGREEMENT, made as of July 29, 2022 (the “Effective Date”) between Taro Pharmaceuticals Inc., having its offices at 130 East Road, Brampton, Ontario, Canada, L6T 1C1 (“Taro”), and Intellipharmaceutics, Corp., having its offices at 30 Worcester Road, Toronto, Ontario, Canada M9W 5X2 (“IPC”). Taro and IPC are herein sometimes referred to individually as a “Party” and collectively as the “Parties”.

RECITALS

A.	WHEREAS IPC is engaged in the business of developing, manufacturing and distributing various regulated pharmaceutical products;
B.	WHEREAS IPC is the owner of proprietary information including a manufacturing formula in respect of the Product (as hereinafter defined);
C.	WHEREAS Taro is engaged in, among other things, registering, marketing and distributing generic pharmaceutical products in Canada and possesses qualified marketing and distribution systems and organizations to enable it to effectively promote, market and distribute such products throughout Canada; and
D.	WHEREAS Taro wishes to purchase and IPC wishes to manufacture, license and supply the Product to Taro for the purpose of marketing, selling, and distributing the Product in Canada.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained in this Agreement, the Parties agree as follows:

ARTICLE I - DEFINITIONS AND SCHEDULES

1.1 Definitions

The following definitions apply in this Agreement, unless the context otherwise requires:

“Active Ingredients” means the active pharmaceutical compounds from which a Product is formulated.

“ANDS” means an abbreviated new drug submission, filed with the TPD in respect of the

Product.

“API” means the Active Ingredient Desvenlafaxine Succinate.

“Affiliate” of a Party means any Person, directly or indirectly, through one or more intermediaries, controlled by, controlling, or under common control with such Party and “control” means (i) directly or indirectly, of the power to direct the management or policies of an entity, whether through direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of a corporation, or more than a fifty percent (50%) interest in the income of a Person, or (ii) such other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity) of the other organization or entity or by contract relating to voting rights or corporate governance, or otherwise.

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“Agreement” means this Agreement including all schedules and appendices to this Agreement, as amended or supplemented from time to time in accordance with its provisions, and the expressions “hereof”, “herein”, “hereunder”, “hereby” and similar expressions refer to this Agreement and not to any particular or other portion of this Agreement.

“Applicable Laws” means any domestic or foreign statutes, laws, codes, regulations, regulatory policies, practices, rules or guidelines, ordinances, judgments, orders, rulings or decisions of any Governmental Authority, in each case binding on or applicable to the Person, the Product or the subject matter referred to in the context in which the term is used.

“Approvals” means any approvals, licences, permits, authorizations, consents, certificates, qualifications, registrations, exemptions, waivers, filings, grants, notifications, privileges, entitlements, rights, orders, judgments, rulings, and directives issued by, obtained from or required by any Governmental Authority.

“Authorized Generic” or “AG Product” means an identical formulation of the Canadian Reference Product that is sold under its generic name by a third party under licensing granted by the manufacturer of the Canadian Reference Drug.

“Canadian Reference Product” means Pristiq® brand tablets, as sold as at the Effective

Date in the Territory by Pfizer Canada Inc. in strengths of 50 mg and 100 mg.

“Competing Product” means any pharmaceutical product that is (A) a generic product containing an identical formulation to the Canadian Reference Product approved by way of an ANDS (excluding the Product subject to this Agreement), (B) the Canadian Reference Product, or (C) an AG Product.

“Consents” means franchises, licences, qualifications, authorizations, consents, certificates, registrations, exemptions, waivers, filings, grants, notifications, privileges, rights, and other permits and approvals obtained from or required by any Third Party other than a Governmental Authority.

“DIN” means the drug identification number assigned by the Health Canada Therapeutics

Product Directorate (TPD) to the Product, including DIN 02469847 for 50mg and DIN

02469855 for 100mg.

“Dispute” has the meaning given to such term in Section 21.4.

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“Dossier” means (i) Product filing and approval with Health Canada, including without limitation, product monograph, labelling, chemistry manufacturing controls documents, safety and efficacy study documents as applicable to the Product (“Product Data”) and (ii) other technical information and data which are or will be created or compiled by IPC and its Affiliates and which are necessary or beneficial for obtaining and maintaining Marketing Approvals for the marketing, distribution and sale of the Product in the Territory.

“Establishment License” means the license required in the Territory to undertake the fabrication, packaging/labelling, importation, distribution, wholesale and testing of the raw materials and finished Product.

“Good Manufacturing Practices” or “GMPs” means the Good Manufacturing Practices regulatory requirements of Health Canada as set out in Applicable Laws and Health Canada guidance or policy documents, as amended from time to time.

“Governmental Authority” means any domestic or foreign government, whether federal, provincial, state, territorial, local, regional, municipal or other political jurisdiction, and any agency, authority, instrumentality, court, tribunal, board, commission, bureau, arbitrator, arbitration tribunal or other tribunal, or any quasi-governmental or other entity, insofar as it exercises a legislative, judicial, regulatory, administrative, expropriation or taxing power or function of or pertaining to government including Health Canada.

“Health Canada” means the Governmental Authority having jurisdiction in the Territory over the approval, registration, fabrication, processing, testing, packaging, labelling, importing, storage, wholesaling, distribution, sale and marketing of prescription drug products as well as any successor agency and its divisions, including the TPD.

“Launch Date” means the initial date, to be determined by Taro following the issuance to Taro of the Marketing Approvals, on which Taro will start to distribute, market and sell the Product in the Territory which shall not be later than three (3) months from the date of receipt of Taro’s Marketing Approvals from the TPD and subject to receipt of sufficient Launch Quantities of the Product from IPC to enable launch.

“Launch Quantity” means the quantity of the Product under the first Purchase Order issued by Taro to IPC pursuant to Section 5.2 of this Agreement.

”IPC IP” means all intellectual property rights related to the Product which are owned by, controlled by or licensed to IPC, other than Taro Trade Marks, including any Product Patents, Product Appearance, Product Know-How and copyrights and any applications for the registration and protection of any of the foregoing.

“Marketing Approvals” means any and all Approvals required for the marketing, distribution and sale of the Product in the Territory, and includes the NOC and DIN.

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“NOA” means a notice of allegation served pursuant to Section 5 of the Canadian Patented

Medicines (Notice of Compliance) Regulations.

“NOC” means a Notice of Compliance issued by TPD in respect of the Product.

“Person” means any natural person, firm, corporation, company, whether of limited or unlimited liability, public company, joint venture, general or limited partnership, trust, association or other entity whatsoever.

“Private Label” means the sale by Third Parties of the Product under the brand name of a pharmacy, pharmacy chain, pharmacy distributor or associated company.

“Product”  means,  as  the  case  may  be  in  the  context  in  which  the  term  is  used, (i) a formulation of a product identical to the Canadian Reference Product in size, shape, color and bio-equivalence in 50 mg and 100 mg strengths, using the knowledge, expertise and know-how developed by IPC, and/or (ii) the finished packaged dosage forms of the generic prescription pharmaceutical product listed in Schedule “A”, which is to be supplied by IPC to Taro and distributed, marketed and sold by Taro in the Territory under the terms of this Agreement.

“Product Appearance” means the appearance of the Product including the design, size, shape, colour and trade dress of the Product, but excluding any Taro Trade Mark contained thereon, the whole as more fully described in Schedule D.

”Product Know-How” means the Product, Product Data and all know-how, knowledge, expertise, trade secrets, manufacturing, formulation, mixing, production and testing procedures known or licensed to, or in the possession of IPC, whether generally known to others or not, relating to the formulation, manufacturing, packaging, labelling or testing of the Product, including, without limitation:

(i)	characteristics, selection of properties and data relating to materials, such as excipients, used or useful in the manufacturing, packaging, labelling or testing of the Product;
(ii)	techniques, equipment and methods used or useful in the manufacturing and testing of the Product;
(iii)	equipment and data relating to the manufacturing and testing of the Product; and
(iv)	all in vivo or clinical, pharmacology, toxicology, safety and efficacy data, formulary submissions, pharmaco-economic data, and other such information useful or required in preparing applications for or obtaining or maintaining Approvals.

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“Taro Trade Marks” means the trademarks, service marks, logos, designs and drawings, trade names and corporate names, whether registered or not, which Taro may use from time to time in association with the Product including, but not limited to, the trade marks set forth in Schedule “B”, as amended by Taro from time to time.

“Specifications” means the formulae, technical information, quality control testing standards, test methods and testing data of the Product, as amended from time to time, and as approved by Health Canada for the Product.

“Supply Price” means the applicable Product supply price set out in Schedule “C” of this

Agreement.

“TPD” means the Therapeutic Products Directorate of Health Canada or any replacement or successor authority with jurisdiction over the manufacture, packaging, distribution, approval, marketing and sale of pharmaceuticals in the Territory.

“Term” has the meaning set out in Section 12.1.

“Territory” means Canada, including all of its provinces and territories.

“Third Party” means any Person other than IPC, Taro and their respective Affiliates.

1.2 Schedules

The following schedules form part of and are incorporated in this Agreement:

Schedule “A” -	Product
Schedule “B” -	Taro Trade Marks
Schedule “C” -	Product Supply Price & Minimum Order Quantities
Schedule “D” -	Product Appearance Details (Trade Dress)

1.3 Appendices

The following appendices form part of and are incorporated in this Agreement:

Appendix I -	Quality Agreement
Appendix II -	Pharmacovigilance Agreement

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 ARTICLE II - GRANT OF LICENSE TO TARO

2.1 Exclusive Licence

Subject to the terms and conditions of this Agreement, IPC hereby grants Taro and its Affiliates an exclusive and sub-licensable licence (i) to promote, market, distribute, offer for sale and sell the Product in the Territory; (ii) to use the IPC IP in connection with the activities authorized in this Section 2.1, and (iii) to reference IPC Dossier filed with Health Canada for the purpose of supporting its activities authorized in this Section 2.1 (collectively, the “License”). For greater certainty, it is confirmed that the License herein granted is an exclusive license which gives Taro the right to exercise the License to the exclusion of all Persons including IPC and Affiliates during the Term of this Agreement.

2.2 Right to Sub-License

The License is sublicensable in whole or in part, to Taro’s Affiliates and Third Parties in accordance with the terms of this Agreement. The granting of sublicenses to Taro’s Affiliates, including for the purpose of a Private Label, shall be at Taro’s sole and exclusive discretion and the granting of sublicenses to non-Affiliates shall be subject to the consent of IPC which shall not be unreasonably withheld, conditioned or delayed. For clarity, such consent shall be deemed to have been given by IPC, if IPC does not revert with its consent and/or objection within [*****] of Taro making such request for sub-license to non- Affiliates.

2.3 Reserved Right

Taro agrees not to intentionally or knowingly sell or distribute the Product outside the Territory and not to supply Product to distributors if Taro knows that those distributors may sell the Product outside the Territory.

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2.4 Licensing Fee

In consideration of the License and other rights granted by IPC to Taro pursuant to the terms hereof, Taro shall pay to IPC a one-time, non-refundable Licensing Fee as per the following milestones, upon receipt of an invoice, subject to the occurrence of the identified events, it being understood that such payments are due only once in respect of each milestone event actually achieved:

Event #	Event	Milestone  in CAD $	Timing of Payment
1	[*****]	[*****]	[*****]
2	[*****]	[*****]	[*****]
3.	[*****]	[*****]	[*****]
4.	[*****]	[*****]	[*****]

ARTICLE III - PRODUCT DEVELOPMENT AND REGULATORY FILINGS BY IPC

3.1	Product Development
	IPC acknowledges and confirms that it has conducted the development of the Product in conformity with Applicable Laws including current TPD requirements and all applicable guidelines including those prescribed by current TPD, the International Conference on Harmonization and the United States Pharmacopeia Guidelines.

3.2 Regulatory Filings

(a)	IPC acknowledges and confirms that it has received the NOC and the DIN of the Product from Health Canada, which will be sufficient to enable Taro to obtain all Marketing Approvals required for the marketing, distribution and sale of the Product in the Territory to be granted by Health Canada.
(b)	Upon the execution of this Agreement, IPC shall send a letter to Health Canada authorizing Taro to cross-license IPC’s Dossier filed with Health Canada in order for Taro to obtain its own Marketing Approvals which shall authorize Taro to market, distribute and sell the Product in the Territory. IPC shall make changes to the IPC Product Dossier filed with Health Canada if and whenever necessary. A copy of any labelling change shall be provided to Taro without delay.
	IPC recognizes the necessity for Taro’s Marketing Approvals of the Product to be obtained as soon as possible, and will use its best efforts to enable Taro to obtain the Marketing Approvals.

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3.3	Drug Establishment License and GMP documents required.
	IPC hereby agrees to provide any and all information, documents and assistance required to permit Taro to add IPC or its manufacturers to the Taro Drug Establishment License (“DEL”) in Canada.
3.4	Pharmacovigilance
	Taro shall be responsible for fulfilling its pharmacovigilance obligations arising from its marketing of the Product in the Territory and the parties shall cooperate with each other with respect to their respective pharmacovigilance responsibilities, and each party shall be solely responsible for costs relating to its respective pharmacovigilance responsibilities, unless agreed otherwise by the parties in writing. The parties will enter into a Pharmacovigilance (PV) Agreement within sixty (60) days upon execution of this Agreement.

ARTICLE IV - SUPPLY OF PRODUCT

4.1 Exclusive Arrangements

(a)

Subject to the terms and conditions of this Agreement, including Sections 4.3, 5.5 and 12.3(d), IPC shall supply Product exclusively to Taro or its designated Third Party during the Term, and Taro shall purchase all of its requirements for Product for sale and distribution in the Territory during the Term exclusively from IPC. The foregoing exclusivity shall apply without condition in the first [*****] after the Launch Date and shall continue subject to Taro securing and maintaining at least [*****] market share in units as defined by IQVIA data (generally known as IMS data) throughout the remainder of the Term.

(b)

Non-Compete. During the Term, neither Party and its Affiliates shall negotiate or agree to, (i) develop, file for Regulatory Approval, acquire, license, or manufacture anywhere for use in the Territory, or (ii) market or otherwise commercialize in the Territory, any Competing Product, either alone or with a Third Party.

4.2 Manufacturing by IPC

(a)  Subject to the terms and conditions of this Agreement, IPC shall furnish all labour, equipment, facilities, Active Ingredients, raw materials and other ingredients and supplies necessary to manufacture, test, label, package and supply the Product in accordance with the Specifications and Good Manufacturing Practices. Without limiting the foregoing, IPC shall analyse the Product for quality control, test the Product, store the Product, label and package the Product and deliver the Product in accordance with Taro’s instructions.

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(b)  Within no later than sixty (60) days of the execution of this Agreement, the Parties agree to enter into a Technical Quality Agreement governing the quality aspects of the Product (the “Quality Agreement”). Upon execution, the Quality Agreement shall become part of this Agreement and the Parties will comply with the obligations contained therein. Notwithstanding the Parties’ commitment to collaborate in order to ensure that the terms of the Quality Agreement and this Agreement do not conflict with one another, in the event of any conflict or inconsistency between this Agreement and the Quality Agreement, the Quality Agreement will take precedence in the event of conflict or inconsistency insofar as quality-related matters are concerned, while this Agreement will prevail in the event of conflict or inconsistency on all other matters.

4.3	Back-Up Manufacturing by an Alternate Manufacturing Site
	IPC shall ensure undisrupted supply of the Product to Taro during the Term of the Agreement.  In the event that IPC shall have any reason to believe it will be unable to supply the Product to Taro within the delivery date pursuant to a confirmed Purchase Order, IPC shall promptly notify Taro thereof. If IPC has any reason to believe that it may be unable to ensure undisrupted supply from its manufacturing facility, IPC shall, in addition to the remedies available to Taro under Section 5.5, within [*****] of becoming aware of such supply issue, identify and have an alternate manufacturing facility qualified and approved by the TPD (under the ANDS and any other required Approvals) for the manufacturing of the Product for sale and distribution in the Territory at its own cost, and use such alternate manufacturing facility to ensure undisrupted supply of the Product to
4.4	Launch Date
	Taro shall determine the Launch Date for the Product upon receipt of its Marketing Approvals.  Subject to the receipt of all necessary Marketing Approvals by Taro and the availability of sufficient Product for sale, Taro shall launch the Product no later than [*****] from Taro’s receipt of the Marketing Approvals (the “Target Launch Date”). In the event that Taro fails to launch the Product by the Target Launch Date, the parties shall discuss the reasons and any correction plan. If the parties determine that the failure to Launch by the Target Launch Date would make the commercialization of the Product commercially unviable, IPC shall have the right to terminate this Agreement with a [*****] prior written notice.

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4.5

Market Price

Taro shall, have sole and absolute discretion over the terms and conditions of the sale of the Product. Without limiting the generality of the foregoing, Taro shall, subject to Applicable Law and any commitments contained in agreements with Third Party payers which are binding on generic pharmaceutical companies, have sole and absolute discretion over the price(s) for the Product and any pricing, discount and trade allowances as well as credit policies for its customers and shall be responsible for all costs and credit risks associated with the sale and shipment of the Product to customers, including shipping and insurance costs, risks of its customers’ credit and debt collection for any and all Product purchases made by its customers. Taro shall be responsible for its customers’ Product order processing, tracking and fulfillment and processing of returns of the Product.

ARTICLE V - FORECASTS AND DELIVERY

5.1

Taro’s Forecasts

Prior to the Launch Date, Taro shall provide IPC with a written monthly estimate as to the quantity of the Product that Taro wishes to have delivered to it during the following twelve (12) months. Prior to the end of each calendar quarter following the Launch Date, Taro shall update its prior twelve (12) month estimate and add an estimate for the next three months immediately thereafter (each a “Forecast”), so that IPC shall receive quarterly, a twelve (12) month estimate of the quantity of Product Taro wishes to receive. [*****] of such estimate shall be binding on both parties. The remaining estimate period shall not be a binding commitment on the part of Taro to order Product in the quantities specified in such estimates, but shall be provided for the purpose of enabling IPC to schedule the use of its designated facility to meet Taro’s estimated requirements for the Product.

5.2 Purchase Orders for Product

(a) Taro shall place firm written purchase orders (“Purchase Orders” or “POs”) for the Product, in the minimum order quantities set out in Schedule B, on Taro’s standard purchase order form and shall specify a delivery date not less than ninety (90) days from the date of the order.  IPC shall confirm acceptance of all Purchase Orders from Taro in writing or electronically within five (5) business days of receipt and IPC shall fill all such purchase orders in accordance with and subject to the purchase orders and the terms of this Agreement. IPC shall accept a Product Purchase Order as long as such Purchase Order is within [*****] of the binding portions of the applicable Forecast. IPC agrees to use commercially reasonable efforts to manufacture and supply any quantity of Product ordered in excess of [*****] of the binding portions of the applicable Forecast. Further, IPC at its own discretion and within [*****] may accept or reject any Product ordered in excess of [*****] of the binding portions of the applicable forecast. If IPC is unable to supply such excess demand, it is not considered as a material supply breach and IPC shall not be liable for any supply penalties.

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(b) The supply of the Product by IPC shall be subject to and governed by the terms and conditions of this Agreement. None of the terms and conditions set forth on any Purchase Order, invoice or the like shall change or modify the provisions of this Agreement unless it is signed and delivered by authorized representatives of both Parties and it clearly indicates by specific reference to this Agreement that the Parties intended to vary its provisions.

5.3	Delivery Terms, Risk of Loss, Title
	IPC shall sell and deliver the Product [*****]. Taro shall, subject to the terms of this Agreement thereafter [*****]. Except for any non- conforming Product, good and marketable title to Product, free and clear of all liens, claims, security interests, pledges, charges, mortgages, deeds of trusts, options, or other encumbrances of any kind, will be transferred to Taro upon delivery of the Product to Taro’s carrier at IPC’s manufacturing facility.
5.4	Non-Conforming Product
	All Product delivered to Taro under this Agreement shall have an expiry date, as at the date of receipt and acceptance by Taro, which is not less than [*****] of the total shelf life set out in the Specifications. IPC shall use commercially reasonable efforts to deliver Product to Taro in order to maximize the remaining shelf life when delivered to Taro. Any Product which is non-conforming to the Specifications shall be returned by Taro to IPC at IPC's expense in accordance with and subject to Section 9.2 of this Agreement. [*****] At all times title to all such non-conforming Product and any waste associated therewith shall remain with IPC.
5.5	Back Orders
	Where Taro has placed an order for Product in accordance with this Article V and such Product is not delivered to Taro on a timely basis (for reasons other than Force Majeure) and is back-ordered for a period in excess of [*****], if Taro incurs customer fines or penalties as a result, Taro will provide to IPC proof thereof which shall only include identity of the customer, and the amount of the Customer Penalty (as defined below) that has been paid by Taro, and IPC shall reimburse Taro for (A) and (B) [*****] (each of (A) and (B) “Customer Penalties”).

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ARTICLE VI - SUPPLY PRICE AND PAYMENT

6.1 Supply Price

(a)	For Product delivered by IPC in accordance with this Agreement, Taro shall pay to IPC the applicable Supply Price. [*****]. The Supply Price shall not be changed for the initial [*****] commencing from the Launch Date.
(b)	[*****]
(c)	[*****]

6.2	Payment Terms
	Taro shall, in accordance with and subject to the terms of this Agreement including Section 9.2, pay IPC the total Supply Price for the Product as follows:

(a)	[*****].
(b)	[*****].

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(c)	[*****].
(d)	[*****].

6.3	Expired Product Returns
	Provided that the Product meets the minimum shelf life requirement set out in Section 5.4, the Specifications and other warranties given by IPC under Section 10.2 of this Agreement, Taro shall be responsible for all returned expired Product which Taro will destroy at its cost.
ARTICLE  VII - INTELLECTUAL PROPERTY AND LABELLING
7.1	Canadian Patent Review
	Each of Taro and IPC agree to inform each other of any patents which it is, or becomes, aware of that may potentially constitute an obstacle to the marketing, distribution and sale of the Product in the Territory and IPC shall work with Taro, as necessary, to take any reasonable steps to endeavour to avoid the likelihood of any patent infringement in the Territory. It is acknowledged that the terms of Article XI which deal with indemnification matters shall govern in the event of a patent infringement claim.
	Taro and IPC shall both retain the right to control (i.e., to take actions and make decisions) any litigation instituted by a third party relating to claims of infringement of patents against either Party or their respective affiliates, during the Term relating to the Product. Taro and IPC shall fully cooperate and collaborate with each other in the defense of any such suit and IPC shall be responsible for any legal expenses relating thereto. Without limiting the foregoing, in the event that either party, as part of any settlement agreement or other agreement with any third party with respect to the commercialization of the Product in the Territory, receives any settlement proceeds from such third party, such settlement proceeds shall be applied, first, to pay or reimburse IPC for all legal expenses incurred in connection with the related litigation and, second, any remaining settlement proceeds shall be applied to compensate Taro for any lost revenue after deducting the cost of goods and any expired or shorted inventory as a result of the litigation.
7.2	Use of Taro Trade Marks

(a) Taro may use one or more Taro Trade Marks on the Product and related promotional materials. Any such use shall be in accordance with this Agreement and Applicable Laws and shall enure to the benefit of Taro along with any goodwill. Taro shall retain ownership and control of the entire right, title and interest in and to the Taro Trade Marks and Taro shall, where it deems necessary and at its cost and expense, register or maintain, or cause to have registered or maintained, the Taro Trade Marks in the Territory.

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(b)	Subject to the terms and conditions of this Agreement, Taro hereby grants to IPC the limited right to use, without charge, the Taro Trade Marks solely in relation to the packaging and labelling of the Product including all printed materials and package inserts. Nothing in this Agreement shall give IPC any right to use any Taro Trade Mark or trade name except on the Product packaging and labelling supplied to Taro under this Agreement, and IPC shall not obtain any right, title or interest in or to any Taro Trade Mark by virtue of this Agreement or its performance of services under this Agreement. IPC acknowledges the validity of the Taro Trade Marks and covenants that it shall not directly or indirectly challenge the validity or the right, title and interest of Taro or its Affiliates in and to the Taro Trade Marks and further acknowledges that use of the Taro Trade Marks shall only be done pursuant to the terms of this Agreement and shall be subject to Taro’s approval and control. Upon expiration or termination of this Agreement for whatsoever reason, IPC shall have no right to use the Taro Trade Marks for any purpose.
(c)	Each of the Parties agrees that while this Agreement is in effect or following its expiration or termination for any reason, if any right, title or interest in or to the Taro Trade Marks becomes vested in IPC, by reason of law or otherwise by reason of this Agreement, IPC shall hold the same in trust for Taro, or its Affiliates and shall, at the request of Taro or its Affiliates, forthwith unconditionally assign any such right, title or interest to Taro or its Affiliates.
(d)	Additionally, IPC shall not, shall cause its Affiliates not to, and shall not authorize or permit any Third Party to:

(i)	use, reproduce or display the Taro Trade Marks in any manner other than as expressly permitted in this Agreement, in connection with any product or service other than the Products;
(ii)	alter, remove or tamper with the Taro Trade Marks, or other means of identification used on or in relation to the Products;
(iii)	use the Taro Trade Marks in any way which might prejudice its distinctiveness or validity or the goodwill of Taro or its Affiliates;
(iv)	use in relation to the Products any trademarks, tradename or logos other than the those provided by Taro, without obtaining the prior written consent of Taro;

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(v)	modify any Taro Trade Marks, including by varying the presentation, color, typeface, orientation or other aspect of the Taro Trade Marks from the manner in which each such Taro Trade Mark is presented by Taro, without the prior written consent of Taro;
(vi)	take any action that could reasonably be expected to dilute or adversely affect Taro’s rights in or the enforceability of the Taro Trade Marks or the goodwill appurtenant thereto;
(vii)	do, or authorize any Third Party to do, any act which would or might invalidate or be inconsistent with any intellectual property of Taro or its Affiliates, and shall not omit or authorize any Third Party to omit to do any act which, by its omission, would have that effect or character; or
(viii)	register any domain name involving the trademarks, and/or otherwise related with Products without Taro’s prior written consent.

(e) Taro shall upon any infringement of any Taro Trade Marks by Third Parties, at its own expense to maintain the Taro Trade Marks and protect them from acts of infringement by Third Parties. IPC shall notify Taro of any trademark infringement of which it has knowledge and will give Taro all necessary support to protect such infringement within the Territory. Therefore, if it is necessary, due to local legislation that IPC institutes that proceedings or is party to a lawsuit as defendant, Taro will meet the costs provided expenditure is incurred by IPC but subject to prior written approval from Taro. Taro shall have the right to appoint the attorneys that will represent IPC in the proceedings and shall also have the right to supervise and instruct such attorneys with respect to such proceedings.

ARTICLE VIII - PRODUCT MARKING, LABELLING AND PROMOTION

8.1	Product Marking
	The Product shall be marked with such Taro Trade Marks or other trademarks as Taro shall determine and IPC will be notified accordingly.
8.2	Taro Label Design
	The Product to be marketed by Taro, and all artwork for labelling and packaging (including package inserts), advertising and promotional material, shall be developed and exclusively owned by Taro at Taro's cost of development and featuring such Taro Trade Marks as designated by Taro. IPC shall provide all technical Specifications required by Taro for label design to Taro within [*****] of the date of such request by Taro and thereafter immediately upon any change in such Specifications. In the event that Taro requests new and/or additional label designs for the Product after receipt of the Marketing Approvals, Taro shall inform IPC at least [*****] prior to any change and IPC shall deliver Product with the new and/or additional label designs to Taro. To the extent that IPC is unable to use the outstanding inventory due to the change of label designs, Taro shall pay the cost of remaining inventory in stock for no more than six (6) months with IPC.

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8.3	Supply of Labels and Printed Materials
	IPC shall furnish all labelling and packaging (including package inserts and printed materials) required by Taro for the distribution, marketing and sale of the Product in the Territory in conformance with Taro’s instructions. [*****].
8.4	Promotion by Taro

(a)	Except as otherwise expressly provided for herein, Taro shall be responsible for all sales, marketing and distribution expenses, including all advertising and promotional materials, relating to the distribution, marketing and sale of the Product by Taro in the Territory. All advertising and promotional materials developed by Taro shall comply with Applicable Laws in the Territory.
(b)	For greater certainty, Taro shall be responsible for all customer transactions involving the sale of the Product by it in the Territory, including establishing the pricing for the Product, the collection of accounts receivable and any customer credit risk.

8.5 Further Obligations of IPC. During the Term, IPC shall

(a)	promptly notify Taro of any comments, responses or notices received from Health Canada, or other applicable regulatory authorities, which relate to or may impact the Product or the manufacture or commercialization of the Product. At its own cost, IPC shall obtain and maintain any and all Approvals with respect to the manufacture and supply of the Product;
(b)	provide ongoing technical support to Taro in responding to any Product inquiries, and Product complaints and adverse experience reports within the time required by law or regulation, and in evaluating the need for recall; and
(c)	reasonably cooperate with Taro in its commercialization activities by, among other things, supplying pertinent Product documentation as requested.

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ARTICLE IX - TESTING AND INSPECTION OF PRODUCT

9.1	Delivery of Specifications
	A copy of the specifications for the Product shall be included in the Quality Agreement and a Certificate of Analysis (CoA) and a Certificate of Compliance of the Product manufactured shall accompany all Purchase Orders delivered to Taro.
9.2	Tests and Assays

(a)	Prior to each shipment of Product to Taro, IPC shall be responsible for all sampling and quality control testing of the Product in accordance with the methods of analysis set forth in the Specifications required to determine whether the Product conforms to the Specifications. [*****].
(b)	Taro shall also have a period of [*****] following its receipt of Product to notify IPC by sending a written notice (a “Rejection Notice”) of any defect in packaging or labelling or any shortage in count reasonably determinable through a visual inspection made with reasonable care by or on behalf of Taro. For defects not discovered by Taro in such inspection, which shall be considered as latent defects that are attributable to the manufacture, handling, or storage of the Product before Taro’s receipt of the Product, Taro shall have the right to send a Rejection Notice to IPC within [*****] after it becomes aware of such latent defect.
(c)	IPC shall notify Taro as promptly as reasonably possible, but in any event within [*****] after receipt of a Rejection Notice, whether it accepts the assertions of nonconformity made by or on behalf of Taro. If IPC does not so notify Taro within [*****] of IPC’s receipt of the product samples as to whether or not it agrees with the basis of Taro’s rejection, IPC shall be deemed to be in agreement therewith. If Taro delivers a Rejection Notice in respect of all or any part of a shipment of Product, then IPC and Taro shall have [*****] from the date of IPC’s receipt of such notice to resolve any dispute regarding whether all or any part of such shipment of Product fails to conform with the Specifications therefore or is otherwise defective.
(d)	Any dispute arising out of the Rejection Notice not resolved in the timeframes set forth herein will be submitted to an independent, reputable laboratory acceptable to both Parties, which shall carry out analyses with respect to the Product using the methods of analysis in the Specifications. In the event the Parties are unable to designate a reputable laboratory acceptable to both of them within [*****] of receipt by IPC of Taro’s written notification, the matter will be deemed to be a Dispute to be resolved in accordance with the terms of Section 21.4. The results obtained by such independent laboratory shall be binding upon the Parties for purposes of this Agreement and the costs of such tests shall be borne by the Party whose test results are not upheld by such independent laboratory testing.

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(e)

In the event it is determined that Product shipped by IPC to Taro does not conform to the Specifications, IPC shall, at Taro’s discretion, either (i) reimburse Taro forthwith for the Supply Price and shipping, storage and insurance costs of the Product; or (ii) replace the non-conforming Product with replacement Product that conforms to the Specifications without any cost [*****] charged to Taro as soon as possible but in any event within [*****] from the date that it is determined that such Product is non-conforming any Product destruction will be at IPC’s cost.

(f)

In the event it is determined that Product shipped by IPC to Taro conforms to the Specifications, Taro shall accept the Product in question and Taro shall pay for the same within [*****], if not already paid.

9.3	On-Going Stability Testing
	IPC shall also be responsible for conducting on-going stability testing on commercial batches of the Product, including the establishment and support of expiration dating, in accordance with GMPs and Applicable Laws in the Territory. [*****].
9.4	Retain Samples
	IPC shall take a sample of each lot or batch of Product manufactured and/or packaged by it hereunder. Such samples shall be in an amount sufficient to determine that such lot or batch conforms to the Specifications and shall be retained by IPC for a period of [*****] after the expiry date of the Product.
9.5	Product Investigations
	IPC is responsible for conducting full quality assurance investigations per IPC’s standard operating procedures, which shall at least be reasonable and consistent with Good Manufacturing Practices, for any Product found not to conform with the Specifications.

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ARTICLE X - WARRANTIES AND COVENANTS

10.1 Mutual Representations and Warranties. Each party hereby represents and warrants to the other party as follows:

(a)	Such party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated.
(b)	Such party (a) has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder, and (b) has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder. This Agreement has been duly executed and delivered on behalf of such party, and constitutes a legal, valid, binding obligation, enforceable against such party in accordance with its terms.
(c)	All necessary consents, approvals and authorizations of all governmental authorities and other Persons required to be obtained by such party in connection with its performance of this Agreement have been obtained.
(d)	The execution and delivery of this Agreement and the performance of such party’s obligations hereunder (a) do not conflict with or violate any requirement of Applicable Laws or regulations, and (b) do not conflict with, or constitute a default under, any material contractual obligation of such party.

10.2	IPC’s Warranties and Covenants
	IPC hereby represents and warrants as follows to Taro:

(a)	IPC owns and shall maintain sole ownership of its entire right, title and interest in and to the IPC IP, and IPC’s right, title and interest in and to the IPC IP is sufficient to perform its obligations hereunder; there are no pending or threatened actions challenging IPC’s inventorship, ownership, or right to use the IPC IP.
(b)	neither (a) the manufacturing of the Product nor (b) the marketing, promotion, storing, warehousing, distribution, selling, importing, exporting and/or otherwise commercializing the Product in the Territory, will infringe any third party Intellectual Property rights;
(c)	as the Effective Date and during the Term, IPC or its Affiliates have not granted and will not grant any rights to, or take any action that would impose or result in a lien, charge or encumbrance of the IPC IP or the Product that conflict with the rights granted to Taro hereunder, and no third party has, or will have, a right under the IPC IP to commercialize the Product in the Territory. Further, IPC covenants that it will not assign, transfer, convey or otherwise grant to any person any rights to any IPC IP or the Product in any manner that conflicts with licenses granted to Taro in the Territory;
(d)	IPC shall maintain in effect and good standing all required Approvals and Consents regarding the use of its designated facility to manufacture, test, label, package, store and, if required, export the Product;
(e)	IPC shall maintain in effect and good standing all required Approvals and capacity regarding the Product and the use of its designated facility to manufacture, test, label, package, store and, if applicable, export the Product, including without limitation (i) the Approval(s) issued to it by the TPD with respect to the maintenance of Good Manufacturing Practices, and (ii) the drug master file(s) in respect of raw materials and ingredients used in the formulation of the Product;

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(f)	IPC has the full title to and the right, power and authority to deliver the regulatory documentation for the Product sufficient to enable Taro to obtain all Marketing Approvals required for the marketing, distribution and sale of the Product in the Territory to be granted by Health Canada; and is not aware of any facts or circumstances that any part of the regulatory documentation is subject to any restriction, covenant or license or obligation (other than this Agreement) or judicial or administrative order of any kind;
(g)	IPC has not received any written notice from any governmental authority in the Territory with respect to any actual or alleged violation and/or failure to comply with any applicable law as related to the Product and there has not been any documents or correspondences with the government authority in the Territory related to the Product that will prevent the development, licensing, manufacturing, supply or commercialization of the Product;
(h)	IPC shall manufacture, test, label, package, store and ship all Product in accordance with (i) applicable Specifications, (ii) Good Manufacturing Practices, (iii) required Approvals, (iv) Applicable Laws and (v) otherwise in accordance with all product manufacturing requirements including the Quality Agreement;
(i)	Each of the Products supplied by it to Taro pursuant to this Agreement shall meet and be capable of maintaining the purity, potency and other product characteristics, as contained in its Specifications and Product Approvals, until the expiration date for the Product;
(j)	The Active Ingredients, excipients, raw materials and Product shall meet all of the applicable Specifications and shall be free from defects including inherent defects, misbranding, adulteration and defects in manufacture, materials or composition; The Product supplied to Taro will only be manufactured using components purchased from vendors approved by Health Canada and listed in the Marketing Approvals of the Product;
(k)	IPC will make no changes in the raw materials, packaging components or in the supplier thereof, or changes to the Production facility that will impact a Product or any Approval without the prior written notice to Taro;
(l)	IPC will use its best efforts in performing its obligations under this Agreement within the timelines therein set out;
(m)	IPC shall comply with all Applicable Laws in respect of the transportation and disposal of non-conforming Product, Active Ingredients, raw materials and all other wastes generated from the manufacture, testing, labelling, packaging and exporting of the Product; and
(n)	IPC now has in effect and shall maintain in good standing throughout the term of this Agreement, comprehensive liability insurance, including product liability and product recall insurance, in the amount of [*****] per occurrence from a reputable and financially secure insurance carrier licensed to do business in the Territory, to cover any liability or obligation arising under or related to IPC’s performance of its obligations under this Agreement.

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10.3	T aro’s Warranties and Covenants
	Taro hereby represents and warrants to IPC as follows:

(a)	Upon obtaining the Marketing Approvals, Taro shall maintain in effect all required Marketing Approvals regarding the Product and shall store, distribute, market and sell Product in accordance with all such Marketing Approvals, Applicable Laws and Good Manufacturing Practices; and
(b)	Taro shall, through the Term of this Agreement, carry and keep in force comprehensive liability insurance, including product liability insurance, in the amount of [*****] per occurrence (through commercially placed insurance, self-insurance or a combination of self-insurance and commercially placed insurance) in such form, amount and effect to fulfill its obligations under this Agreement.
(c)	Taro warrants and agrees to use commercially reasonable efforts to sell the Product by, among other things, at all times maintaining staffing and sales personnel; not using the Product as a “loss leader” to sell other of Taro’s products.

ARTICLE XI - INDEMNIFICATION, RECALLS

NON-CONFORMING PRODUCTS, ADVERSE DRUG REACTIONS

11.1

Indemnity to Taro

IPC shall defend, indemnify and hold Taro, its Affiliates and their respective shareholders, officers, directors, employees and agents (collectively the “Taro Indemnitees”) harmless from and against any and all costs, claims, expenses (including, reasonable attorneys’ fees and costs of litigation, regardless of outcome and costs of clean-up, remediation or restoration), liabilities and damages arising from or relating to any claim, action or proceeding made by or brought by a Third Party with respect to or arising out of:

(a) the Product (including without limitation, the manufacture, testing, storage, packaging and shipment of the Product), any inherent defects in the Product and recall of the Product attributable to IPC;

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(b)	IPC’s material breach of any of its representations, warranties, undertaking, obligations, acknowledgments or covenants set forth in Sections 10.1 or 10. 2 or material breach of any other provision of this Agreement by IPC;
(c)	IPC’s storage, transportation, or disposal of non-conforming Product, Active Ingredients, raw materials or other wastes pursuant to this Agreement;
(d)	the negligence, fraud, wilful misconduct, or failure to comply with Applicable Law on the part of any IPC Indemnitee (as defined below),
(e)	actual or claimed infringement of any third party intellectual property rights in the Territory, or
(f)	Taro’s use of IPC IP in the commercialization of a Product.
Notwithstanding the foregoing, IPC shall have no obligation to indemnify any of the Taro Indemnitees under this Section 11.1 if any of the costs, claims, expenses, liabilities or damages referred to above arise from the gross negligence, recklessness or intentional acts of any of the Taro Indemnitees or to the extent such costs, claims, expenses, liabilities or damages give rise to an indemnification claim of IPC under Section 11.2 below.

11.2

Indemnity to IPC

Taro shall defend, indemnify and hold IPC, its Affiliates and their respective shareholders, officers, directors, employees and agents (collectively the “IPC Indemnitees”) harmless from and against any and all costs, claims, expenses (including without limitation, reasonable attorneys’ fees and costs of litigation, regardless of outcome and costs of clean- up, remediation or restoration), liabilities and damages arising from or relating to any claim, action or proceeding made or brought by a Third Party with respect to or arising out of:

(a)	Taro’s negligence or wilful misconduct in connection with the import, storage, use, marketing, distribution, handling or sale of the Product by Taro;
(b)	Taro’s material breach of any of its warranties set forth in Section 10.1 or 10.3 or material breach of any other provision of this Agreement by Taro; or
(c)	any actual or claimed trademark infringement with respect to the Taro Trade Marks.
Notwithstanding the foregoing, Taro shall have no obligation to indemnify any of the IPC Indemnities under this Section 11.2 if any of the costs, claims, expenses, liabilities or damages referred to above arise solely from gross negligence, recklessness or intentional acts of any of the IPC Indemnitees or to the extent such costs, claims, expenses, liabilities or damages give rise to an indemnification claim of Taro under Section 11.1 above.

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11.3	Notification of Third Party Claims
	The Party seeking indemnity under Section 11.1 or 11.2, as the case may be, shall promptly notify the other Party (the “Indemnifying Party”) in writing upon receipt of notice of any claim or potential claim covered under this Article XI, and shall allow the Indemnifying Party to intervene, control and handle (including settle provided it has obtained the other Party’s prior written consent) any such claim or suit at its own expense; provided that the Party seeking indemnity may also be represented in such proceedings by counsel of its choice. The Indemnifying Party shall be given adequate authority, information, and assistance and co-operation by the Party seeking indemnity for the defense of such claims.
11.4	Recalls

(a)	Taro may decide to recall the Product after consultation with IPC and notice to it. IPC shall co-operate with Taro in carrying out any recall of the Product, whether voluntarily or imposed by a Governmental Authority and, if applicable, in identifying and correcting any deficiency in the manufacture and/or packaging of the Product.
(b)	In the event of a recall of the Product (whether by Governmental Authority or otherwise) resulting solely from the manufacturing, testing, storage, handling, packaging, labelling or shipping of Product by IPC, IPC shall be responsible for the identification and correction of any deficiencies in the Product and the replacement of recalled Product including responsibility for the cost of notices, shipping and testing of the Product, as well as the manufacture, packaging, testing and shipping of replacement Product and distribution expenses up to [*****] of the selling price (the wholesale list price which may vary between provinces) and third- party recall expenses. Taro agrees to offer reasonable assistance to IPC in such an event.
(c)	In the event of a recall of the Product (whether by Governmental Authority or otherwise) resulting solely from the storage, handling, packaging, labelling or shipping of Product by Taro and its sub-licensees, Taro shall be responsible for the identification and correction of any deficiencies in the Product and the replacement of recalled Product including responsibility for the cost of notices, shipping and testing of the Product, as well as the manufacture, packaging, testing and shipping of replacement Product and distribution expenses and third-party recall expenses. IPC agrees to offer reasonable assistance to Taro in such an event.
(d)	In the event a recall is not due to either party’s act or omission as defined herein, the recall costs shall be shared by the parties equally or as otherwise mutually agreed upon by the parties.

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 ARTICLE XII - TERM AND TERMINATION

12.1	Initial Term
	The initial term of this Agreement shall commence on the Effective Date and shall be in effect for a period of [*****] from the Launch Date of the Product, unless terminated earlier in accordance with the provisions hereof.
12.2	Renewal Terms
	This Agreement shall be renewed automatically for additional one (1) year renewal terms (unless terminated earlier in accordance with the provisions hereof) from the date of expiry of the initial term set out in Section 12.1 or any subsequent renewed term, unless either party provides to the other with a written notice to the effect that it does not wish to renew this Agreement at least ninety (90) days prior to the expiry of the initial term or any subsequent renewal term. The initial term and all applicable renewal terms are collectively referred to as the “Term”.
12.3	Early Termination

(a)	Either Party shall have the right to terminate this Agreement if the other Party commits a material breach of this Agreement and fails to cure such breach within sixty (60) days after receiving written notice of such breach from the non-breaching Party.
(b)	IPC may terminate this Agreement pursuant to Section 4.4.
(c)	Either Party shall also have the right to terminate this Agreement in the event the other Party is declared insolvent or bankrupt by a court of competent jurisdiction, or it files a proposal, assignment for the benefit of creditors, arrangement, composition or seeks similar relief under any bankruptcy law including the Bankruptcy and Insolvency Act and the Company’s Creditors Arrangement Act, or the other Party is in receivership, in which case termination shall be effective upon written notice to that effect.
(d)	In the event the Product is back-ordered for more than [*****] and IPC fails to qualify an alternate manufacturing site in accordance with the terms of Section 4.3 to Taro’s satisfaction, Taro shall be entitled to terminate the Agreement with [*****] written notice to IPC.
(e)	Taro shall also be entitled to terminate this Agreement if as a result of a Third Party claim (actual or threatened) alleging infringement of such Third Party’s intellectual property including any patent right or of any other nature whatsoever, Taro, acting reasonably, determines that it cannot continue to commercialize the Product in the Territory.

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12.4 Effect of Termination

(a)

Except as otherwise herein expressly set out, termination of this Agreement shall not operate to release either party from any obligation or liability incurred under this Agreement prior to or upon termination hereof.

(b)

If this Agreement is terminated by IPC pursuant to Section 12.3 (a) and 12.3 (b) , and, (i) Taro has, prior to the effective date of termination as set forth in IPC’s termination notice (the “Termination Date”), placed a firm written order for the Product and such order has not yet been delivered by IPC, and (ii) Taro provides written notice to IPC prior to the Termination Date that it does not require the order to be delivered, then Taro agrees, subject to the terms of this Agreement including Section 9.2, to be responsible for:

(i)	if the delivery date requested by Taro under the order is prior to the Termination Date, the applicable Supply Price of any finished Product already produced for the purpose of filling such order;
(ii)	if the delivery date requested by Taro under the order is on or after the Termination Date, IPC’s cost of any finished or unfinished Product manufactured for the purpose of filling such order;
(iii)	the cost of IPC’s raw materials inventory (API and excipients) required to fill any remaining portion of such order (i.e. less any raw materials that have been used or consumed in the production of any finished or unfinished Product by IPC for the purpose of filling such order and any such API or excipients that can be reasonably used to accommodate other customers or markets); and
(iv)	IPC’s cost of packaging materials for the Product (up to a maximum [*****] supply from the Termination Date, based on the then current forecast).

12.5

Continued Supply after Early Termination

Provided IPC has the capability to continue manufacturing the Product upon early termination or expiry of this Agreement for any reason, IPC shall, for a reasonable period thereafter (to be agreed upon by both Parties in writing, but if no such agreement is reached, such period shall not be greater [*****]) continue to supply Taro with any additional quantity of Product that Taro may require during such period following expiry or early termination of the Agreement. However, IPC shall not be obligated to supply the Product if the Agreement is terminated early because: (i) of a Taro uncured breach within the scope of Section 12.3(a); or (ii) of a Taro insolvency or bankruptcy within the scope of Section 12.3(c).

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12.6	Right to Claim Damages.
	For greater certainty, it is acknowledged that in addition to any other right of the terminating party under the terms of this Agreement and under Applicable Laws, the terminating party maintains all of its rights to claim damages against the defaulting party, subject, however, to the terms and conditions set out in this Agreement and to the general principles of Applicable Laws governing the duties of the terminating party in such circumstances.
12.7	Limitations of Liability.
	UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY (WHETHER UNDER CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE), OR TO ANY THIRD PARTY, FOR ANY INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, OR MULTIPLE DAMAGES, INCLUDING, WITHOUT LIMITATION, FOR ANY LOSS OR DAMAGE TO BUSINESS EARNINGS, ANTICIPATED SALES, ANTICIPATED OR LOST PROFITS OR GOODWILL, SUFFERED BY THE OTHER PARTY AND/OR RELATED WITH, AND/OR CONNECTED TO, THE PERFORMANCE OF THIS AGREEMENT, EVEN IF SUCH PARTY IS ADVISED OF, OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF, SUCH DAMAGES.  FOR THE AVOIDANCE OF DOUBT, THE FOREGOING DOES NOT LIMIT ANY OF THE OBLIGATIONS OR LIABILITIES OF EITHER PARTY PURSUANT TO SECTIONS 11.1 Error! Reference source not found. AND 11.2 OR TO THE EXTENT ARISING OUT OF OR A BREACH OF ARTICLE VII (CONFIDENTIATLITY) OR XIV (CONFIDENTIALITY).

ARTICLE XIII - RECORDS AND RIGHT OF INSPECTION

13.1	Inspection by Taro
	IPC shall allow Taro and/or its authorized representatives, agents or advisors, upon advance notice and once in a calendar year, to enter its facilities for the purpose of inspecting and auditing the facility where the Product is manufactured, packaged and stored, and verifying IPC’s compliance with the terms of this Agreement. If pursuant to any audit and/or inspection hereunder, Taro notifies IPC of any deviations from any Product Approvals (including NOC commitments), Specifications or Good Manufacturing Practices, then IPC shall develop a plan of action to correct such deficiencies that is acceptable to Taro and shall promptly carry out such plan at its own expense.
13.2	Inspection by TPD
	IPC shall permit representatives of any Governmental Authority to inspect its facility where the Product is manufactured, packaged and stored, and shall notify Taro within three (3) days upon learning of such inspections or inquiries regarding its facilities or operations as they may pertain to the Product. IPC shall notify Taro of any deficiencies in its facilities or operations pertaining to the Product that are noted by such Governmental Authority and shall promptly comply at its own expense with any requirements that may be imposed by such Governmental Authority concerning the Product.

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ARTICLE XIV - CONFIDENTIALITY

14.1 Acknowledgment

(a) The term “Confidential Information” includes all information treated by or on behalf of the disclosing party or its Affiliate as confidential or proprietary, including but not limited to, any formulae, data, specifications, methods, techniques, processes, procedures, work papers, concepts, strategies, components, programs, reports, studies, memoranda, correspondence, materials, manuals, records, technology, products, plans, research, service, design information, documentation, policies, pricing, billing, customer lists and leads, and any other data, information and know-how, technical or non-technical, whether written, graphic, computer- generated which relate to the disclosing party’s or its Affiliates’ products or customers or potential customers or suppliers or potential suppliers or are otherwise useful in the disclosing party’s or its Affiliates’ business, this Agreement or any addendums thereto, or any discussions and proceedings relating to any of the foregoing, and which the disclosing party desires to maintain confidential. Confidential Information includes any copies thereof. Confidential Information will be entitled to protection hereunder whether or not such information is oral or written, whether or not such information is identified as such by an appropriate stamp or marking on each document; provided however, that if Confidential Information is first orally provided, such Confidential Information is identified at the time of disclosure as Confidential Information. Therefore, each party shall safeguard the confidential and proprietary nature of the Confidential Information of the other party with at least the same degree of care as it holds its own confidential or proprietary information of like kind, which shall be no less than a reasonable degree of care. Each party agrees not to use such Confidential Information except for the purposes contemplated by this Agreement and not to disclose such Confidential Information to others (except to such of its employees and Affiliates and their employees who reasonably require same for the purposes hereof and who are bound to it by like obligations as to confidentiality and non- use) without the express written permission of the other party, except that neither party shall be prevented from using or disclosing any portion of such Confidential Information:

(i)	which such party can demonstrate by its written records was known to it from a source other than the other party or its Affiliates prior to the disclosure hereunder; or
(ii)	which is now, or becomes in the future, public knowledge other than by breach of this Section 14.1 by such party or its Affiliates; or

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(iii)	which is lawfully obtained on a non-confidential basis by such party from a Third Party who is not obligated to retain such information in confidence; or
(iv)	which is developed by the recipient party or its Affiliates independently of the disclosures made to it under this Agreement, and can be so demonstrated by the written records of the recipient party or its Affiliates.

(b)	Nothing hereunder shall be interpreted to prevent the recipient party from disclosing Confidential Information that it is ordered to disclose by a Governmental Authority, provided that the recipient party gives sufficient prior notice of such required disclosure to the other party and cooperates with and assists the other Party in seeking a protective order or other similar assurance with respect to the confidentiality of the information required to be disclosed. In such circumstances, the recipient party shall only disclose that portion of the Confidential Information which it is legally required to disclose.
(c)	The Parties agree not to disclose any terms or conditions of this Agreement (or any agreement entered into in connection herewith) to any third party without the prior consent of the other Party, except as required by applicable law. If either Party determines that it is required to file this Agreement (or any agreement entered into in connection herewith) with any governmental agency for any reason, such Party shall request confidential treatment of such portions of this Agreement (or such other agreement) as either Party hereto shall deem appropriate.
(d)	Neither Party will issue any press release or make any other public disclosure of the nature of or existence of this Agreement without the prior written consent of the other Party; provided that, either Party may make such disclosure of the nature and existence of this Agreement, in the exercise of reasonable judgment, as is legally required.
(e)	The obligations of both parties under Section 14.1 shall remain in full force and effect for ten (10) years following the expiration or termination of this Agreement.

14.2

Remedies

Each party further agrees that release of any of the other party’s Confidential Information in breach hereof, whether directly or indirectly, would cause irreparable injury to the disclosing party and the disclosing party will, in addition to any other rights and remedies the disclosing party may have at law or in equity, be entitled seek an injunction enjoining and restraining the receiving party from violating or threatening to breach this Article XIV.

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ARTICLE XV - FORCE MAJEURE

15.1	No Liability for Damages
	Neither Party shall be liable in damages by reason of any delay or default in such Party’s performance under this Agreement if such default or delay is caused by events beyond such Party’s reasonable control including acts of God, order or other action of any Governmental Authority (except where such action applies only to the Party but not to any other pharmaceutical company in the Territory), war or insurrection, civil commotion, catastrophic events including earthquakes, destruction or damage of production facilities or materials by earthquake, fire, flood or storm, labour disturbances, epidemic, or failure of public utilities or common carriers directly affecting or impeding raw material or drug product procurement, manufacture or supply (as applicable) (collectively referred to as a “Force Majeure Event”). Any party invoking a Force Majeure Event, shall notify the other party within five (5) days of the Force Majeure Event commencing. The notice shall fully describe the alleged Force Majeure Event, how the event has impacted the party’s ability to perform its obligations, and the efforts the party has taken to remediate the event. The party shall also update the other party monthly of developments taken by the party to remediate the event. In no circumstance may the invoking party use generalized allegations of an event as a justification for a Force Majeure Event.
15.2	Best Efforts to Remedy
	If the performance of either Party under this Agreement is delayed or suspended as a result of the occurrence of a Force Majeure Event, that Party shall notify forthwith of the nature and extent of any such delay or inability to perform, and IPC shall use its best efforts to eliminate the cause of any such delay or inability to perform. If a Force Majeure Event continues for more than sixty (60) days starting on the day the Force Majeure Event starts, either Party may terminate this Agreement by giving not less than thirty (30) days written notice to the other Party.

ARTICLE XVI - INDEPENDENT CONTRACTORS

16.1

Parties are Independent Contractors

Each Party is solely an independent contractor with respect to the other Party and nothing in this Agreement shall be construed to give either Party the power or authority to act for, bind or commit the other Party. Accordingly, each Party agrees that it will not at any time enter into or incur, or hold itself out to any Third Party as having authority to enter into or incur, any commitments, expenses or liabilities whatsoever on behalf of the other Party. Subject to terms under this Agreement, neither Party shall, without the other Party’s prior written consent use the other Party’s name on its stationery, advertising, or the like in a manner that might suggest that either Party is the other’s principal or agent, as the case may be, or make quotations or write letters under the name or on behalf of the other Party.

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ARTICLE XVII - NOTICES

17.1	Notice
	Any notice, payment, report, or other correspondence (hereinafter collectively referred to as “correspondence”) required or permitted to be given under this Agreement shall be sufficiently given if delivered by courier or sent by prepaid telecopier or facsimile to the Party to whom such correspondence is required or permitted to be given. If sent by telecopier or other facsimile communication, any such correspondence shall be deemed to have been given on the next business day following such transmission. If delivered by courier, any such correspondence shall be deemed to have been given when delivered to the Party to whom such correspondence is given. Either Party may, by giving notice as provided in this Section 17.1, change its address for receiving such notice.
17.2	Addresses

(a)	All correspondence to IPC shall be addressed as follows:
	President & CSO Intellipharmaceutics Corp. 30 Worcester Road, Toronto, ON, Canada M9W 5X2
	Attention: Dr. Amina Odidi, President & CSO Fax Number: (416) 798-3007 Phone Number: (416) 798-3001 Ext. 103

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(b)	All correspondence to Taro shall be addressed as follows:
	Taro Pharmaceuticals Inc. Attention: Andreas Wegner, Vice President Head of Manufacturing Brampton,130 East Drive, Brampton, Ontario L6T 1C1 Canada
	With a copy to: Taro Pharmaceuticals Inc. Attention: General Counsel East Drive, Brampton, Ontario L6T 1C1 Canada Legal.contracts@taro.com

ARTICLE XVIII - ASSIGNMENT, CHANGE OF CONTROL

18.1	Assignment to Affiliates
	Either Party may at its sole discretion and without approval by the other Party:

(a)	assign this Agreement or transfer its interest or any part thereof under this Agreement to any of its Affiliates; or
(b)	designate and cause any of its Affiliates to perform all or part of its obligations or to have the benefit of all or part of its rights under this Agreement.
In the event of any such assignment, transfer or designation, the assignee, transferee or designee shall assume and be bound by the provisions of this Agreement and the assigning Party shall remain solely liable with such assignee, transferee or designee for the performance of all such provisions.

18.2

Assignment to Third Parties

Except for assignments in accordance with Section 18.1 and the rights to sublicense referred to in Article II hereof, this Agreement may not be assigned to a Third Party by a Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. In such a case, the assigning Party shall remain solely liable with the assignee for the performance of all obligations which have been assigned.

ARTICLE XIX - SURVIVAL OF TERMS

19.1	Survival
	The provisions of Sections 5.4, 12.4, 12.5, and Articles IX, X, XI, XII, XIV, XIX, XX and XXI and any other provision contained herein which contemplates survival beyond termination shall survive the termination of this Agreement.

-32-

19.2	Interpretation
	The provisions of this Agreement which do not survive termination hereof (as the case may be) shall, nonetheless, be controlling on, and shall be used in construing and interpreting the rights and obligations of the Parties hereto with regard to any Dispute, which may arise under, out of, in connection with, or relating to this Agreement.

ARTICLE XX - GOVERNING LAW AND ATTORNMENT

20.1	Governing Law
	This Agreement and any Dispute arising from or in relation to this Agreement shall be governed by, interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein (but without giving effect to any conflict of laws rules).

ARTICLE XXI - GENERAL MATTERS

21.1	Severability
	Should any part or provision of this Agreement be held unenforceable, the invalid or unenforceable part or provision shall be replaced with a provision which accomplishes, to the extent possible, the original business purpose of such part or provision in a valid and enforceable manner, and the remainder of this Agreement shall remain binding upon the Parties.
21.2	Non-Waiver
	No failure or delay on the part of either Party in exercising any right under this Agreement will operate as a waiver of, or impair, any such right. No single or partial exercise of any such right will preclude any other or further exercise thereof or the exercise of any other right. No waiver of any such right will be deemed a waiver of any other right under this Agreement.
21.3	Remedies are Cumulative
	The rights and remedies of the Parties under this Agreement are cumulative and not alternative and are in addition to and not in substitution for any other rights and remedies either Party may have hereunder or under Applicable Laws.
21.4	Dispute Resolution
	In the event of any dispute, claim, question, or difference arising out or relating to this Agreement (a “Dispute”), the Parties shall first use their commercially reasonable efforts to settle such Dispute. To this end, they shall consult and negotiate with each other, in good faith, to reach a just and equitable solution satisfactory to both Parties. If the Parties are unable for any reason to reach such a solution within a period of thirty (30) days after commencement of the Dispute, the Dispute may, in accordance with and subject to the provisions of the last sentence of Section 20.1, be submitted by either Party to a court of competent jurisdiction for resolution.

-33-

21.5	Headings
	The sections and other headings contained in this Agreement are solely for the convenience of reference and shall not be deemed to be part of this Agreement or to affect its meaning or interpretation. All references to “Sections” and “Articles” refer to Sections and Articles of this Agreement, unless specified otherwise.
21.6	Currency
	All dollar amounts referred to in this Agreement are Canadian dollars unless specified otherwise.
21.7	Interpretation
	In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders. Where the word “including” or “includes” is used in this Agreement, it means “including (or includes) without limitation”.
21.8	Amendment
	No modification, alteration, waiver or change in any of the terms of this Agreement shall be valid or binding upon the Parties unless made in writing and duly executed by authorized representatives and delivered on behalf of each of the Parties.
21.9	Entire Agreement
	This Agreement, together with the Schedules and Appendices, the Quality Agreement, the Pharmacovigilance Agreement and Purchase Orders represents the entire understanding of the Parties with respect to the subject matter of this Agreement, and supersedes all prior agreements, negotiations, understandings, representations, statements, letters and writings between the Parties relating thereto.
21.10	Counterparts
	This Agreement may be executed in any number of counterparts (including counterparts by facsimile or electronically), each of which once executed shall be deemed an original of this Agreement and all of which together shall constitute one and the same Agreement. Signatures provided by facsimile transmission or in Adobe Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures.

-34-

21.11	Fax/E-Delivery
	Delivery of an executed copy of this Agreement by the Parties by facsimile or electronic transmission will be as effective as delivery of a manually executed copy of this Agreement, provided that the Parties exchange original manually executed copies as soon as reasonably practicable. Electronically executed copies shall have the same effect as manually executed copies.
21.12	English Language
	The Parties confirm that they have required that this Agreement and all ancillary agreements be drawn up in the English language/ Les parties aux présentes confirment qu’elles ont exigé que cette convention ainsi que toute autre convention y afférente soient rédigées en langue anglaise.

[Signature page follows]

-35-

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective Date.

Taro Pharmaceuticals Inc.
By:	/s/ Uday Badota
Name:	Uday Baldota
Title:	CEO
Intellipharmaceutics Corp.
By:	/s/ Dr. Amina Odidi
Name:	Dr. Amina Odidi
Title:	President, COO, & CSO

-36-

SCHEDULE “A”

Product

Desvenlafaxine Extended-Release Tablets, 50 MG and 100 MG

-37-

SCHEDULE “B”

Taro Trade Marks

Country	Trade Mark	Application No.	Filing Date	Registration No.	Registration Date
[*****]	[*****]	[*****]	[*****]	[*****]	[*****]
[*****]	[*****]	[*****]	[*****]	[*****]	[*****]

-38-

SCHEDULE “C”

Product Supply Price & Minimum Order Quantities

(Desvenlafaxine Extended–Release Tablets)

	UNIT PRICE	PACK SIZE		MINIMUM ORDER
STRENGTH	PER TABLET	30s	100s	[*****] tablets of Each strength (which represents a batch size)
50 MG	[*****]	[*****]	[*****]
100 MG	[*****]	[*****]	[*****]

-39-

 SCHEDULE “D”

Product Appearance Details

(Trade Dress)

TRADE DRESS

Date:	August 11, 2021
Generic Product	IPC-Desvenlafaxine ER
Active Ingredient	Desvenlafaxine Succinate
Reference Product	Pristiq®
Innovator	T.M. Wyeth LLC
Primary Indication	Symptomatic relief of major depressive disorder
Market	Canada

Strengths		Strength 1	50 mg	Strength 2	100 mg
Source		Innovator	Generic	Innovator	Generic
Picture
Color (No. by. Colorcon guide)		Light Pink	Light Pink	Reddish-orange	Maroon
Dosage Form		Tablets (Extended- release)	Tablets (Extended- release)	Tablets (Extended- release)	Tablets (Extended- release)
Shape		[*****]	[*****]	[*****]	[*****]
[*****]	[*****]	[*****]	[*****]	[*****]	[*****]
	[*****]	[*****]	[*****]	[*****]	[*****]
	[*****]	[*****]	[*****]	[*****]	[*****]
[*****]	[*****]	-	-	-	-
	[*****]	[*****]	[*****]	[*****]	[*****]
[*****]		[*****]	[*****]	[*****]	[*****]
[*****]			[*****]		[*****]
[*****]			[*****]		[*****]

41

APPENDIXI

Quality Agreement

-40-

Appendix II Phannacovigilance

(PV) Agreement

-41-

EX-4.88

EXHIBIT 4.88

PROMISSORY NOTE

Principal:   US$200,000.00 Dated: October 5, 2022 

1. FOR VALUE RECEIVED, Intellipharmaceutics Corp. (the "Borrower"), promise to pay to or to the order of Ramnath Reddy. (the "Creditor") at any other place as the Creditor may, from time to time, designate by notice in writing to the Borrower, the principal sum of US$200,000.00 (the "Principal") with interest accruing on the Principal at 10.0% per annum.

2. Term —The Principal plus the interest will become due and payable in full in 6 months from April 5, 2023. For greater clarity, the Principal shall be due in full on April 5, 2023 (the "Maturity").

3. Currency and Payment - Any money to be paid pursuant to this promissory note must be paid by bank draft, certified cheque or electronic funds transfer of immediately available funds payable to the Creditor, in lawful United States currency.

4. Non-Waiver - The extension of the time for making any payment which is due and payable under this promissory note, or the Creditor’s failure or delay in exercising or enforcing any rights or remedies under this promissory note, or under any instrument securing payment of the indebtedness evidenced by this promissory note, will not constitute a continuing waiver of the right of the Creditor to enforce those rights and remedies in the future.

5. Notices and Demands - Any demand or notice to be made or given in connection with this promissory note will be in writing and will be personally delivered to an officer or responsible employee of the Borrowers or the Creditor or sent by facsimile, e-mail, or functionally equivalent electronic means, charges (if any) prepaid, at or to any address, electronic address, or facsimile number, as the case may be, as the Borrowers or the Creditor may designate to the other in accordance with this provision. Any demand or notice which is personally delivered will be deemed to have been validly and effectively given on the date of delivery if that date is a business day, and the delivery was made during normal business hours; otherwise, it will be deemed to have been validly and effectively given on the business day next following the date of delivery. Any demand or notice which is transmitted by facsimile, e-mail, or functionally equivalent electronic means will be deemed to have been validly and effectively given on the date of transmission if that date is a business day and the transmission was made during normal business hours of the recipient; otherwise, it will be deemed to have been validly and effectively given on the business day next following the date of transmission.

10. Amendments - No amendment or waiver of any provision of this promissory note or consent to any departure by the Borrowers from any provision of this promissory note is effective unless it is in writing and signed by the Creditor, and then the amendment, waiver or consent is effective only in the specific instance and for the specific purpose for which it is given.

11. Governing Law - This promissory note will be governed by and construed in all respects in accordance with the laws of the Province of Ontario and the laws of Canada applicable in that Province.

12. Time of the Essence - Time will in all respects be of the essence of this promissory note.

13. Waiver of Benefits - Presentment for payment, protest and notice of protest, notice of non-payment and notice of dishonour are waived by the Borrowers.

14. Assignment - The Borrower will not be permitted to assign this promissory note, in whole or in part, without the prior written consent of the Creditor. The Creditor may assign (including by way of security) this promissory note, in whole or in part, without the prior written consent of the Borrower. This promissory note will be binding upon the successors and permitted assigns of the Borrowers and will ensure for the benefit of the Creditors and its successors and assigns.

The Borrower has executed this promissory note as of the October 5, 2022.

Intellipharmaceutics Corp.

/s/Dr. Isa Odidi

Per: Dr. Isa Odidi

Title: CEO

I have authority to bind the corporation

/s/ Ramanath Reddy

Per: Ramanath Reddy

Actimus Inc.

2

EX-4.89

EXHIBIT 4.89

PROMISSORY NOTE EXTENSION

1. THE PARTIES. This Promissory Note Extension Agreement (“Agreement”) made April 6, 2023 between:

Borrower: Intellipharmaceutics Corp., with a mailing address of 30 Worcester Road, Toronto, ON M9W 5X2 (“Borrower”) and

Lender: Actimus Inc, (“Lender”).

HEREINAFTER the Borrower and Lender shall be referred together as the “Parties” and in consideration of the covenants herein contained agree as follows:

2. ORIGINAL NOTE. It is known that this Agreement is amending a note that exists between the Parties signed on October 5, 2022, for the sum of USD $200,000.00 and maturing on April 5, 2023 (“Original Note”). 

3. EXTENSION. As of April 5, 2023, the current balance outstanding is $210,000 including interest.  Under this extension agreement, the Parties agree to extend the maturity date as stated in the Original Note to October 5, 2023 (“Extension Date”).

4. ADDITIONAL TERMS. The Parties agree that all other terms and conditions stated in the Original Note shall remain in full force and effect.

IN WITNESS WHEREOF, the Parties have indicated their acceptance of the terms of this Agreement by their signatures below on the dates indicated.

 

Borrower’s Signature: /s/ Amina Odidi	Date:   April 6, 2023
Lender’s Signature: /s/ Ramanath Reddy	Date:   April 6, 2023

EX-8.1

EXHIBIT 8.1

LIST OF SUBSIDIARIES

INTELLIPHARMACEUTICS INTERNATIONAL INC.

EX-12.1

EXHIBIT 12.1

INTELLIPHARMACEUTICS INTERNATIONAL INC.

CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF

THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Isa Odidi, certify that:

1. I have reviewed this Amendment No. 1 to the Annual Report on Form 20-F of Intellipharmaceutics International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;

d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the  annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: June 14, 2023

By:	/s/ Isa Odidi
	Isa Odidi
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer)

2

EX-12.2

EXHIBIT 12.2

INTELLIPHARMACEUTICS INTERNATIONAL INC.

CERTIFICATION PURSUANT TO RULE 13a-14 OR 15d-14 OF

THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Amina Odidi, certify that:

1. I have reviewed this Amendment No. 1 to the Annual Report on Form 20-F of Intellipharmaceutics International Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;

d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the  annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: June 14, 2023

By:	/s/ Amina Odidi
	Amina Odidi
	Acting Chief Financial Officer
	(Principal Financial Officer)

EX-13.1

EXHIBIT 13.1

INTELLIPHARMACEUTICS INTERNATIONAL INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No. 1 to the Annual Report of Intellipharmaceutics International Inc. (the “Company”) on Form 20-F for the period ending November 30, 2022 (the “Report”), I, Isa Odidi, the Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

By:	/s/ Isa Odidi
	Isa Odidi
	Chairman of the Board and Chief Executive Officer
	(Principal Executive Officer)

Date: June 14, 2023

EX-13.2

EXHIBIT 13.2

INTELLIPHARMACEUTICS INTERNATIONAL INC.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No. 1 to the Annual Report of Intellipharmaceutics International Inc. (the “Company”) on Form 20-F for the period ending November 30, 2022(the “Report”), I, Amina Odidi, Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

By:	/s/ Amina Odidi
	Amina Odidi
	Acting Chief Financial Officer
	(Principal Financial Officer)

Date: June 14, 2023

EX-15.1

EXHIBIT 15.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference of our auditor’s report dated June 05, 2023 with respect to the consolidated financial statements of Intellipharmaceutics International Inc. and its subsidiaries as at November 30, 2022, 2021 and 2020 and for each of the years in the three year period ended November 30, 2022, included in the Annual Report on Form 20-F of Intellipharmaceutics International Inc. for the year ended November 30, 2022, as filed with the United States Securities Exchange Commission.

/s/ MNP LLP

Chartered Professional Accountants

Licensed Public Accountants

June 14, 2023

Toronto, Canada

XML

Cover - shares	12 Months Ended
	Nov. 30, 2022	Jun. 10, 2023
Cover [Abstract]
Entity Registrant Name	INTELLIPHARMACEUTICS INTERNATIONAL INC.
Entity Central Index Key	0001474835
Document Type	20-F
Amendment Flag	false
Entity Voluntary Filers	No
Current Fiscal Year End Date	--11-30
Entity Well Known Seasoned Issuer	No
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Nov. 30, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		33,092,665
Entity Interactive Data Current	Yes
Document Shell Company Report	false
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Entity File Number	0-53805
Entity Incorporation State Country Code	Z4
Entity Address Address Line 1	30 Worcester Road
Entity Address City Or Town	Toronto
Entity Address State Or Province	ON
Entity Address Postal Zip Code	M9W 5X2
Icfr Auditor Attestation Flag	false
Document Accounting Standard	U.S. GAAP
Auditor Name	MNP LLP
Auditor Location	Toronto, Canada
Auditor Firm Id	1930
Contact Personnel Name	true

XML

Consolidated balance sheets - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Current
Cash	$ 83,722	$ 771,945
Trade and other receivables, net	602	0
Investment tax credits	268,179	268,179
Prepaid expenses and other assets (Note 5)	140,008	62,192
Current Assets	492,511	1,102,316
Property and equipment, net (Note 6)	788,050	994,109
Right-of-use asset (Note 10)	151,471	0
Total Assets	1,432,032	2,096,425
Current
Accounts payable	3,764,692	3,779,550
Accrued liabilities (Note 7)	2,821,506	2,272,610
Employee costs payable (Note 9)	3,067,578	2,263,944
Operating lease liability (Note 10)	165,441	0
Income tax payable (Note 16)	29,036	18,178
Promissory notes payable (Note 8)	360,514	165,878
Convertible debentures (Note 8)	1,800,000	1,751,483
Total Liabilities	12,008,767	10,251,643
Shareholders' deficiency
Issued and outstanding 33,092,665 common shares (November 30, 2020 - 23,678,105)	49,175,630	49,175,630
Additional paid-in capital	45,097,313	44,626,436
Accumulated other comprehensive income	284,421	284,421
Accumulated deficit	(105,134,099)	(102,241,705)
Shareholders' deficiency (Equity)	(10,576,735)	(8,155,218)
Liabilities and Shareholders' deficiency (Equity)	$ 1,432,032	$ 2,096,425

XML

Consolidated balance sheets (Parenthetical) - shares	Nov. 30, 2022	Nov. 30, 2020
Consolidated balance sheets
Common shares, issued	33,092,665	23,678,105
Common shares, outstanding	33,092,665	23,678,105

XML

Consolidated statements of operations and comprehensive loss - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Revenue
Licensing (Note 3)	$ 29,682	$ 0	$ 1,401,517
Up-front fees (Note 3)	19,068	0	0
Other Services	16,978	0	0
Revenues	65,728	0	1,401,517
Expenses
Research and development	2,149,126	2,661,875	3,517,018
Selling, general and administrative	561,050	1,249,676	2,147,432
Depreciation (Note 6)	206,059	261,525	415,375
Total operating expenses	2,916,235	4,173,076	6,079,825
Loss from operations	(2,850,507)	(4,173,076)	(4,678,308)
Net foreign exchange gain (loss)	210,634	(22,465)	(168,568)
Interest expense	(291,619)	(549,299)	(969,653)
Gain on settlement	0	0	2,500,000
Gain (loss) on disposal of property and equipment	44,435	0	(41,603)
Impairment of fixed asset (Note 6)	0	(514,502)	0
Net loss before income taxes	(2,887,057)	(5,259,342)	(3,358,132)
Provision for income taxes (Note 16)
Current tax expense / (recovery)	10,858	(20,333)	32,833
Deferred tax recovery	(5,521)	(93,854)	0
Net loss and comprehensive loss	$ (2,892,394)	$ (5,145,155)	$ (3,390,965)
Loss per common share, basic and diluted	$ (0.09)	$ (0.17)	$ (0.14)
Weighted average number of common
shares outstanding, basic and diluted	33,092,665	29,430,014	23,561,949

XML

Consolidated statements of shareholders' equity (deficiency) - USD ($)	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Balance, shares at Nov. 30, 2019		22,085,856
Balance, amount at Nov. 30, 2019	$ (3,692,221)	$ 45,561,222	$ 44,167,721	$ 284,421	$ (93,705,585)
Stock options to employees (Note 12)	71,645	$ 0	71,645	0	0
Shares issued upon exercise of 2018 Pre-Funded Warrants (Note 15), shares		1,592,249
Shares issued upon exercise of 2018 Pre-Funded Warrants (Note 15), amount		$ 583,180	(583,180)
Beneficial conversion feature related to Debentures (Note 8)	697,952		697,952
Net loss	(3,390,965)	$ 0	0	0	(3,390,965)
Proceeds from private placemtn financing (Note 11), amount	0
Balance, shares at Nov. 30, 2020		23,678,105
Balance, amount at Nov. 30, 2020	(6,313,589)	$ 46,144,402	44,354,138	284,421	(97,096,550)
Stock options to employees (Note 12)	11,985	0	11,985	0	0
Beneficial conversion feature related to Debentures (Note 8)	354,167		354,167
Net loss	(5,145,155)	$ 0	0	0	(5,145,155)
Proceeds from private placemtn financing (Note 11), shares		9,414,560
Proceeds from private placemtn financing (Note 11), amount	3,069,448	$ 3,069,448	0	0	0
Cost of private placement financing (Note 11)	(38,220)	$ (38,220)	0	0	0
Deferred tax expense related to beneficial conversion feature (Note 16)	(93,854)		(93,854)
Balance, shares at Nov. 30, 2021		33,092,665
Balance, amount at Nov. 30, 2021	(8,155,218)	$ 49,175,630	44,626,436	284,421	(102,241,705)
Beneficial conversion feature related to Debentures (Note 8)	20,833		20,833
Net loss	(2,892,394)	0	0	0	(2,892,394)
Proceeds from private placemtn financing (Note 11), amount	0
Deferred tax expense related to beneficial conversion feature (Note 16)	(5,521)		(5,521)
Proceeds from sale of equipment (Note 6)	455,565	$ 0	455,565	0	0
Balance, shares at Nov. 30, 2022		33,092,665
Balance, amount at Nov. 30, 2022	$ (10,576,735)	$ 49,175,630	$ 45,097,313	$ 284,421	$ (105,134,099)

XML

Consolidated statements of cash flows - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Consolidated statements of cash flows
Net loss	$ (2,892,394)	$ (5,145,155)	$ (3,390,965)
Items not affecting cash
Depreciation (Note 6)	206,059	261,525	415,375
Stock-based compensation (Note 12)	0	11,985	71,645
Accreted interest on convertible debentures (Note 8)	69,351	313,865	744,930
Deferred income tax recovery (Note 16)	(5,521)	(93,854)	0
Write-down of inventory	0	112,672	236,459
Write-down of investment tax credits	0	0	233,377
(Gain) loss on disposal of property and equipment	(44,435)	0	41,603
Non-cash lease expense	14,366	138,051	19,855
Write down on impaired fixed assets (Note 6)	0	514,502	0
Unrealized foreign exchange (gain) loss	(5,761)	1,995	62,658
Change in non-cash operating assets & liabilities
Accounts receivable	(602)	566,384	(389,182)
Investment tax credits	0	213,956	60,244
Prepaid expenses, sundry and other assets	(77,816)	53,558	40,866
Accounts payable, accrued liabilities and employee costs payable	1,337,672	609,520	1,932,410
Income tax payable	10,858	(20,333)	32,833
Cash flows (used in) provided from operating activities	(1,388,223)	(2,461,329)	112,108
Financing activities
Proceeds from promissory notes payable (Note 8)	200,000	0	0
Proceeds from private placement (Note 11)	0	3,069,448	0
Share issuance cost (Note 11)	0	(38,220)	0
Cash flows provided from financing activities	200,000	3,031,228	0
Investing activity
Sale of property and equipment (Note 6)	500,000	0	29,191
Purchase of property and equipment (Note 6)	0	0	(3,875)
Cash flows provided from investing activities	500,000	0	25,316
(Decrease) increase in cash	(688,223)	569,899	137,424
Cash, beginning of year	771,945	202,046	64,622
Cash, end of year	83,722	771,945	202,046
Supplemental cash flow information
Interest paid	0	0	0
Taxes paid	$ 0	$ 0	$ 0

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Nature of operations

12 Months Ended

Nov. 30, 2022

Nature of operations

Nature of operations

1. Nature of operations 

Intellipharmaceutics International Inc. (the “Company”) is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs.

On October 22, 2009, IntelliPharmaCeutics Ltd. (“IPC Ltd. “) and Vasogen Inc. completed a court approved plan of arrangement and merger (the “IPC Arrangement Agreement”), resulting in the formation of the Company, which is incorporated under the laws of Canada. The Company’s common shares are traded on the Toronto Stock Exchange (“TSX”) and the OTCQB Venture Market.

The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing and cost-plus payments on sales of resulting products. In November 2013, the U.S. Food and Drug Administration (“FDA”) granted the Company final approval to market the Company’s first product, the 15 mg and 30 mg strengths of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules. In 2017, the FDA granted final approval for the remaining 6 (six) strengths, all of which have been launched. In May 2017, the FDA granted the Company final approval for its second commercialized product, the 50, 150, 200, 300 and 400 mg strengths of generic Seroquel XR® (quetiapine fumarate extended release) tablets, and the Company commenced shipment of all strengths that same month. In November 2018, the FDA granted the Company final approval for its venlafaxine hydrochloride extended-release capsules in the 37.5, 75, and 150 mg strengths.

Going concern

The consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. The Company has incurred losses from operations since inception and has reported losses of $2,892,394 for the year ended November 30, 2022 (2021 – $5,145,155; 2020 – $3,390,965) and has an accumulated deficit of $105,134,099 as at November 30, 2022 (November 30, 2021 - $102,241,705). The Company has a working capital deficiency of $11,516,252 as atNovember 30, 2022 (November 30, 2021–working capital deficiency of $9,149,327). The Company has funded its research and development (“R&D”) activities principally through the issuance of securities, loans from related parties, funds from the IPC Arrangement Agreement, and funds received under development agreements. There is no certainty that such funding will be available going forward. These conditions raise substantial doubt about its ability to continue as a going concern and realize its assets and pay its liabilities as they become due.

In order for the Company to continue as a going concern and fund any significant expansion of its operation or R&D activities, the Company will require significant additional capital. Although there can be no assurances, such funding may come from revenues from the sales of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules, from revenues from the sales of the Company’s generic Seroquel XR® (quetiapine fumarate extended-release) tablets and from potential partnering opportunities. Other potential sources of capital may include payments from licensing agreements, cost savings associated with managing operating expense levels, other equity and/or debt financings, and/or new strategic partnership agreements which fund some or all costs of product development. The Company’s ultimate success will depend on whether its product candidates receive the approval of the FDA, Health Canada, and the regulatory authorities of the other countries in which its products are proposed to be sold and whether it is able to successfully market approved products. The Company cannot be certain that it will receive FDA, Health Canada, or such other regulatory approval for any of its current or future product candidates, or that it will reach the level of sales and revenues necessary to achieve and sustain profitability, or that the Company can secure other capital sources on terms or in amounts sufficient to meet its needs, or at all.

The availability of equity or debt financing will be affected by, among other things, the results of the Company’s R&D, its ability to obtain regulatory approvals, its success in commercializing approved products with its commercial partners and the market acceptance of its products, the state of the capital markets generally, the delisting from Nasdaq (as defined below), strategic alliance agreements, and other relevant commercial considerations.

In addition, if the Company raises additional funds by issuing equity securities, its then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict its operations. In the event that the Company does not obtain sufficient additional capital, it will raise substantial doubt about the Company’s ability to continue as a going concern, realize its assets and pay its liabilities as they become due. The Company’s cash outflows are expected to consist primarily of internal and external R&D, legal and consulting expenditures to advance its product pipeline and selling, general and administrative expenses to support its commercialization efforts. Depending upon the results of the Company’s R&D programs, the impact of the litigation against the Company and the availability of financial resources, the Company could decide to accelerate, terminate, or reduce certain projects, or commence new ones. Any failure on its part to successfully commercialize approved products or raise additional funds on terms favorable to the Company or at all, may require the Company to significantly change or curtail its current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in the Company not taking advantage of business opportunities, in the termination or delay of clinical trials or the Company not taking any necessary actions required by the FDA or Health Canada for one or more of the Company’s product candidates, in curtailment of the Company’s product development programs designed to identify new product candidates, in the sale or assignment of rights to its technologies, products or product candidates, and/or its inability to file Abbreviated New Drug Applications (“ANDAs”), Abbreviated New Drug Submissions (“ANDSs”) or New Drug Applications (“NDAs”) at all or in time to competitively market its products or product candidates.

The consolidated financial statements do not include any adjustments that might result from the outcome of uncertainties described above. If the going concern assumption no longer becomes appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments could be material.

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Basis of presentation

12 Months Ended

Nov. 30, 2022

Basis of presentation

Basis of presentation

2. Basis of presentation

(a)Basis of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiaries, IPC Ltd., Intellipharmaceutics Corp., and Vasogen Corp.

References in these consolidated financial statements to share amounts, per share data, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the 1-for-10 reverse stock split (known as a share consolidation under Canadian law) (the “reverse split”) which became effective on each of The Nasdaq Stock Market LLC (“Nasdaq”) and TSX at the opening of the market on September 14, 2018. The term “share consolidation” is intended to refer to such reverse split and the terms “pre-consolidation” and “post-consolidation” are intended to refer to “pre-reverse split” and “post-reverse split”, respectively.

In September 2018, the Company announced the reverse split. At a special meeting of the Company’s shareholders held on August 15, 2018, the Company’s shareholders granted the Company’s Board of Directors discretionary authority to implement a share consolidation of the issued and outstanding common shares of the Company on the basis of a share consolidation ratio within a range from five (5) pre-consolidation common shares for one (1) post-consolidation common share to fifteen (15) pre-consolidation common shares for one (1) post-consolidation common share. The Board of Directors selected a share consolidation ratio of ten (10) pre-consolidation shares for one (1) post-consolidation common share. On September 12, 2018, the Company filed an amendment to the Company’s articles ("Articles of Amendment") to implement the 1-for-10 reverse split.

The Company’s common shares began trading on each of Nasdaq and TSX on a post-split basis under the Company’s existing trade symbol “IPCI” at the opening of the market on September14, 2018. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the change was applied retroactively.

These consolidated financial statements have been prepared using the same accounting policies and methods as those used by the Company in the annual audited consolidated financial statements for the year ended November 30, 2021.

All inter-company accounts and transactions have been eliminated on consolidation.

(b) Use of estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

Areas where significant judgment is involved in making estimates are the determination of the functional currency; the fair values of financial assets and liabilities, valuation of convertible debt; the determination of units of accounting for revenue recognition; the accrual of licensing and milestone revenue; and forecasting future cash flows for assessing the going concern assumption.

From late 2019 the Company has had to reduce development activities and staffing levels significantly due to ongoing financial problems which have continued, coupled with the effects of the Covid-19 pandemic. It is not possible to reliably estimate the length and severity of the developments and impact on the future financial results and condition of the Company. The challenges and uncertainties could impair the Company’s ability to raise capital,postpone research activities, impact our ability to maintain operations and launch new products; it could also impair the value of our shares, our long-lived assets, and materially adversely impact our ability to generate potential future revenue.

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Significant accounting policies

12 Months Ended

Nov. 30, 2022

Significant accounting policies

Significant accounting policies

3. Significant accounting policies

(a) Cash and cash equivalents

The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. Cash equivalent balances consist of bankers’ acceptances and bank accounts with variable market rates of interest. The financial risks associated with these instruments are minimal and the Company has not experienced any losses from investments in these securities. The carrying amount of cash approximates its fair value due to its short-term nature.

As at November 30, 2022 and 2021, the Company had no cash equivalents.

(b) Accounts receivable

The Company reviews its sales and accounts receivable aging and determines whether an allowance for doubtful accounts is required.

(c) Financial instruments

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are classified as liabilities, the derivative instrument is initially recorded at its fair value using the appropriate valuation methodology and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss.

(d) Investment tax credits

The investment tax credits (“ITC") receivable are amounts considered recoverable from the Canadian federal and provincial governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The amounts claimed under the program represent the amounts based on management estimates of eligible research and development costs incurred during the year. Realization is subject to government approval. Any adjustment to the amounts claimed will be recognized in the year in which the adjustment occurs. Refundable ITCs claimed relating to capital expenditures are credited to property and equipment. Refundable ITCs claimed relating to current expenditures are netted against research and development expenditures.

(e) Property and equipment

Property and equipment are recorded at cost. Equipment acquired under capital leases are recorded net of imputed interest, based upon the net present value of future payments. Assets under capital leases are pledged as collateral for the related lease obligation. Repairs and maintenance expenditures are charged to operations; major betterments and replacements are capitalized. Depreciation bases and rates are as follows:

Assets	Basis	Rate
Computer equipment	Declining balance		30	%
Computer software	Declining balance		50	%
Furniture and fixtures	Declining balance		20	%
Laboratory equipment	Declining balance		20	%
Leasehold improvements	Straight line	Over term of lease

Leasehold improvements and assets acquired under capital leases are depreciated over the term of their useful lives or the lease period, whichever is shorter. The charge to operations resulting from depreciation of assets acquired under capital leases is included with depreciation expense.

(f) Impairment of long-lived assets

Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. For assets that are to be held and used, impairment is recognized when the sum of estimated undiscounted cash flows associated with the asset or group of assets is less than its carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.

(g) Warrants

The Company previously issued warrants as described in Notes 11 and 15. In fiscal 2013, the outstanding warrants were presented as a liability because they did not meet the criteria of Accounting Standard Codification (“ASC”) Topic 480 Distinguishing Liabilities from Equity for equity classification. Subsequent changes in the fair value of the warrants were recorded in the consolidated statements of operations and comprehensive loss. The Company changed its functional currency effective December 1, 2013 such that these warrants met the criteria for

(g) Warrants (continued)

prospective equity classification in ASC Topic 480, and the U.S. dollar translated amount of the warrant liability at December 1, 2013 became the amount reclassified to equity.

(h) Revenue recognition

The Company accounts for revenue in accordance with the provisions of ASC Topic 606 Revenue from Contracts with Customers. Under ASC Topic 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation(s). The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing payments on sales of resulting products.

The relevant revenue recognition accounting policy is applied to each separate unit of accounting.

Licensing

The Company recognizes revenue from the licensing of the Company's drug delivery technologies, products and product candidates. Under the terms of the licensing arrangements, the Company provides the customer with a right to access the Company’s intellectual property with regards to the license which is granted. Revenue arising from the license of intellectual property rights is recognized over the period the Company transfers control of the intellectual property.

The Company has a license and commercialization agreement with Par Pharmaceutical Inc. (“Par”). Under the exclusive territorial license rights granted to Par, the agreement requires that Par manufacture, promote, market, sell and distribute the product. Licensing revenue amounts receivable by the Company under this agreement are calculated and reported to the Company by Par, with amounts generally based upon net product sales and net profit which include estimates for chargebacks, rebates, product returns, and other adjustments. Licensing revenue payments received by the Company from Par under this agreement are not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this arrangement and the guidance per ASC Topic 606, the Company records licensing revenue over the period the Company transfers control of the intellectual property in the consolidated statements of operations and comprehensive loss.

Milestones

For milestone payments that are not contingent on sales-based thresholds, the Company applies a most-likely amount approach on a contract-by-contract basis. Management makes an assessment of the amount of revenue expected to be received based on the probability of the milestone outcome. Variable consideration is included in revenue only to the extent that it is probable that the amount will not be subject to a significant reversal when the uncertainty is resolved (generally when the milestone outcome is satisfied).

Research and development

Under arrangements where the license fees and research and development activities can be accounted for as a separate unit of accounting, non-refundable upfront license fees are deferred and recognized as revenue on a straight-line basis over the expected term of the Company's continued involvement in the research and development process.

(i) Revenue recognition (continued)

Deferred revenue

Deferred revenue represents the funds received from clients, for which the revenues have not yet been earned, as the milestones have not been achieved, or in the case of upfront fees for drug development, where the work remains to be completed. As of November 30, 2022, the Company has recorded a deferred revenue balance of $Nil (November 30, 2021 - $Nil) due to the termination of its license and commercial supply agreement with Mallinckrodt.

(j) Research and development costs

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC Topic 730 Research and Development. However, materials and equipment are capitalized and amortized over their useful lives if they have alternative future uses.

(k) Income taxes

The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for losses and tax credit carry forwards. Significant judgment is required in determining whether deferred tax assets will be realized in full or in part. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the date of enactments. A valuation allowance is provided for the portion of deferred tax assets that is more likely than not to remain unrealized.

The Company accounts for income taxes in accordance with ASC Subtopic 740-10 Income Taxes - Overall. This ASC Subtopic requires that uncertain tax positions are evaluated in a two-step process, whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The cumulative effects of the application of the provisions of ASC Subtopic 740-10 are described in Note 16.

The Company records any interest related to income taxes in interest expense and penalties in selling, general and administrative expense.

(l) Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

(m) Translation of foreign currencies

Transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss.

The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.

(n) Stock-based compensation

The Company has a stock-based compensation plan which authorizes the granting of various equity-based incentives including stock options and restricted share units (“RSU”s). The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the year is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation expense is recorded in the consolidated statements of operations and comprehensive loss under research and development expense and under selling, general and administration expense. Note 12 provides supplemental disclosure of the Company's stock options.

(o) Deferred Share Units

Deferred Share Units (“DSU”s) are valued based on the trading price of the Company’s common shares on the Toronto Stock Exchange. The Company records the value of the DSU’s owing to non-management board members in the consolidated statements of shareholders’ equity (deficiency).

Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase common shares of the Company during fiscal 2022, 2021, and 2020, respectively, were not included in the computation of diluted EPS because the Company has incurred a loss for each of the years ended November 30, 2022, 2021 and 2020 and the effect would be anti-dilutive.

(q)Comprehensive loss

The Company follows ASC Topic 220 Income Statement – Reporting Comprehensive Income. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity (deficiency). Other than foreign exchange gains and losses arising from cumulative translation adjustments, the Company has no other comprehensive loss items.

(r) Fair value measurement

Under ASC Topic 820 Fair Value Measurement, fair value is defined as 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 (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels to the hierarchy based on the reliability of inputs, as follows:

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

· Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

· Level 3 - Unobservable inputs for the asset or liability.

The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

(t) Lease

On December 1, 2019, the Company adopted ASC Topic 842 Leases using the modified retrospective transition method, applying the new standard to all leases existing at the date of initial application. In addition, the Company elected the package of practical expedients in transition, which permitted the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs on leases that commenced prior to adoption of the new standard. The Company also elected the ongoing practical expedient not to recognize operating lease right-of-use assets and operating lease liabilities for short-term leases. As a result of adopting the new standard, the Company didn’t recognize any right-of-use (“ROU”) assets or lease liabilities in the consolidated balance sheet, as the Company only had one lease which had a term of less than 12 months on the date of adoption of Topic 842. There was no impact to opening accumulated deficit on the date of adoption.

The ROU assets are initially measured at cost and amortized using the straight-line method through the end of the lease term. The lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate.

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Trade and other receivables

12 Months Ended

Nov. 30, 2022

Trade and other receivables

Trade And Other Receivables

4. Trade and other receivables

The Company currently has no debt agreements in place whereby any amount of receivables serve as collateral. The Company has no off-balance-sheet credit exposures and has no foreclosed or repossessed assets. Trade and other receivables are carried on the consolidated balance sheets net of allowance for doubtful accounts. This provision is established based on the Company’s best estimates regarding the ultimate recovery of balances for which collection is uncertain. As at November 30, 2022, the Company has a trade and other receivables balance of $602 (2021 - $Nil) and an allowance for doubtful accounts of $Nil (2021 - $Nil). Risks and uncertainties and credit quality information related to trade and other receivables have been disclosed in Note 18.

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Prepaids expenses and other assets

12 Months Ended

Nov. 30, 2022

Prepaids expenses and other assets

Prepaids expenses and other assets

5.Prepaids expenses and other assets

	November 30, 2022		November 30, 2021
HST Receivable		120,602		48,155
Professional Fees		7,403		-
Other		12,003		14,037
		140,008		62,192

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Property and equipment

12 Months Ended

Nov. 30, 2022

Property and equipment

Property And equipment

6. Property and equipment

	Computer equipment		Computer software		Furniture and fixtures		Laboratory equipment			Leasehold improvements		Total
	$		$		$		$			$		$
Cost
Balance at November 30, 2020		631,334		156,059		172,498		5,576,359			1,441,452		7,977,702
Impairment of asset		-		-		-		(514,502	)		-		(514,502	)
Balance at November 30, 2021		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Balance at November 30, 2022		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Accumulated depreciation
Balance at November 30, 2020		536,697		152,942		145,614		3,930,860			1,441,452		6,207,565
Depreciation		28,391		1,558		5,377		226,200			-		261,526
Balance at November 30, 2021		565,088		154,500		150,991		4,157,060			1,441,452		6,469,091
Depreciation		19,874		925		4,301		180,959			-		206,059
Balance at November 30, 2022		584,962		155,425		155,292		4,338,019			1,441,452		6,675,150
Net book value at:
November 30, 2021		66,246		1,559		21,507		904,797			-		994,109
November 30, 2022		46,372		634		17,206		723,838			-		788,050

During the year ended November 30, 2022, the Company sold equipment that were not in use for the amount of $500,000 and recognized a gain on sale of that equipment in the amount of $44,435, and the remainder allocated to additional paid in capital as a capital contribution. This equipment was sold to a related Company, which is controlled by a shareholder of the Company.

Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is assessed by comparing the carrying amount of an asset with the sum of the undiscounted cash flows expected from its use and disposal, and as such requires the Company to make significant estimates on expected revenues from the commercialization of its products and services and the related expenses. The Company records a write-down for long-lived assets which have been abandoned and do not have any residual value. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Impairment is assessed by comparing the carrying amount of an asset with the sum of the undiscounted cash flows expected from its use and disposal, and as such requires the Company to make significant estimates on expected revenues from the commercialization of its products and services and the related expenses. The Company records a write-down for long-lived assets which have been abandoned and do not have any residual value. During the year ended November 30, 2022, the Company recorded a write-down of long-lived assets of $Nil (2021 - $514,502).

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Accrued liabilities

12 Months Ended

Nov. 30, 2022

Accrued liabilities

Accrued liabilities

7. Accrued liabilities

	November 30,		November 30,
	2022		2021
	$		$
Professional fees		120,308		106,417
Board of Directors fees		276,178		189,220
Litigation settlement fee (Note 17)		-		400,000
Interest		678,216		472,357
Federal Drug Administration fees		1,500,940		914,277
Other		245,864		190,339
		2,821,506		2,272,610

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Convertible debentures and promissory notes payable

12 Months Ended

Nov. 30, 2022

Convertible debentures and promissory notes payable

Convertible debentures and promissory notes payable

8. Convertible debentures and promissory notes payable

(a) Convertible debentures

Amounts due to the related parties are payable to two shareholders who are also officers and directors of the Company.

	November 30,		November 30,
	2022		2021
Convertible debenture payable to two directors and officers of the Company, unsecured, 10% annual interest rate, payable monthly (“2018 Debenture”)	$	500,000	$	500,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“May 2019 Debenture”)		1,050,000		1,050,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“November 2019 Debenture”)		250,000		201,483
	$	1,800,000	$	1,751,483

On September 10, 2018, the Company completed a private placement financing of the unsecured convertible 2018 Debenture in the principal amount of $0.5 million. The 2018 Debenture matured on September 1, 2020. The 2018 Debenture bore interest at a rate of 10% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares of the Company at a conversion price of $3.00 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company provided the Company with the $0.5 million of the proceeds for the 2018 Debenture.

At issuance, as the conversion price was lower than the market share price, the beneficial conversion feature valued at September 10, 2018 of $66,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the 2018 Debenture was accreted over the remaining life of the 2018 Debenture using an effective rate of interest of 7.3%. Effective September 1, 2020, the maturity date for the 2018 Debenture was further extended to November 30, 2020. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the 2018 Debenture was further extended to August 31, 2023.

Effective May 31, 2022, the maturity date for the May 2019 Debenture was further extended to November 30, 2022. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of

the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the May 2019 Debenture was further extended to August 31, 2023.

Effective May 31, 2022, the maturity date for the November 2019 Debenture was further extended to November 30, 2022. Under ASC Subtopic 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC paragraph 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the November 2019 Debenture using a nominal effective rate of interest. As of November 30, 2022 the maturity date for the November 2019 Debenture was further extended to August 31, 2023.

(b) Promissory notes payable

	November 30,		November 30,
	2022		2021
	$		$
Promissory notes payable to two directors and officers
of the Company, unsecured, no annual interest
rate on the outstanding loan balance		157,437		165,878
Promissory notes payable to third party
unsecured, 10% annual interest
rate on the outstanding loan balance		203,077		-
		360,514		165,878

In September 2019, the Company issued two unsecured, non-interest bearing promissory notes, with no fixed repayment terms, in the amounts of US$6,500 and CDN$203,886, to Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company.

In October 2023, the Company issued an unsecured, 10% annual interest bearing promissory note, with a 6 month fixed repayment term, in the amount of US$200,000.

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Employee costs payable

12 Months Ended

Nov. 30, 2022

Employee costs payable

Employee costs payable

9.Employee costs payable

As at November 30, 2022, the Company had $3,067,578 (2021 - $2,263,944) accrued salaries, accrued vacation and severance payable to certain employees. This balance is due on demand and therefore presented as current liabilities.

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Lease

12 Months Ended

Nov. 30, 2022

Lease

Lease

10.Lease

On December 1, 2015, the Company entered into a new lease agreement for the premises that it currently operates from, as well the adjoining property, which is owned by the same landlord, for a 5-year term with a 5-year renewal option. On June 21, 2020, the Company entered into a lease surrender agreement and vacated one of its premises on June 30, 2020. On August 20, 2020, The Company extended its lease for the premises that it currently operates from, for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021.This operating lease was capitalized under ASC Topic 842 effective on the August 20, 2020 date of extension.

The gross amounts of assets and liabilities related to operating leases were as follows:

	November 30, 2022
Assets:
Operating lease right-of-use asset	$	151,471
Liabilities:
Current:
Operating lease liability	$	165,441
Total lease liability	$	165,441

Operating lease costs, net of Canada Emergency Rent Subsidy (CERS) received, amounted to $115,784 for the year ended November 30, 2021 respectively and have been recorded in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

For the year ended November 30, 2022, lease payments of $169,072 (2021 - $169,552) were paid in relation to the operating lease liability. For the year ended November 30, 2021, these payments have been offset by $34,709 received as part of the CERS COVID-19 relief program for net cash lease payments of $134,843.

Lease terms and discount rates are as follows:

	November 30, 2022
Remaining lease term (months)		12
Estimated incremental borrowing rate		11.4	%

The approximate future minimum lease payments for the operating lease as at November 30, 2022 were as follows:

	November 30, 2022
Lease payments from December 1, 2022 - November 30, 2023	$	175,821
Less imputed interest (December 1, 2022 - November)		10,380
Present value of lease liabilities	$	165,441

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Capital stock

12 Months Ended

Nov. 30, 2022

Capital stock

Capital stock

11. Capital stock

Authorized, issued and outstanding

(a) The Company is authorized to issue an unlimited number of common shares, all without nominal or par value and an unlimited number of preference shares. As at November 30, 2022, the Company had 33,092,665 (November 30, 2021 – 33,092,665) common shares issued and outstanding and no preference shares issued and outstanding. Two officers and directors of the Company owned directly and through their family holding company 578,131 (November 30, 2021 – 578,131) common shares or approximately 1.7% (November 30, 2021 – 1.7%) of the issued and outstanding common shares of the Company as at November 30, 2022.

Each common share of the Company entitles the holder thereof to one vote at any meeting of shareholders of the Company, except meetings at which only holders of a specified class of shares are entitled to vote.

Holders of common shares of the Company are entitled to receive, as and when declared by the board of directors of the Company, dividends in such amounts as shall be determined by the board.

The holders of common shares of the Company have the right to receive the remaining property of the Company in the event of liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary.

Authorized, issued and outstanding

The preference shares may at any time and from time to time be issued in one or more series. The board of directors will, by resolution, from time to time, before the issue thereof, fix the rights, privileges, restrictions and conditions attaching to the preference shares of each series. Except as required by law, the holders of any series of preference shares will not as such be entitled to receive notice of, attend or vote at any meeting of the shareholders of the Company. Holders of preference shares will be entitled to preference with respect to payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or any other distribution of the assets of the Company among its shareholders for the purpose of winding up its affairs, on such shares over the common shares of the Company and over any other shares ranking junior to the preference shares.

(b) In April 2021, the Company completed a private placement offering of an aggregate of 9,414,560 common shares at a price of CAD$0.41 per Common Share. The Company recorded $3,069,448 44as the value of common shares under Capital stock in 3. The direct costs related to the issuance of the common shares were $38,220. These direct costs were recorded as an offset against the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency).

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Options

12 Months Ended

Nov. 30, 2022

Options

Options

12. Options

All grants of options to employees after October 22, 2009 are made from the Employee Stock Option Plan (the “Employee Stock Option Plan”). The maximum number of common shares issuable under the Employee Stock Option Plan is limited to 10% of the issued and outstanding common shares of the Company from time to time, or 3,309,267 based on the number of issued and outstanding common shares as at November 30, 2021. As at November 30, 2022, 1,309,000 options are outstanding and there were2,000,267 options available for grant under the Employee Stock Option Plan. Each option granted allows the holder to purchase one common share at an exercise price not less than the closing price of the Company's common shares on the TSX on the last trading day prior to the grant of the option. Options granted under these plans typically have a term of 5 years with a maximum term of 10 years and generally vest over a period of up to three years.

In the year ended November 30, 2022, Nil (2021 – Nil; 2020 - Nil) stock options were granted to management and other employees and Nil (2021 – Nil; 2020 - Nil) stock options were granted to members of the Board of Directors.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model, consistent with the provisions of ASC Topic 718. Compensation—Stock Compensation Option pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The Company calculates expected volatility based on historical volatility of the Company’s own volatility for options that have an expected life of less than ten years. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on the historical average of the term and historical exercises of the options. The risk-free rate assumed in valuing the options is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the option.

The expected dividend yield percentage at the date of grant is Nil as the Company is not expected to pay dividends in the foreseeable future.

Details of stock option transactions in Canadian dollars (“C$”) are as follows:

	November 30, 2022							November 30, 2021							November 30, 2020
				Weighted							Weighted							Weighted
				average		Weighted					average		Weighted					average		Weighted
				exercise		average					exercise		average					exercise		average
	Number of			price per		grant date		Number of			price per		grant date		Number of			price per		grant date
	options			share		fair value		options			share		fair value		options			share		fair value
				$		$					$		$					$		$
Outstanding,
beginning of year		1,489,500			2.40		1.80		1,697,638			2.92		1.99		2,353,829			8.35		4.30
Granted		-			-		-		-			-		-		-			-		-
Cancelled		-			-		-		(156,572	)		1.05		0.57		(101,182	)		1.53		0.78
Forfeiture		-			-		-		(6,666	)		0.35		0.22		(225,315	)		0.35		0.22
Expired		(180,500	)		17.16		12.81		(44,900	)		27.60		13.74		(329,694	)		42.84		19.68
Balance,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,697,638			2.92		1.99
Options
exercisable,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,231,309			3.90		2.64

As of November 30, 2022, the exercise prices, weighted average remaining contractual life of outstanding options and weighted average grant date fair values were as follows in Canadian dollars (“C$”):

Options outstanding

Options exercisable

Weighted

Weighted

Weighted

Weighted

Weighted

average

average

average

average

average

exercise

remaining

grant

exercise

grant

Exercise

Number

price per

contract

date

Number

price per

date

price

outstanding

share

life (years)

fair value

exercisable

share

fair value

$

$

$

$

$

$

$

$

Under 0 - 1.00

1,309,000

0.35

6.27

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

Total unrecognized compensation cost relating to the unvested performance-based stock options at November 30, 2022 is $Nil (2021- $Nil; 2020 - $Nil).

For the year ended November 30, 2022, 2021 and 2020, no options were exercised.

The following table summarizes the components of stock-based compensation expense.

	November 30,		November 30,		November 30,
	2022		2021		2020
			$		$
Research and development		-		9,719		60,446
Selling, general and administrative		-		2,266		11,199
		-		11,985		71,645

The Company has estimated its stock option forfeitures to be approximately 4% for year ended November 30, 2022 (2021–4%; 2020 – 4%).

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Deferred share units

12 Months Ended

Nov. 30, 2022

Deferred share units

Deferred share units

13. Deferred share units

Effective May 28, 2010, the Company’s shareholders approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its non-management directors and reserved a maximum of 11,000 common shares for issuance under the plan. The DSU Plan permits certain non-management directors to defer receipt of all or a portion of their board fees until termination of the board service and to receive such fees in the form of common shares at that time. A DSU is a unit equivalent in value to one common share of the Company based on the trading price of the Company's common shares on the TSX.

Upon termination of board service, the director will be able to redeem DSUs based upon the then market price of the Company's common shares on the date of redemption in exchange for any combination of cash or common shares as the Company may determine.

During the year ended November 30, 2021 and 2020, no non-management board members elected to receive director fees in the form of DSUs under the Company’s DSU Plans. As at November 30, 2022, Nil (2021 – Nil; 2020 – Nil) DSUs were outstanding and 11,000 (2021 – 11,000; 2020–11,000) DSUs were available for grant under the DSU Plan.

During the year ended November 30, 2022, Nil (2021 – Nil; 2020 – Nil) DSU’s were exercised and the Company recorded a charge of $Nil (2021 – $Nil; 2020 – $Nil) from Additional paid-in capital to common shares under Capital stock.

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Restricted share units

12 Months Ended

Nov. 30, 2022

Restricted share units

Restricted share units

14.Restricted share units

Effective May 28, 2010, the Company’s shareholders approved a Restricted Share Unit (“RSU”) Plan for officers and employees of the Company and reserved a maximum of 33,000 common shares for issuance under the plan. The RSU Plan will form part of the incentive compensation arrangements available to officers and employees of the Company and its designated affiliates. An RSU is a unit equivalent in value to one common share of the Company. Upon vesting of the RSUs and the corresponding issuance of common shares to the participant, or on the forfeiture and cancellation of the RSUs, the RSUs credited to the participant’s account will be cancelled. No RSUs have been issued under the plan.

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Warrants

12 Months Ended

Nov. 30, 2022

Warrants

Warrants

15. Warrants

All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480.Topic 480 Distinguishing Liabilities from Equity. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms.

The following table provides information on the 21,160,314 warrants, including 2018 Firm Warrants, outstanding and exercisable as of November 30, 2022:

	Exercise		Number			Shares issuable
Warrant	price ($)		outstanding		Expiry	upon exercise
2018 Firm Warrants		0.75		20,000,000	October 16, 2023		20,000,000
October 2018 Placement Agent Warrants		0.9375		1,160,314	October 16, 2023		1,160,314
				21,160,314			21,160,314

During the years ended November 30, 2022 and 2021, there were no cash exercises in respect of warrants and no cashless exercise of warrants, resulting in the issuance of Nil common shares, respectively.

Details of warrant transactions for the years ended November 30, 2022 and 2021 are as follows:

	Outstanding,  December 1, 2021		Issued		Expired		Exercised		Outstanding,  November 30,  2022
2018 Firm Warrants		20,000,000		-		-		-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-		-		1,160,314
		21,160,314		-		-		-		21,160,314

	Outstanding,  December 1, 2020		Issued		Expired			Exercised		Outstanding,  November 30,  2021
June 2016 Warrants		277,478		-		(277,478	)		-		-
March 2018 Warrants		441,666		-		(441,666	)		-		-
March 2018 Placement
Agent Warrants		44,166		-		(44,166	)		-		-
2018 Firm Warrants		20,000,000		-		-			-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-			-		1,160,314
		21,923,624		-		(763,310	)		-		21,160,314

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Income taxes

12 Months Ended

Nov. 30, 2022

Income taxes

Income taxes

16. Income taxes

The Company files Canadian income tax returns for its Canadian operations. Separate income tax returns are filed as locally required.

The total provision for income taxes differs from the amount which would be computed by applying the Canadian income tax rate to loss before income taxes. The reasons for these differences are as follows:

	November 30,			November 30,			November 30,
	2022			2021			2020
	%			%			%
Statutory income tax rate		26.5			26.5			26.5
		$			$			$
Statutory income tax recovery		(765,070	)		(1,393,726	)		(889,905	)
Increase (decrease) in income taxes
Non-deductible expenses/
non-taxable income		(41,921	)		53,470			47,287
Change in valuation allowance		815,181			540,925			843,877
Financing costs booked to equity		-			(10,128	)		-
Difference in foreign tax rates		(2,844	)		(98	)		-
Tax loss expired and other		(9	)		695,370			(9,069	)
Global intangible low-taxed income (GILTI)		-			-			40,643
Income tax expense (recovery)		5,337			(114,187	)		-
The Company's income tax expense (recovery) is allocated as follows:
Current tax expense		10,858			(20,333	)		32,833
Deferred tax recovery		(5,521	)		(93,854	)		-

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and certain carry-forward balances

Significant temporary differences and carry-forwards are as follows:

	November 30,			November 30,
	2022			2021
	$			$
Deferred tax assets
Non-capital loss carry-forwards		16,560,810			16,323,553
Book and tax basis differences
on assets and liabilities		1,582,397			1,527,791
Other		2,120,034			1,509,122
Investment tax credit		2,850,496			2,850,496
Undeducted research and
development expenditures		4,227,211			4,227,211
Capital loss carryforwards		318,915			318,915
Share issuance cost		6,077			227,253
		27,665,940			26,984,341
Deferred tax liabilities
Unrealized foreign exchange gain		(271,913	)		(271,913	)
Convertible debentures		-			(12,857	)
		(271,913	)		(284,770	)
Valuation allowances for
deferred tax assets		(27,394,027	)		(26,699,571	)
Net deferred tax assets		-			-

Deferred tax assets and liabilities have been offset where they relate to income taxes levied by the same taxation authority and the Company has the legal right and intent to offset.

Movement in net deferred tax assets (liabilities):

	2022			2021
		$			$
Balance at the beginning of the year		-			-
Recognized in profit/loss		(5,521	)		(93,854	)
Recognized in shareholders' equity		5,521			93,854
Balance at the end of the year		-			-

At November 30, 2022, the Company had cumulative operating losses available to reduce future years’ income for income tax purposes:

Canadian income tax losses expiring
in the year ended November 30,	Federal
2029		614,200
2030		3,717,403
2031		6,154,180
2032		6,410,970
2033		4,984,768
2034		149,927
2035		2,634,823
2036		3,404,504
2037		4,328,444
2038		11,231,494
2039		9,891,661
2040		3,111,826
2041		4,968,817
2042		890,607
		62,493,624

The Company has had no taxable income under the Federal and Provincial tax laws of Canada for the year ended November 30, 2022. The Company has non-capital loss carry-forwards at November 30, 2022, totaling $62,493,624 in Canada that must be offset against future taxable income. If not utilized, the loss carry-forwards will expire between 2029 and 2042.

At November 30, 2022, the Company had a cumulative carry-forward pool of Canadian Federal Scientific Research & Experimental Development expenditures in the amount of $15,951,739 (2021 - $15,951,739) which can be carried forward indefinitely.

At November 30, 2022, the Company had approximately $2,933,013 (2021 - $2,933,013) of unclaimed Investment Tax Credits which expire from 2025 to 2039. These credits are subject to a full valuation allowance as they are not more likely than not to be realized.

The net deferred tax assets have been fully offset by a valuation allowance because it is not more likely than not the Company will realize the benefit of these deferred tax assets. The Company does not have any recognized tax benefits as of November 30, 2022 or November 30, 2021.

The Company files unconsolidated federal income tax returns domestically and in foreign jurisdictions. The Company has open tax years from 2009 to 2021 with tax jurisdictions including Canada and the U.S. These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations, as they relate to amount, timing, or inclusion of revenues and expenses.

The Company had accrued interest and penalties as of November 30, 2022 of $38,673 (2021 - $Nil and 2020 - $Nil).

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Contingencies

12 Months Ended

Nov. 30, 2022

Contingencies

Contingencies

17. Contingencies

From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As at November 30, 2022, and continuing as at May 31, 2023, the Company is not aware of anypending or threatenedmateriallitigation claimsagainst the Company, other than as described below.

In November 2016, the Company filed an NDA for its Oxycodone ER product candidate, relying on the 505(b)(2) regulatory pathway, which allowed the Company to reference data from Purdue Pharma L.P's (“Purdue”) file for its OxyContin^® extended release oxycodone hydrochloride. The Oxycodone ER application was accepted by the FDA for further review in February 2017. The Company certified to the FDA that it believed that its Oxycodone ER product candidate would not infringe any of the OxyContin® patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly

known as the “Orange Book”, or that such patents are invalid, and so notified Purdue and the other owners of the subject patents listed in the Orange Book of such certification.

On April 7, 2017, the Company received notice that Purdue Pharma L.P., Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., or collectively the Purdue parties, Rhodes Technologies, and Grünenthal GmbH, or collectively the Purdue litigation plaintiffs, had commenced patent infringement proceedings against the Company in the U.S. District Court for the District of Delaware (docket number 17-392) in respect of its NDA filing for Oxycodone ER, alleging that its proposed Oxycodone ER infringes six out of the 16 patents associated with the branded product OxyContin^®, or the OxyContin^® patents, listed in the Orange Book.

Subsequent to the above-noted filing of lawsuit, four further such patents were listed and published in the Orange Book. On March 16, 2018, the Company received notice that the Purdue litigation plaintiffs had commenced further such patent infringement proceedings adding the four further patents. On April 15, 2020, Purdue filed a new patent infringement suit against the Company relating to additional Paragraph IV certifications lodged against two more listed Purdue patents.

As a result of the commencement of the first of these legal proceedings, the FDA was stayed for 30 months from granting final approval to the Company’s Oxycodone ER product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs received notice of the Company’s certification concerning the patents, and were to expire on August 24, 2019, unless the stay was earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties. On April 24, 2019, an order was issued, setting a trial date of

November 12, 2019 for case number 17-392 in the District of Delaware, and also extending the 30-month stay date for regulatory approval to March 2, 2020.

On or about June 26, 2018, the court issued an order to sever 6 “overlapping” patents from the second Purdue case, but ordered litigation to proceed on the 4 new (2017-issued) patents. An answer and counterclaim was filed on July 9, 2018. On July 6, 2018, the court issued a so-called “Markman” claim construction ruling on the first case. On July 24, 2018, the parties to the case mutually agreed to and did

have dismissed without prejudice the infringement claims related to the Grünenthal ‘060 patent, which is one of the six patents included in the original litigation case.

On October 4, 2018, the parties mutually agreed to postpone the scheduled court date pending a case status conference scheduled for December 17, 2018. At that time, further trial scheduling and other administrative matters were postponed pending the Company’s resubmission of the Oxycodone ER NDA to the FDA, which was made on February 28, 2019. On January 17, 2019, the court issued a scheduling order in which the remaining major portions are scheduled. The trial was scheduled for June 2020.

On April 4, 2019, the U.S. Federal Circuit Court of Appeals affirmed the invalidity of one Purdue OxyContin® formulation patent, subject to further appeal to the U.S. Supreme Court.

Following the filing of a bankruptcy stay by Purdue Pharma L.P., the Company’s ongoing litigation case numbers 1:17-cv-00392-RGA and 1:18-cv-00404-RGA-SRF between Purdue Pharma L.P. et al and The Company were stayed and the existing trial dates in both cases vacated by orders issued in each case by the judge in the District of Delaware on October 3, 2019. With the litigation stay order, the previous 30-month stay date of March 2, 2020 was unchanged.

On or about July 2, 2020 the parties in the cases, numbers 17-cv-392-RGA, 18-cv-404-RGA and 20-cv-515-RGA (the “Litigations”) between Purdue Pharma L.P. et al (“Purdue’) and Intellipharmaceutics entered into a stipulated dismissal of the Litigations. The stipulated dismissal, which was subject to approval by the bankruptcy court presiding over Purdue Pharma’s pending chapter 11 cases, provides for the termination of the patent infringement proceedings. The stipulated dismissal also provides that (i) for a thirty (30) day period following a final approval of the Company’s Aximris XRTM NDA the parties will attempt to resolve any potential asserted patent infringement claims relatingto the NDA and (ii) if the parties fail to resolve all such claims during such periodPurdue Pharma will have fifteen (15) days to pursue an infringement action against the Company.The terms of the stipulated dismissal agreement are confidential.

On July 28, 2020 theU.S.District Court for the District of Delaware signed the stipulations of dismissal into order thereby dismissing the claims in the three cases without prejudice.In consideration of the confidential stipulated dismissal agreement andfor future saved litigation expenses, Purduepaidan amount to the Company.

In July 2017, three complaints were filed in the U.S. District Court for the Southern District of New York that were later consolidated under the caption Shanawaz v. Intellipharmaceutics Int’l Inc., et al., No. 1:17-cv-05761 (S.D.N.Y.). The lead plaintiffs filed a consolidated amended complaint on January 29, 2018. In the amended complaint, the lead plaintiffs assert claims on behalf of a putative class consisting of purchasers of the Company’s securities between May 21, 2015 and July 26, 2017. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements or failing to disclose certain information regarding the Company’s NDA for Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The complaint seeks, among other remedies, unspecified damages, attorneys’ fees and other costs, equitable and/or injunctive relief, and such other relief as the court may find just and proper.

On November 7, 2019, the Company announced that the parties reached a settlement that is subject to the approval of the court following notice to class members. The stipulation of settlement provides for a settlement payment of US$1.6 million by the Company, which has been paid from available insurance coverage.

As part of the settlement, the Company also agreed to contribute to the settlement fund specific anticipated Canadian tax refunds of up to US$400,000 to the extent received within 18 months after the entry of final judgment. The stipulation of settlement acknowledges that the Company and the other defendants continue to deny that they committed any violation of the U.S. securities laws or engaged in any other wrongdoing and that they are entering into the settlement at this time based on the burden, expense, and inherent uncertainty of continuing the litigation. On December 7, 2020 the court approved the settlement and entered an order and final judgement to that effect, thereby concluding the case.

On February 21, 2019, the Company and its CEO, Dr. Isa Odidi (“Defendants”), were served with a Statement of Claim filed in the Superior Court of Justice of Ontario (“Court”) for a proposed class action under the Ontario Class Proceedings Act (“Action”). The Action was brought by Victor Romita, the proposed representative plaintiff (“Plaintiff”), on behalf of a class of Canadian persons (“Class”) who traded shares of the Company during the period from February 29, 2016 to July 26, 2017 (“Period”). The Statement of Claim, under the caption Victor Romita v. Intellipharmaceutics International Inc. and Isa Odidi, asserted that the defendants knowingly or negligently made certain public statements during the relevant period that contained or omitted material facts concerning Oxycodone ER abuse-deterrent oxycodone hydrochloride extended-release tablets. The plaintiff alleges that he and the class suffered loss and damages as a result of their trading in the Company’s shares during the relevant period. The plaintiff seeks, among other remedies, unspecified damages, legal fees and court and other costs as the Court may permit. On February 26, 2019, the plaintiff delivered a Notice of Motion seeking the required approval from the Court, in accordance with procedure under the Ontario Securities Act, to allow the statutory claims under the Ontario Securities Act to proceed with respect to the claims based upon the acquisition or disposition of the Company’s shares on the TSX during the Period (“Motion”). On June 28, 2019, the Court endorsed a timetable for the exchange of material leading to the hearing of the Motion scheduled for January 27-28, 2020. On October 28, 2019, plaintiff’s counsel advised the court that the Plaintiff intended to amend his claim and could not proceed with the Leave Motion scheduled for January 27-28, 2020. As such, the Court released those dates. On January 28, 2020 the plaintiff served a Notice of Motion for leave to amend the Statement of Claim. On April 2, 2020 the plaintiff delivered an Amended Motion Record and Amended Notice of Motion seeking an order for leave to issue a fresh as Amended Statement of Claim including the addition of Christopher Pearce as a Plaintiff (“Amendment Motion”).

On May 1, 2020, the court granted the plaintiff’s Amendment Motion. An order for leave to proceed for settlement purposes was granted on 25 June 2021. At a hearing on October 12,2021, the Court approved the settlement. The stipulation of settlement provides for a settlement payment of CAD$266,000 by the Company, CAD$226,000 was paid from insurance coverage while the Company paid CAD$40,000. Therefore, this action is now settled.

On October 7, 2019, a complaint was filed in the U.S. District Court for the Southern District of New York by Alpha Capital Anstalt (“Alpha”) against the Company, two of its existing officers and directors and its former Chief Financial Officer. In the complaint, Alpha alleged that the Company and the executive officers/directors named in the complaint violated Sections 11, 12(a)(2) and 15 of the U.S. Securities Act of 1933, as amended, by allegedly making false and misleading statements in the Company’s Registration Statement on Form F-1 filed with the U.S. Securities and Exchange Commission on September 20, 2018, as amended (the “Registration Statement”) by failing to disclose certain information regarding the resignation of the Company’s then Chief Financial Officer, which was announced several weeks after such registration statement was declared effective. In the complaint, Alpha seeks unspecified damages, rescission of its purchase of the Company’s securities in the relevant offering, attorneys’ fees and other costs and further relief as the court may find just and proper. On December 12, 2019, the Company and the other defendants in the action filed a motion to dismiss for failure to state a claim. The plaintiff filed an opposition to that motion on February 4, 2020 and a reply brief in further support of the motion to dismiss the action was filed March 6, 2020. In addition, the Court scheduled a mandatory settlement conference with the Magistrate Judge for April 23, 2020 which the Company and its counsel attended. On June 18, 2020, the court largely denied the Company’s motion to dismiss the action. Briefing on these motions was completed on February 19, 2021. In a court order filed July 9, 2021, the District Court issued an opinion and order granting summary judgment in the Company’s favor and ordered the case closed. The judgment was entered on July 12, 2021. On August 10, 2021, the Plaintiff filed a notice of appeal. On October 1, 2021, the Plaintiff filed a notice of voluntary dismissal of the appeal with prejudice, stipulated to by the Company. The Court of Appeals “so ordered” the voluntary dismissal stipulation and the appeal was

dismissed. As a result, the matter has been fully resolved in favor of the Company and the named individual Defendants.

On or about August 5, 2020 a former employee filed a claim against the Company for wrongful dismissal of employment plus loss of benefits, unpaid vacation pay, interest and costs. The parties have agreed to settlement terms in the matter. The Company has fulfilled the terms and has received a release and consent to dismiss. A dismissal order is pending from the court.

On or about August 9, 2022, a service provider brought to the Company’s attention a Motion Record to seek judgement with respect to amounts owed it by the Company for the principal amount owed, plus pre-judgment interest and costs. We found out then, that a statement of claim dated May 3, 2021 was delivered to the Company’s premises. The Company did not respond to the claim because it was inadvertently never brought to the attention of management, as a result the Company was noted in default in May 31, 2021. The Company was not aware of claim and the default before August 9, 2022. The Company has signed a consent which allows the other party to obtain judgement from a court and take steps to enforce judgement if we default on certain conditions.

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Financial instruments

12 Months Ended

Nov. 30, 2022

Financial instruments

Financial instruments

18. Financial instruments

(a) Fair values

The Company follows ASC Topic 820 Fair Value Measurement (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC Topic 820 apply to other accounting pronouncements that require or permit fair value measurements. ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

The three levels of the hierarchy are defined as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs for asset or liabilities.

The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

(i) The Company calculates fair value of the options and warrants using its own historical volatility (Level 1).

(ii) The Company calculates the interest rate for the conversion option based on the Company’s estimated cost of raising capital (Level 2).

An increase/decrease in the volatility and/or a decrease/increase in the discount rate would have resulted in an increase/decrease in the fair value of the conversion option and warrants.

(a) Fair values (continued)

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis are as follows:

	November 30, 2022				November 30, 2021
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	$		$		$		$
Financial Liabilities
Convertible debentures(i)		1,800,000		1,753,406		1,751,483		1,783,882
Promissory notes payable(i)		360,514		360,514		165,878		165,878

(i) The Company calculates the interest rate for the Debentures and promissory notes payable based on the Company’s estimated cost of raising capital and uses the discounted cash flow model to calculate the fair value of the Debentures and the promissory notes payable.

The carrying values of cash, accounts receivable, accounts payable, accrued liabilities and employee cost payable approximates their fair values because of the short-term nature of these instruments.

(b) Interest rate and credit risk

Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and the convertible debenture due to the short-term nature of these obligations. Trade accounts receivable potentially subjects the Company to credit risk. The Company provides an allowance for doubtful accounts equal to the estimated losses expected to be incurred in the collection of accounts receivable.

The following table sets forth details of the aged accounts receivable that are not overdue as well as an analysis of overdue amounts and the related allowance for doubtful accounts:

	November 30,		November 30,
	2022		2021
	$		$
Accounts receivable		602		-
Less allowance for doubtful accounts		-		-
Total trade and other receivables, net		602		-
Not past due		602		-
Past due for more than 31 days
but no more than 120 days		-		-
Past due for more than 120 days		-		-
Total trade and other receivables, gross		602		-

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of uncollateralized accounts receivable. The Company’s maximum exposure to credit risk is equal to the potential amount of financial assets. For the year ended November 30, 2022, three customers accounted for all the revenues and one customer accounted for all the accounts receivable of the Company recognized as other receivable within trade and other receivables in the Company’s consolidated balance sheet as at November 30, 2022.

The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank. The Company’s cash is not subject to any external restrictions.

(c)Foreign exchange risk

The Company has balances in Canadian dollars that give rise to exposure to foreign exchange risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a foreign exchange loss while a weakening U.S. dollar will lead to a foreign exchange gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.

(d) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet its commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown.

The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at November 30, 2022:

	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		to 1 year		1 year		Total
	$		$		$		$		$		$
Accounts payable		3,764,692		-		-		-		-		3,764,692
Accrued liabilities		2,821,506		-		-		-		-		2,821,506
Employee costs payable		3,067,578		-		-		-		-		3,067,578
Operating lease liabiity		45,891		45,891		45,891		45,891		-		183,564
Convertible debentures (Note 8)		1,800,000		-		-		-		-		1,800,000
Promissory notes payable (Note 8)		360,514		-		-		-		-		360,514
Total contractual obligations		11,860,181		45,891		45,891		45,891		-		11,997,854

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Segmented information

12 Months Ended

Nov. 30, 2022

Segmented information

Segmented information

19. Segmented information

The Company's operations comprise a single reportable segment engaged in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for revenue, loss for the period, depreciation and total assets also represent segmented amounts. In addition, all of the Company's long-lived assets are in Canada. The Company’s license and commercialization agreement with Par accounts for substantially all of the revenue of the Company.

	November 30,		November 30,		November 30,
	2022		2021		2020
	$		$		$
Revenue
United States		29,682		-		1,401,517
Canada		19,068		-		-
Other		16,978		-		-
		65,728		-		1,401,517
Total assets
Canada		1,432,032		2,096,425		3,387,055
Total property and equipment
Canada		788,050		994,109		1,770,137

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Significant accounting policies (Policies)

12 Months Ended

Nov. 30, 2022

Significant accounting policies

Cash and cash equivalents

The Company considers all highly liquid securities with an original maturity of three months or less to be cash equivalents. Cash equivalent balances consist of bankers’ acceptances and bank accounts with variable market rates of interest. The financial risks associated with these instruments are minimal and the Company has not experienced any losses from investments in these securities. The carrying amount of cash approximates its fair value due to its short-term nature.

As at November 30, 2022 and 2021, the Company had no cash equivalents.

Accounts receivable

The Company reviews its sales and accounts receivable aging and determines whether an allowance for doubtful accounts is required.

Financial instruments

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are classified as liabilities, the derivative instrument is initially recorded at its fair value using the appropriate valuation methodology and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations and comprehensive loss.

Investment tax credits

The investment tax credits (“ITC") receivable are amounts considered recoverable from the Canadian federal and provincial governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The amounts claimed under the program represent the amounts based on management estimates of eligible research and development costs incurred during the year. Realization is subject to government approval. Any adjustment to the amounts claimed will be recognized in the year in which the adjustment occurs. Refundable ITCs claimed relating to capital expenditures are credited to property and equipment. Refundable ITCs claimed relating to current expenditures are netted against research and development expenditures.

Property and equipment

Property and equipment are recorded at cost. Equipment acquired under capital leases are recorded net of imputed interest, based upon the net present value of future payments. Assets under capital leases are pledged as collateral for the related lease obligation. Repairs and maintenance expenditures are charged to operations; major betterments and replacements are capitalized. Depreciation bases and rates are as follows:

Assets	Basis	Rate
Computer equipment	Declining balance		30	%
Computer software	Declining balance		50	%
Furniture and fixtures	Declining balance		20	%
Laboratory equipment	Declining balance		20	%
Leasehold improvements	Straight line	Over term of lease

Leasehold improvements and assets acquired under capital leases are depreciated over the term of their useful lives or the lease period, whichever is shorter. The charge to operations resulting from depreciation of assets acquired under capital leases is included with depreciation expense.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying value of an asset may not be recoverable. For assets that are to be held and used, impairment is recognized when the sum of estimated undiscounted cash flows associated with the asset or group of assets is less than its carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.

Warrants

The Company previously issued warrants as described in Notes 11 and 15. In fiscal 2013, the outstanding warrants were presented as a liability because they did not meet the criteria of Accounting Standard Codification (“ASC”) Topic 480 Distinguishing Liabilities from Equity for equity classification. Subsequent changes in the fair value of the warrants were recorded in the consolidated statements of operations and comprehensive loss. The Company changed its functional currency effective December 1, 2013 such that these warrants met the criteria for

prospective equity classification in ASC Topic 480, and the U.S. dollar translated amount of the warrant liability at December 1, 2013 became the amount reclassified to equity.

Revenue recognition

The Company accounts for revenue in accordance with the provisions of ASC Topic 606 Revenue from Contracts with Customers. Under ASC Topic 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation(s). The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing payments on sales of resulting products.

The relevant revenue recognition accounting policy is applied to each separate unit of accounting.

Licensing

The Company recognizes revenue from the licensing of the Company's drug delivery technologies, products and product candidates. Under the terms of the licensing arrangements, the Company provides the customer with a right to access the Company’s intellectual property with regards to the license which is granted. Revenue arising from the license of intellectual property rights is recognized over the period the Company transfers control of the intellectual property.

The Company has a license and commercialization agreement with Par Pharmaceutical Inc. (“Par”). Under the exclusive territorial license rights granted to Par, the agreement requires that Par manufacture, promote, market, sell and distribute the product. Licensing revenue amounts receivable by the Company under this agreement are calculated and reported to the Company by Par, with amounts generally based upon net product sales and net profit which include estimates for chargebacks, rebates, product returns, and other adjustments. Licensing revenue payments received by the Company from Par under this agreement are not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this arrangement and the guidance per ASC Topic 606, the Company records licensing revenue over the period the Company transfers control of the intellectual property in the consolidated statements of operations and comprehensive loss.

Milestones

For milestone payments that are not contingent on sales-based thresholds, the Company applies a most-likely amount approach on a contract-by-contract basis. Management makes an assessment of the amount of revenue expected to be received based on the probability of the milestone outcome. Variable consideration is included in revenue only to the extent that it is probable that the amount will not be subject to a significant reversal when the uncertainty is resolved (generally when the milestone outcome is satisfied).

Research and development

Under arrangements where the license fees and research and development activities can be accounted for as a separate unit of accounting, non-refundable upfront license fees are deferred and recognized as revenue on a straight-line basis over the expected term of the Company's continued involvement in the research and development process.

Deferred revenue

Deferred revenue represents the funds received from clients, for which the revenues have not yet been earned, as the milestones have not been achieved, or in the case of upfront fees for drug development, where the work remains to be completed. As of November 30, 2022, the Company has recorded a deferred revenue balance of $Nil (November 30, 2021 - $Nil) due to the termination of its license and commercial supply agreement with Mallinckrodt.

Research and development costs

Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC Topic 730 Research and Development. However, materials and equipment are capitalized and amortized over their useful lives if they have alternative future uses.

Income taxes

The Company uses the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for losses and tax credit carry forwards. Significant judgment is required in determining whether deferred tax assets will be realized in full or in part. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the date of enactments. A valuation allowance is provided for the portion of deferred tax assets that is more likely than not to remain unrealized.

The Company accounts for income taxes in accordance with ASC Subtopic 740-10 Income Taxes - Overall. This ASC Subtopic requires that uncertain tax positions are evaluated in a two-step process, whereby (i) the Company determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (ii) those tax positions that meet the more likely than not recognition threshold, the Company would recognize the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the related tax authority. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The cumulative effects of the application of the provisions of ASC Subtopic 740-10 are described in Note 16.

The Company records any interest related to income taxes in interest expense and penalties in selling, general and administrative expense.

Share issue costs

Share issue costs are recorded as a reduction of the proceeds from the issuance of capital stock.

Translation of foreign currencies

Transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the consolidated statements of operations and comprehensive loss.

The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.

Stock-based compensation

The Company has a stock-based compensation plan which authorizes the granting of various equity-based incentives including stock options and restricted share units (“RSU”s). The Company calculates stock-based compensation using the fair value method, under which the fair value of the options at the grant date is calculated using the Black-Scholes Option Pricing Model, and subsequently expensed over the vesting period of the option. The provisions of the Company's stock-based compensation plans do not require the Company to settle any options by transferring cash or other assets, and therefore the Company classifies the awards as equity. Stock-based compensation expense recognized during the year is based on the value of stock-based payment awards that are ultimately expected to vest.

The Company estimates forfeitures at the time of grant and are revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation expense is recorded in the consolidated statements of operations and comprehensive loss under research and development expense and under selling, general and administration expense. Note 12 provides supplemental disclosure of the Company's stock options.

Deferred Share Units

Deferred Share Units (“DSU”s) are valued based on the trading price of the Company’s common shares on the Toronto Stock Exchange. The Company records the value of the DSU’s owing to non-management board members in the consolidated statements of shareholders’ equity (deficiency).

Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.

The dilutive effect of stock options is determined using the treasury stock method. Stock options and warrants to purchase common shares of the Company during fiscal 2022, 2021, and 2020, respectively, were not included in the computation of diluted EPS because the Company has incurred a loss for each of the years ended November 30, 2022, 2021 and 2020 and the effect would be anti-dilutive.

Comprehensive loss

The Company follows ASC Topic 220 Income Statement – Reporting Comprehensive Income. This statement establishes standards for reporting and display of comprehensive (loss) income and its components. Comprehensive loss is net loss plus certain items that are recorded directly to shareholders' equity (deficiency). Other than foreign exchange gains and losses arising from cumulative translation adjustments, the Company has no other comprehensive loss items.

Fair value measurement

Under ASC Topic 820 Fair Value Measurement, fair value is defined as 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 (i.e., an exit price). ASC Topic 820 establishes a hierarchy for inputs to valuation techniques used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that reflect assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. There are three levels to the hierarchy based on the reliability of inputs, as follows:

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

· Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets and liabilities in markets that are not active.

· Level 3 - Unobservable inputs for the asset or liability.

The degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

Lease

On December 1, 2019, the Company adopted ASC Topic 842 Leases using the modified retrospective transition method, applying the new standard to all leases existing at the date of initial application. In addition, the Company elected the package of practical expedients in transition, which permitted the Company not to reassess prior conclusions about lease identification, lease classification and initial direct costs on leases that commenced prior to adoption of the new standard. The Company also elected the ongoing practical expedient not to recognize operating lease right-of-use assets and operating lease liabilities for short-term leases. As a result of adopting the new standard, the Company didn’t recognize any right-of-use (“ROU”) assets or lease liabilities in the consolidated balance sheet, as the Company only had one lease which had a term of less than 12 months on the date of adoption of Topic 842. There was no impact to opening accumulated deficit on the date of adoption.

The ROU assets are initially measured at cost and amortized using the straight-line method through the end of the lease term. The lease liabilities are measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Company’s incremental borrowing rate.

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Significant accounting policies (Tables)

12 Months Ended

Nov. 30, 2022

Significant accounting policies

Schedule Of Depreciation Rates

Assets	Basis	Rate
Computer equipment	Declining balance		30	%
Computer software	Declining balance		50	%
Furniture and fixtures	Declining balance		20	%
Laboratory equipment	Declining balance		20	%
Leasehold improvements	Straight line	Over term of lease

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Prepaids expenses and other assets (Tables)

12 Months Ended

Nov. 30, 2022

Prepaids expenses and other assets

Schedule Of Prepaids expenses and other assets

	November 30, 2022		November 30, 2021
HST Receivable		120,602		48,155
Professional Fees		7,403		-
Other		12,003		14,037
		140,008		62,192

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Property and equipment (Tables)

12 Months Ended

Nov. 30, 2022

Property and equipment

Schedule Of Property And Equipment

	Computer equipment		Computer software		Furniture and fixtures		Laboratory equipment			Leasehold improvements		Total
	$		$		$		$			$		$
Cost
Balance at November 30, 2020		631,334		156,059		172,498		5,576,359			1,441,452		7,977,702
Impairment of asset		-		-		-		(514,502	)		-		(514,502	)
Balance at November 30, 2021		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Balance at November 30, 2022		631,334		156,059		172,498		5,061,857			1,441,452		7,463,200
Accumulated depreciation
Balance at November 30, 2020		536,697		152,942		145,614		3,930,860			1,441,452		6,207,565
Depreciation		28,391		1,558		5,377		226,200			-		261,526
Balance at November 30, 2021		565,088		154,500		150,991		4,157,060			1,441,452		6,469,091
Depreciation		19,874		925		4,301		180,959			-		206,059
Balance at November 30, 2022		584,962		155,425		155,292		4,338,019			1,441,452		6,675,150
Net book value at:
November 30, 2021		66,246		1,559		21,507		904,797			-		994,109
November 30, 2022		46,372		634		17,206		723,838			-		788,050

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Accrued liabilities (Tables)

12 Months Ended

Nov. 30, 2022

Accrued liabilities

Schedule Of Accrued Liabilities

	November 30,		November 30,
	2022		2021
	$		$
Professional fees		120,308		106,417
Board of Directors fees		276,178		189,220
Litigation settlement fee (Note 17)		-		400,000
Interest		678,216		472,357
Federal Drug Administration fees		1,500,940		914,277
Other		245,864		190,339
		2,821,506		2,272,610

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Convertible debentures and promissory notes payable (Tables)

12 Months Ended

Nov. 30, 2022

Convertible debentures and promissory notes payable

Schedule Of Related Party Transactions

	November 30,		November 30,
	2022		2021
Convertible debenture payable to two directors and officers of the Company, unsecured, 10% annual interest rate, payable monthly (“2018 Debenture”)	$	500,000	$	500,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“May 2019 Debenture”)		1,050,000		1,050,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly (“November 2019 Debenture”)		250,000		201,483
	$	1,800,000	$	1,751,483

Schedule Of Promissory notes payable

	November 30,		November 30,
	2022		2021
	$		$
Promissory notes payable to two directors and officers
of the Company, unsecured, no annual interest
rate on the outstanding loan balance		157,437		165,878
Promissory notes payable to third party
unsecured, 10% annual interest
rate on the outstanding loan balance		203,077		-
		360,514		165,878

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Lease (Tables)

12 Months Ended

Nov. 30, 2022

Lease

Schedule Of Operating Lease Assets And Liabilities

	November 30, 2022
Assets:
Operating lease right-of-use asset	$	151,471
Liabilities:
Current:
Operating lease liability	$	165,441
Total lease liability	$	165,441

Schedule Of discount rates

	November 30, 2022
Remaining lease term (months)		12
Estimated incremental borrowing rate		11.4	%

Schedule future minimum lease payments

	November 30, 2022
Lease payments from December 1, 2022 - November 30, 2023	$	175,821
Less imputed interest (December 1, 2022 - November)		10,380
Present value of lease liabilities	$	165,441

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Options (Tables)

12 Months Ended

Nov. 30, 2022

Options

Schedule Of Share-based Compensation, Stock Options, Activity

	November 30, 2022							November 30, 2021							November 30, 2020
				Weighted							Weighted							Weighted
				average		Weighted					average		Weighted					average		Weighted
				exercise		average					exercise		average					exercise		average
	Number of			price per		grant date		Number of			price per		grant date		Number of			price per		grant date
	options			share		fair value		options			share		fair value		options			share		fair value
				$		$					$		$					$		$
Outstanding,
beginning of year		1,489,500			2.40		1.80		1,697,638			2.92		1.99		2,353,829			8.35		4.30
Granted		-			-		-		-			-		-		-			-		-
Cancelled		-			-		-		(156,572	)		1.05		0.57		(101,182	)		1.53		0.78
Forfeiture		-			-		-		(6,666	)		0.35		0.22		(225,315	)		0.35		0.22
Expired		(180,500	)		17.16		12.81		(44,900	)		27.60		13.74		(329,694	)		42.84		19.68
Balance,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,697,638			2.92		1.99
Options
exercisable,
end of year		1,309,000			0.35		0.27		1,489,500			2.40		1.80		1,231,309			3.90		2.64

Schedule Of Share-based Compensation, Shares Authorized Under Stock Option Plans, By Exercise Price Range

Options outstanding

Options exercisable

Weighted

Weighted

Weighted

Weighted

Weighted

average

average

average

average

average

exercise

remaining

grant

exercise

grant

Exercise

Number

price per

contract

date

Number

price per

date

price

outstanding

share

life (years)

fair value

exercisable

share

fair value

$

$

$

$

$

$

$

$

Under 0 - 1.00

1,309,000

0.35

6.27

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

1,309,000

0.35

0.27

Schedule Of Employee Service Share-based Compensation, Allocation Of Recognized Period Costs

	November 30,		November 30,		November 30,
	2022		2021		2020
			$		$
Research and development		-		9,719		60,446
Selling, general and administrative		-		2,266		11,199
		-		11,985		71,645

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Warrants (Tables)

12 Months Ended

Nov. 30, 2022

Warrants

Schedule Of Stockholders' Equity Note, Warrants Or Rights

	Exercise		Number			Shares issuable
Warrant	price ($)		outstanding		Expiry	upon exercise
2018 Firm Warrants		0.75		20,000,000	October 16, 2023		20,000,000
October 2018 Placement Agent Warrants		0.9375		1,160,314	October 16, 2023		1,160,314
				21,160,314			21,160,314

Schedule Of Warrant Transactions

	Outstanding,  December 1, 2021		Issued		Expired		Exercised		Outstanding,  November 30,  2022
2018 Firm Warrants		20,000,000		-		-		-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-		-		1,160,314
		21,160,314		-		-		-		21,160,314

	Outstanding,  December 1, 2020		Issued		Expired			Exercised		Outstanding,  November 30,  2021
June 2016 Warrants		277,478		-		(277,478	)		-		-
March 2018 Warrants		441,666		-		(441,666	)		-		-
March 2018 Placement
Agent Warrants		44,166		-		(44,166	)		-		-
2018 Firm Warrants		20,000,000		-		-			-		20,000,000
October 2018 Placement
Agent Warrants		1,160,314		-		-			-		1,160,314
		21,923,624		-		(763,310	)		-		21,160,314

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Income taxes (Tables)

12 Months Ended

Nov. 30, 2022

Income taxes

Schedule Of Effective Income Tax Rate Reconciliation

	November 30,			November 30,			November 30,
	2022			2021			2020
	%			%			%
Statutory income tax rate		26.5			26.5			26.5
		$			$			$
Statutory income tax recovery		(765,070	)		(1,393,726	)		(889,905	)
Increase (decrease) in income taxes
Non-deductible expenses/
non-taxable income		(41,921	)		53,470			47,287
Change in valuation allowance		815,181			540,925			843,877
Financing costs booked to equity		-			(10,128	)		-
Difference in foreign tax rates		(2,844	)		(98	)		-
Tax loss expired and other		(9	)		695,370			(9,069	)
Global intangible low-taxed income (GILTI)		-			-			40,643
Income tax expense (recovery)		5,337			(114,187	)		-
The Company's income tax expense (recovery) is allocated as follows:
Current tax expense		10,858			(20,333	)		32,833
Deferred tax recovery		(5,521	)		(93,854	)		-

Schedule Of Deferred Tax Assets And Liabilities

	November 30,			November 30,
	2022			2021
	$			$
Deferred tax assets
Non-capital loss carry-forwards		16,560,810			16,323,553
Book and tax basis differences
on assets and liabilities		1,582,397			1,527,791
Other		2,120,034			1,509,122
Investment tax credit		2,850,496			2,850,496
Undeducted research and
development expenditures		4,227,211			4,227,211
Capital loss carryforwards		318,915			318,915
Share issuance cost		6,077			227,253
		27,665,940			26,984,341
Deferred tax liabilities
Unrealized foreign exchange gain		(271,913	)		(271,913	)
Convertible debentures		-			(12,857	)
		(271,913	)		(284,770	)
Valuation allowances for
deferred tax assets		(27,394,027	)		(26,699,571	)
Net deferred tax assets		-			-

Schedule Of Movement in net deferred tax assets (liabilities)

	2022			2021
		$			$
Balance at the beginning of the year		-			-
Recognized in profit/loss		(5,521	)		(93,854	)
Recognized in shareholders' equity		5,521			93,854
Balance at the end of the year		-			-

Schedule Of Operating Losses

Canadian income tax losses expiring
in the year ended November 30,	Federal
2029		614,200
2030		3,717,403
2031		6,154,180
2032		6,410,970
2033		4,984,768
2034		149,927
2035		2,634,823
2036		3,404,504
2037		4,328,444
2038		11,231,494
2039		9,891,661
2040		3,111,826
2041		4,968,817
2042		890,607
		62,493,624

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Financial instruments (Tables)

12 Months Ended

Nov. 30, 2022

Financial instruments

Schedule Of Fair Value Measurements, Nonrecurring

	November 30, 2022				November 30, 2021
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
	$		$		$		$
Financial Liabilities
Convertible debentures(i)		1,800,000		1,753,406		1,751,483		1,783,882
Promissory notes payable(i)		360,514		360,514		165,878		165,878

Schedule Of Past Due Financing Receivables

	November 30,		November 30,
	2022		2021
	$		$
Accounts receivable		602		-
Less allowance for doubtful accounts		-		-
Total trade and other receivables, net		602		-
Not past due		602		-
Past due for more than 31 days
but no more than 120 days		-		-
Past due for more than 120 days		-		-
Total trade and other receivables, gross		602		-

Contractual Obligation, Fiscal Year Maturity Schedule

	Less than		3 to 6		6 to 9		9 months		Greater than
	3 months		months		months		to 1 year		1 year		Total
	$		$		$		$		$		$
Accounts payable		3,764,692		-		-		-		-		3,764,692
Accrued liabilities		2,821,506		-		-		-		-		2,821,506
Employee costs payable		3,067,578		-		-		-		-		3,067,578
Operating lease liabiity		45,891		45,891		45,891		45,891		-		183,564
Convertible debentures (Note 8)		1,800,000		-		-		-		-		1,800,000
Promissory notes payable (Note 8)		360,514		-		-		-		-		360,514
Total contractual obligations		11,860,181		45,891		45,891		45,891		-		11,997,854

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Segmented information (Tables)

12 Months Ended

Nov. 30, 2022

Segmented information

Schedule Of Revenue From External Customers And Long-lived Assets, By Geographical Areas

	November 30,		November 30,		November 30,
	2022		2021		2020
	$		$		$
Revenue
United States		29,682		-		1,401,517
Canada		19,068		-		-
Other		16,978		-		-
		65,728		-		1,401,517
Total assets
Canada		1,432,032		2,096,425		3,387,055
Total property and equipment
Canada		788,050		994,109		1,770,137

XML

Nature of Operations (Details Narrative) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Nature of operations
Net loss	$ (2,892,394)	$ (5,145,155)	$ (3,390,965)
Working capital deficiency	(11,516,252)	(9,149,327)
Accumulated deficit	$ (105,134,099)	$ (102,241,705)

XML

Basis of presentation (Details Narrative)	12 Months Ended
	Nov. 30, 2022
Basis of presentation
Description of business	1-for-10 reverse stock split

XML

Significant Accounting Policies (Detail)	12 Months Ended
	Nov. 30, 2022
Declining Balance | Computer software
Declining balance depreciation rate	50.00%
Declining Balance | Computer Equipment
Declining balance depreciation rate	30.00%
Declining Balance | Furniture and Fixtures
Declining balance depreciation rate	20.00%
Declining Balance | Laboratory Equipment
Declining balance depreciation rate	20.00%
Straight Line | Leasehold Improvements
Leasehold improvements	Over term of lease

XML

Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Lease Term	12 months
Mallinckrodt LLC [Member]
Deferred revenue	$ 0	$ 0

XML

Trade and Other Receivables (Details Narrative) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Trade and other receivables
Account Receivable	$ 602	$ 0
Allowance For Doubtful Accounts	$ 0	$ 0

XML

Prepaids expenses and other assets (Details ) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Prepaids expenses and other assets
HST Receivable	$ 120,602	$ 48,155
Professional Fees	7,403	0
Other	12,003	14,037
Total	$ 140,008	$ 62,192

XML

Property and Equipment (Details) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Cost, beginning balance	$ 7,463,200	$ 7,977,702
Impairment of asset		(514,502)
Cost, ending balance	7,463,200	7,463,200
Accumulated amortization, beginning balance	6,469,091	6,207,565
Depreciation	206,059	261,526
Accumulated amortization, ending balance	6,675,150	6,469,091
Net book value	788,050	994,109
Computer Equipment
Cost, beginning balance	631,334	631,334
Impairment of asset		0
Cost, ending balance	631,334	631,334
Accumulated amortization, beginning balance	565,088	536,697
Depreciation	19,874	28,391
Accumulated amortization, ending balance	584,962	565,088
Net book value	46,372	66,246
Computer Software
Cost, beginning balance	156,059	156,059
Impairment of asset		0
Cost, ending balance	156,059	156,059
Accumulated amortization, beginning balance	154,500	152,942
Depreciation	925	1,558
Accumulated amortization, ending balance	155,425	154,500
Net book value	634	1,559
Furniture and Fixtures
Cost, beginning balance	172,498	172,498
Impairment of asset		0
Cost, ending balance	172,498	172,498
Accumulated amortization, beginning balance	150,991	145,614
Depreciation	4,301	5,377
Accumulated amortization, ending balance	155,292	150,991
Net book value	17,206	21,507
Leasehold Improvements
Cost, beginning balance	1,441,452	1,441,452
Impairment of asset		0
Cost, ending balance	1,441,452	1,441,452
Accumulated amortization, beginning balance	1,441,452	1,441,452
Depreciation	0	0
Accumulated amortization, ending balance	1,441,452	1,441,452
Net book value	0	0
Laboratory Equipment
Cost, beginning balance	5,061,857	5,576,359
Impairment of asset		(514,502)
Cost, ending balance	5,061,857	5,061,857
Accumulated amortization, beginning balance	4,157,060	3,930,860
Depreciation	180,959	226,200
Accumulated amortization, ending balance	4,338,019	4,157,060
Net book value	$ 723,838	$ 904,797

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Property and Equipment (Details Narrative) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Property and equipment
Write-down of long lived assets	$ 0	$ 514,502
Gain loss on sale of equipment	44,435	0	$ (41,603)
Proceeds from sale of equipment	$ 500,000	$ 0	$ 29,191

XML

Accrued Liabilities (Details) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Accrued liabilities
Professional Fees	$ 120,308	$ 106,417
Board Of Directors Fees	276,178	189,220
Litigation Settlement Fee (note 17)	0	400,000
Interest	678,216	472,357
Federal Drug Administration fees	1,500,940	914,277
Other	245,864	190,339
Accrued Liabilities	$ 2,821,506	$ 2,272,610

XML

Convertible Debentures and Promissory Notes Payable (Details) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Convertible Debentures and Promissory Notes Payable (Details)
Convertible debenture payable to two directors and officers of the Company, unsecured, 10% annual interest rate, payable monthly ("2018 Debenture")	$ 500,000	$ 500,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly ("May 2019 Debenture")	1,050,000	1,050,000
Convertible debenture payable to two directors and officers of the Company, unsecured, 12% annual interest rate, payable monthly ("November 2019 Debenture")	250,000	201,483
Promissory note payable to two directors and officers of the Company, unsecured no annual interest rate on the outstanding loan balance	$ 1,800,000	$ 1,751,483

XML

Convertible Debentures and Promissory Notes Payable (Details 1) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Promissory Notes Payable	$ 360,514	$ 165,878
Promissory notes payable to third party
Promissory Notes Payable	203,077	0
Promissory notes payable to two directors and officers
Promissory Notes Payable	$ 157,437	$ 165,878

XML

Convertible Debentures and Promissory Notes Payable (Details Narrative)	Sep. 10, 2018 USD ($) $ / shares	Nov. 30, 2022 USD ($)	Nov. 30, 2021 USD ($)	May 31, 2021 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2019 CAD ($)
Convertible Debt Fair Value	$ 500,000	$ 1,753,406	$ 1,783,882	$ 1,050,000
Carrying Amount Of Convertible Debt	$ 500,000			1,050,000
Debt Instrument Interest Rate Effective	7.30%
Additional Paid-in Capital	$ 66,667
Convertible Debenture		$ 1,800,000	$ 1,751,483			$ 203,886
Non-interest Bearing Promissory Notes					$ 6,500
Private Placement [Member]
Interest Rate	10.00%
Debt Principal Amount	$ 500,000
Proceeds From Debt	$ 500,000
Debt Conversion Price | $ / shares	$ 3.00
November 2019 Debenture [Member]
Convertible Debt Fair Value				250,000
Carrying Amount Of Convertible Debt				$ 250,000

XML

Employee Costs Payable (Details Narrative) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Employee costs payable
Employee-related Liabilities, Current	$ 3,067,578	$ 2,263,944

XML

Lease (Details) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Lease
Operating Lease Right-of-use Asset	$ 151,471	$ 0
Current Operating Lease Liability	165,441	$ 0
Total Lease Liability	$ 165,441

XML

Lease (Details 1)	12 Months Ended
	Nov. 30, 2022
Lease
Remaining Lease Term (months)	12 months
Estimated Incremental Borrowing Rate	11.40%

XML

Lease (Details 2)	Nov. 30, 2022 USD ($)
Lease
Lease payments for the remainder of the year ending	$ 175,821
Less imputed interest	10,380
Present value of lease liabilities	$ 165,441

XML

Lease (Details Narrative) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Lease
Operating Lease Cost		$ 115,784
Renewal of Lease Term (months)	5 years
Net Cash Lease Payments	$ 134,843
Relief Fund Offset	34,709
Lease Payments	$ 169,072	$ 169,552

XML

Capital Stock (Details Narrative)	1 Months Ended	12 Months Ended
	Apr. 30, 2021 USD ($) shares	Nov. 30, 2022 shares	Nov. 30, 2021 shares	Apr. 30, 2021 $ / shares	Nov. 30, 2020 shares
Common Shares, Issued		33,092,665			23,678,105
Private Placement Offering Of An Aggregate Of Common Shares	9,414,560
Share Issued, Price Per Share | $ / shares				$ 0.41
Private Placement Offering Of An Aggregate Of Common Value | $	$ 3,069,448
Stock Issuance Costs | $	$ 38,220
Officers and Directors
Common Shares, Issued		33,092,665	33,092,665
Noncontrolling Interest, Ownership Percentage By Noncontrolling Owners		1.70%	1.70%
Common Stock		578,131	578,131

XML

Options (Details)	12 Months Ended
	Nov. 30, 2022 $ / shares shares
Options Outstanding | shares	1,489,500
Options exercisable | shares	1,309,000
Weighted average exercise price outstanding	$ 2.40
Option [Member]
Options Outstanding | shares	1,309,000
Options exercisable | shares	1,309,000
Weighted average exercise price outstanding	$ 0.35
Weighted average exercise price option exercisable	$ 0.35
Expected life (in Years)	3 months 7 days
Weighted average grant date fair value of options granted exercisable	$ 0.27
Option Outstanding
Options Outstanding | shares	1,309,000
Options exercisable | shares	1,309,000
Weighted average exercise price outstanding	$ 0.35
Weighted average exercise price option exercisable	$ 0.35
Expected life (in Years)	6 months 8 days
Weighted average grant date fair value of options granted outstanding	$ 0.27
Weighted average grant date fair value of options granted exercisable	$ 0.27

XML

Options (Details 1) - $ / shares	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Options
Options Outstanding	1,489,500	1,697,638	2,353,829
Expired	(180,500)	(44,900)	(329,694)
Cancelled	0	(156,572)	(101,182)
Granted	0	0	0
Forfeiture	0	(6,666)	(225,315)
Options Outstanding, End of period	1,309,000	1,489,500	1,697,638
Options exercisable	1,309,000	1,489,500	1,231,309
Weighted average exercise price outstanding	$ 2.40	$ 2.92	$ 8.35
Weighted average exercise price, Expired	17.16	27.60	42.84
Weighted average exercise price, Granted	0	0	0
Weighted average exercise price, Cancelled	0	1.05	1.53
Weighted average exercise price, Forfeiture	0	0.35	0.35
Weighted average exercise price outstanding, Ending	0.35	2.40	2.92
Weighted average exercise price, Options exercisable end of period	0.35	2.40	3.90
Weighted average grant date fair value, Beginning	1.80	1.99	4.30
Weighted average grant date fair value, Expired	12.81	13.74	19.68
Weighted average grant date fair value, Cancelled	0	0.57	0.78
Weighted average grant date fair value, Granted	0	0	0
Weighted average grant date fair value, Forfeiture	0	0.22	0.22
Weighted average grant date fair value, Ending	0.27	1.80	1.99
Weighted average grant date fair value, Options exercisable end of period	$ 0.27	$ 1.80	$ 2.64

XML

Options (Details 2) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Stock Based Compensation Expense Components	$ 0	$ 11,985	$ 71,645
Research and Development Expense
Stock Based Compensation Expense Components	0	9,719	60,446
Selling, General and Administrative Expenses
Stock Based Compensation Expense Components	$ 0	$ 2,266	$ 11,199

XML

Options (Details Narrative) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Unrecognized compensation cost	$ 0	$ 0	$ 0
Options Outstanding	1,489,500	1,697,638	2,353,829
Share-based compensation arrangement by share-based payment award, options, grants in period	0		0
Options exercised	$ 0	$ 0	$ 0
Stock option share-based compensation forfeiture rate	4.00%	4.00%	4.00%
Common shares, outstanding	33,092,665		23,678,105
Employee Stock Option Plan [Member]
Options Outstanding	1,309,000
Share-based compensation arrangement by share-based payment award, options, grants in period	2,000,267
Common shares, outstanding	3,309,267
Lower [Member]
Options granted, term	5 years
Upper [Member]
Options granted, term	10 years

XML

Deferred Share Units (Details Narrative) - Deferred Share Units - shares	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020	May 28, 2010
Common Shares Reserved Maximum For Issuance Under The Plan				11,000
Outstanding shares	0	0	0
Share based compensation arrangement by share based payment award number of shares available for grant	11,000	11,000	11,000
Shares exercised	0	0
Charges from additional paid in capital to cmmon shares under capital stock	0	0	0

XML

Restricted share units (Details Narrative)	May 28, 2010 shares
Restricted share units
Restricted Share Unit Reserved Maximum For Issuance Under The Plan	33,000

XML

Warrants (Details) - $ / shares	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Number Outstanding	21,160,314	21,923,624
Shares Issuable Upon Exercise	21,160,314
2018 Firm Warrants
Number Outstanding	20,000,000	20,000,000
Shares Issuable Upon Exercise	20,000,000
Exercise Price	$ 0.75
Expiry	Oct. 16, 2023
October 2018 Placement Agent Warrants
Number Outstanding	1,160,314	1,160,314
Shares Issuable Upon Exercise	1,160,314
Exercise Price	$ 0.9375
Expiry	Oct. 16, 2023

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Warrants (Details1)	Nov. 30, 2022 shares
Warrant outstanding, beginning	21,923,624
Warrant outstanding, ending	21,160,314
Warrant [Member]
Warrant outstanding, beginning	21,160,314
Warrant outstanding, ending	21,160,314
2018 Firm Warrants
Warrant outstanding, beginning	20,000,000
Warrant outstanding, ending	20,000,000
October 2018 Placement Agent Warrants
Warrant outstanding, beginning	1,160,314
Warrant outstanding, ending	1,160,314

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Warrants (Details 2)	12 Months Ended
	Nov. 30, 2022 shares
Warrant outstanding, beginning	21,923,624
Issued	0
Expired	(763,310)
Exercised	0
Warrant outstanding, ending	21,160,314
2018 Firm Warrants
Warrant outstanding, beginning	20,000,000
Issued	0
Expired	0
Exercised	0
Warrant outstanding, ending	20,000,000
October 2018 Placement Agent Warrants
Warrant outstanding, beginning	1,160,314
Issued	0
Expired	0
Exercised	0
Warrant outstanding, ending	1,160,314
March 2018 Warrants
Warrant outstanding, beginning	441,666
Issued	0
Expired	(441,666)
Exercised	0
Warrant outstanding, ending	0
March 2018 Placement Agent Warrants
Warrant outstanding, beginning	44,166
Issued	0
Expired	(44,166)
Exercised	0
Warrant outstanding, ending	0
June 2016 Warrants
Warrant outstanding, beginning	277,478
Issued	0
Expired	(277,478)
Exercised	0
Warrant outstanding, ending	0

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Warrants (Details Narrative)	Nov. 30, 2022 shares
Warrants
Warrants to purchase common stock shares	21,160,314

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Income taxes (Details) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Income taxes
Tax Loss Expired And Other	$ (9)	$ 695,370	$ (9,069)
Global Intangible Low-taxed Income (gilti)	0	0	40,643
Income Tax Expense (recovery)	5,337	114,187	0
Current Tax Expense	10,858	(20,333)	32,833
Deferred Tax Recovery	$ (5,521)	$ (93,854)	$ 0
Statutory Income Tax Rate	26.50%	26.50%	26.50%
Statutory Income Tax Recovery	$ (765,070)	$ (1,393,726)	$ (889,905)
Non-deductible Expenses/ Non-taxable Income	41,921	53,470	47,287
Change In Valuation Allowance	815,181	540,925	843,877
Financing Costs Booked To Equity	0	(10,128)	0
Difference In Foreign Tax Rates	$ (2,844)	$ (98)	$ 0

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Income taxes (Details 1) - USD ($)	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Income taxes
Non-capital Loss Carry-forwards	$ 16,560,810	$ 16,323,553
Book And Tax Basis Differences On Assets And Liabilities	1,582,397	1,527,791
Other	2,120,034	1,509,122
Investment Tax Credit	2,850,496	2,850,496
Undeducted Research And Development Expenditures	4,227,211	4,227,211
Capital Loss Carryforwards	318,915	318,915
Share Issuance Cost	6,077	227,253
Deferred Tax Assets, Gross	27,665,940	26,984,341
Unrealized Foreign Exchange Gain	271,913	271,913
Convertible Debentures	0	(12,857)
Deferred Tax Liabilities	(271,913)	(284,770)
Valuation Allowances For Deferred Tax Assets	27,394,027	26,699,571
Net Deferred Tax Assets	$ 0	$ 0	$ 0

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Income taxes (Details 2) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Income taxes
Balance At The Beginning Of The Year	$ 0	$ 0
Recognized In Profit/loss	(5,521)	(93,854)
Recognized In Shareholders' Equity	5,521	93,854
Balance At The End Of The Year	$ 0	$ 0

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Income taxes (Details 3) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Operating Loss Carryforwards	$ 62,493,624	$ 62,493,624
2029
Operating Loss Carryforwards		614,200
2030
Operating Loss Carryforwards		3,717,403
2031
Operating Loss Carryforwards		6,154,180
2032
Operating Loss Carryforwards		6,410,970
2033
Operating Loss Carryforwards		4,984,768
2034
Operating Loss Carryforwards		149,927
2035
Operating Loss Carryforwards		2,634,823
2036
Operating Loss Carryforwards		3,404,504
2037
Operating Loss Carryforwards		4,328,444
2038
Operating Loss Carryforwards		11,231,494
2040
Operating Loss Carryforwards		9,891,661
2039
Operating Loss Carryforwards		3,111,826
2041
Operating Loss Carryforwards		4,968,817
2042
Operating Loss Carryforwards		$ 890,607

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Income taxes (Details Narrative) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Income taxes
Operating Loss Carryforwards	$ 62,493,624	$ 62,493,624
Research And Experimental Development Expenditures, Cumulative Carry-forwards	15,951,739	15,951,739
Accrued interest and penalties	38,673	0
Unclaimed Investment Tax Credits	$ 2,933,013	$ 2,933,013

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Contingencies (Details Narrative)	Oct. 12, 2021 CAD ($)	Nov. 07, 2019 USD ($)
Contingencies
Payment For Settlement	$ 40,000	$ 1,600,000
Settlement Expense	266,000,000,000
Contribution To Settlement Fund		$ 400,000
Payment For Settlement From Insurance Coverage	$ 226,000

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Financial Instruments (Details)	Nov. 30, 2022 USD ($)	Nov. 30, 2021 USD ($)	May 31, 2021 USD ($)	Sep. 30, 2019 CAD ($)	Sep. 10, 2018 USD ($)
Financial Liabilities
Convertible Debentures, Carrying Amount	$ 1,800,000	$ 1,751,483		$ 203,886
Convertible Debentures, Fair Value	1,753,406	1,783,882	$ 1,050,000		$ 500,000
Promissory Notes Payable, Carrying Amount	360,514	165,878
Promissory Notes Payable, Fair Value	$ 360,514	$ 165,878

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Financial Instruments (Details 1) - USD ($)	Nov. 30, 2022	Nov. 30, 2021
Total Accounts Receivable	$ 602	$ 0
Less Allowance For Doubtful Accounts	0	0
Total Accounts Receivable, Net	602	0
Not Past Due	602	0
Total Accounts Receivable, Gross	602	0
Past due for more than 31 days but no more than 120 days
Past Due	0	0
Past due for more than 120 days
Past Due	$ 0	$ 0

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Financial Instruments (Details 2)	12 Months Ended
	Nov. 30, 2022 USD ($)
Undiscounted Future Cash Flows	$ 11,997,854
Employee Costs Payable
Undiscounted Future Cash Flows	3,067,578
Convertible Debentures
Undiscounted Future Cash Flows	1,800,000
Promissory Notes Payable
Undiscounted Future Cash Flows	360,514
Operating lease liabiity
Undiscounted Future Cash Flows	183,564
Accrued Liabilities
Undiscounted Future Cash Flows	2,821,506
Accounts Payable
Undiscounted Future Cash Flows	3,764,692
Less Than 3 Months
Undiscounted Future Cash Flows	11,860,181
Less Than 3 Months | Employee Costs Payable
Undiscounted Future Cash Flows	3,067,578
Less Than 3 Months | Convertible Debentures
Undiscounted Future Cash Flows	1,800,000
Less Than 3 Months | Promissory Notes Payable
Undiscounted Future Cash Flows	360,514
Less Than 3 Months | Operating lease liabiity
Undiscounted Future Cash Flows	45,891
Less Than 3 Months | Accrued Liabilities
Undiscounted Future Cash Flows	2,821,506
Less Than 3 Months | Accounts Payable
Undiscounted Future Cash Flows	3,764,692
Three To Six Months
Undiscounted Future Cash Flows	45,891
Three To Six Months | Employee Costs Payable
Undiscounted Future Cash Flows	0
Three To Six Months | Convertible Debentures
Undiscounted Future Cash Flows	0
Three To Six Months | Promissory Notes Payable
Undiscounted Future Cash Flows	0
Three To Six Months | Operating lease liabiity
Undiscounted Future Cash Flows	45,891
Three To Six Months | Accrued Liabilities
Undiscounted Future Cash Flows	0
Three To Six Months | Accounts Payable
Undiscounted Future Cash Flows	0
Six To Nine Months
Undiscounted Future Cash Flows	45,891
Six To Nine Months | Employee Costs Payable
Undiscounted Future Cash Flows	0
Six To Nine Months | Convertible Debentures
Undiscounted Future Cash Flows	0
Six To Nine Months | Promissory Notes Payable
Undiscounted Future Cash Flows	0
Six To Nine Months | Operating lease liabiity
Undiscounted Future Cash Flows	45,891
Six To Nine Months | Accrued Liabilities
Undiscounted Future Cash Flows	0
Six To Nine Months | Accounts Payable
Undiscounted Future Cash Flows	0
Nine Months To One Year
Undiscounted Future Cash Flows	45,891
Nine Months To One Year | Employee Costs Payable
Undiscounted Future Cash Flows	0
Nine Months To One Year | Convertible Debentures
Undiscounted Future Cash Flows	0
Nine Months To One Year | Promissory Notes Payable
Undiscounted Future Cash Flows	0
Nine Months To One Year | Operating lease liabiity
Undiscounted Future Cash Flows	45,891
Nine Months To One Year | Accrued Liabilities
Undiscounted Future Cash Flows	0
Nine Months To One Year | Accounts Payable
Undiscounted Future Cash Flows	0
Greater Than One Year
Undiscounted Future Cash Flows	0
Greater Than One Year | Employee Costs Payable
Undiscounted Future Cash Flows	0
Greater Than One Year | Convertible Debentures
Undiscounted Future Cash Flows	0
Greater Than One Year | Promissory Notes Payable
Undiscounted Future Cash Flows	0
Greater Than One Year | Operating lease liabiity
Undiscounted Future Cash Flows	0
Greater Than One Year | Accrued Liabilities
Undiscounted Future Cash Flows	0
Greater Than One Year | Accounts Payable
Undiscounted Future Cash Flows	$ 0

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Financial Instruments (Details Narrative) $ in Millions	12 Months Ended
	Nov. 30, 2022 USD ($)
Financial instruments
Foreign Exchange Risk Movement In Currency Percentage	10.00%
Foreign Exchange Risk Loss And Other Comprehensive Loss Amount Affected	$ 1.0

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Segmented Information (Details) - USD ($)	12 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2020
Revenues	$ 65,728	$ 0	$ 1,401,517
Assets	1,432,032	2,096,425
Total property and equipment	788,050	994,109
Canada [Member]
Revenues	19,068	0	0
Assets	1,432,032	2,096,425	3,387,055
Total property and equipment	788,050	994,109	1,770,137
United States [Member]
Revenues	29,682	0	1,401,517
Other [Member]
Revenues	$ 16,978	$ 0	$ 0