INTELGENX TECHNOLOGIES CORP., 10-Q filed on 11/9/2017
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2017
Document Type
10-Q 
Amendment Flag
false 
Document Period End Date
Sep. 30, 2017 
Trading Symbol
igxt 
Entity Registrant Name
IntelGenx Technologies Corp. 
Entity Central Index Key
0001098880 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Smaller Reporting Company 
Entity Common Stock, Shares Outstanding
66,931,467 
Entity Current Reporting Status
Yes 
Entity Voluntary Filers
No 
Entity Well Known Seasoned Issuer
No 
Document Fiscal Year Focus
2017 
Document Fiscal Period Focus
Q3 
Consolidated Balance Sheet (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2017
Dec. 31, 2016
Current
 
 
Cash
$ 1,631 
$ 612 
Short-term investments
5,291 
3,884 
Accounts receivable
470 
1,044 
Prepaid expenses
236 
566 
Investment tax credits receivable
254 
246 
Total current assets
7,882 
6,352 
Leasehold improvements and equipment, net
6,523 
5,730 
Security deposits
761 
708 
Total assets
15,166 
12,790 
Current
 
 
Accounts payable and accrued liabilities
1,222 
897 
Current portion of long-term debt
776 
704 
Deferred revenue
978 
3,634 
Total current liabilities
2,976 
5,235 
Deferred lease obligations
50 
45 
Long-term debt
2,192 
2,565 
Convertible debentures
5,158 
Total liabilities
10,376 
7,845 
Shareholders' equity
 
 
Capital stock, common shares, $0.00001 par value; 100,000,000 shares authorized; 66,931,467 shares issued and outstanding (2016: 64,812,020 common shares)
Additional paid-in capital
25,149 
23,700 
Accumulated deficit
(19,697)
(17,737)
Accumulated other comprehensive loss
(663)
(1,019)
Total shareholders' equity
4,790 
4,945 
Total Liabilities and Shareholders' Equity
$ 15,166 
$ 12,790 
Consolidated Balance Sheet (Parenthetical) (USD $)
Sep. 30, 2017
Dec. 31, 2016
Common Stock, Par Value Per Share
$ 0.00001 
$ 0.00001 
Common Stock, Shares Authorized
100,000,000 
100,000,000 
Common Stock, Shares, Issued
66,931,467 
64,812,020 
Common Stock, Shares, Outstanding
66,931,467 
64,812,020 
Consolidated Statement of Shareholders' Equity (USD $)
In Thousands, except Share data
Capital Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Loss [Member]
Total
Beginning Balance at Dec. 31, 2016
$ 1 
$ 23,700 
$ (17,737)
$ (1,019)
$ 4,945 
Beginning Balance (Shares) at Dec. 31, 2016
64,812,020 
 
 
 
 
Foreign currency translation adjustment
 
 
 
356 
356 
Warrants exercised
 
1,120 
 
 
1,120 
Warrants exercised (Shares)
1,984,447 
 
 
 
 
Options exercised
 
62 
 
 
62 
Options exercised (Shares)
135,000 
 
 
 
 
Stock-based compensation
 
267 
 
 
267 
Net loss for the period
 
 
(1,960)
 
(1,960)
Ending Balance at Sep. 30, 2017
$ 1 
$ 25,149 
$ (19,697)
$ (663)
$ 4,790 
Ending Balance (Shares) at Sep. 30, 2017
66,931,467 
 
 
 
 
Consolidated Statement of Comprehensive Income (Loss) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Revenues
 
 
 
 
Royalties
$ 0 
$ 0 
$ 0 
$ 1,051 
License and other revenue
1,254 
1,819 
3,733 
2,258 
Total revenues
1,254 
1,819 
3,733 
3,309 
Expenses
 
 
 
 
Cost of royalty, license and other revenue
97 
97 
278 
228 
Research and development expense
578 
388 
1,876 
1,295 
Selling, general and administrative expense
963 
1,072 
2,693 
2,837 
Depreciation of tangible assets
185 
174 
525 
361 
Total expenses
1,823 
1,731 
5,372 
4,721 
Operating (loss) income
(569)
88 
(1,639)
(1,412)
Interest income
Financing and interest expense
(218)
(60)
(329)
(146)
Net (loss) income
(782)
30 
(1,960)
(1,556)
Other comprehensive income
 
 
 
 
Foreign currency translation adjustment
196 
32 
356 
105 
Comprehensive (loss) income
$ (586)
$ 62 
$ (1,604)
$ (1,451)
Basic:
 
 
 
 
Weighted average number of shares outstanding
66,834,363 
63,874,252 
65,885,055 
63,702,536 
Diluted (loss) earnings per common share
$ (0.01)
$ 0.00 
$ (0.02)
$ (0.02)
Diluted:
 
 
 
 
Weighted average number of shares outstanding
66,834,363 
73,541,378 
65,885,055 
63,702,536 
Diluted (loss) earnings per common share
$ (0.01)
$ 0.00 
$ (0.02)
$ (0.02)
Consolidated Statement of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Funds provided (used) - Operating activities
 
 
 
 
Net (loss) income
$ (782)
$ 30 
$ (1,960)
$ (1,556)
Depreciation of tangible assets
185 
174 
525 
361 
Stock-based compensation
44 
49 
267 
141 
Accretion expense
57 
57 
Total Adjustments
(496)
253 
(1,111)
(1,054)
Changes in non-cash items related to operations:
 
 
 
 
Accounts receivable
(103)
539 
574 
929 
Prepaid expenses
168 
(430)
330 
(469)
Investment tax credits receivable
(41)
(21)
(8)
(74)
Security deposit
11 
(218)
Accounts payable and accrued liabilities
770 
(331)
325 
(769)
Deferred revenue
(902)
4,651 
(2,656)
4,651 
Deferred lease obligations
18 
Net change in assets and liabilities
(106)
4,419 
(1,430)
4,068 
Net cash (used in) from operating activities
(602)
4,672 
(2,541)
3,014 
Financing activities
 
 
 
 
Issuance of long-term debt
1,569 
Repayment of long-term debt
(169)
(239)
(523)
(309)
Proceeds from exercise of warrants and stock options
166 
596 
1,182 
596 
Net proceeds from issuance of convertible debentures
4,978 
4,978 
Net cash provided by financing activities
4,975 
357 
5,637 
1,856 
Investing activities
 
 
 
 
Additions to leasehold improvements and equipment
(452)
(385)
(907)
(2,229)
Acquisitions of short-term investments
(3,952)
(3,000)
(3,952)
(3,000)
Redemption of short-term investments
410 
2,735 
Net cash used in investing activities
(3,994)
(3,385)
(2,124)
(5,229)
Increase (decrease) in cash
379 
1,644 
972 
(359)
Effect of foreign exchange on cash
77 
(20)
47 
214 
Cash
 
 
 
 
Beginning of period
1,175 
1,096 
612 
2,865 
End of period
$ 1,631 
$ 2,720 
$ 1,631 
$ 2,720 
Basis of Presentation
Basis of Presentation [Text Block]
1.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal and recurring nature.

These financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2016. Operating results for the nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

The consolidated financial statements include the accounts of the Company and its subsidiary companies. On consolidation, all inter-entity transactions and balances have been eliminated.

The financial statements are expressed in U.S. funds.

Management has performed an evaluation of the Company’s activities through the date and time these financial statements were issued and concluded that there are no additional significant events requiring recognition or disclosure.

Adoption of New Accounting Standards
Adoption of New Accounting Standards [Text Block]
2.

Adoption of New Accounting Standards

The FASB issued Update 2016-06, Derivatives and Hedging Contingent Put and Call Options in Debt Instruments, clarifying the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. The amendments in this Update require an entity performing the assessment to assess the embedded call (put) options solely in accordance with the four-step decision sequence. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

The FASB issued Update 2016-09, Compensation – Stock Compensation Improvements to Employee Share-Based Payment Accounting, simplifying several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

The FASB issued Update 2015-11, Inventory: Simplifying the Measurement of Inventory, aligning the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in this Update state that an entity should measure inventory within the scope of this update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

The FASB issued 2015-017, Income Taxes: Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities be classified as noncurrent in a classified statement of financial position. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

Significant Accounting Policies
Significant Accounting Policies [Text Block]
3.

Significant Accounting Policies

Leasehold Improvements and Equipment

Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

 

On the declining balance method -

     
 

       Laboratory and office equipment

  20%  
 

       Computer equipment

  30%  
 

On the straight-line method -

     
 

       Leasehold improvements

  over the lease term  
 

       Manufacturing equipment

  5 – 10 years  

Recent Accounting Pronouncements

ASU 2017-09 – Stock Compensation (Topic 718) Scope of Modification Accounting

In May 2016, the FASB issued ASU 2017-09 which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The statement is effective for annual periods beginning after December 15, 2017. Early adoption is permitted in any interim or annual period for which financial statements have not yet been issued. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-18 – Statement of Cash Flows (Topic 230) Restricted Cash

In November 2016, the FASB issued ASU 2016-18 which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted or restricted cash equivalents. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-15 – Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU 2016-15 which clarifies how certain cash receipts and payments are to be presented in the Statement of cash flows. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016-01, which will significantly change practice for all entities. The targeted amendments to existing guidance are expected to include:

  1.

Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values.

     
  2.

Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.

     
  3.

Entities would make the assessment of the realizability of a deferred tax asset (DTA) related to an available- for-sale (AFS) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery.

     
  4.

Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment

The FASB issued ASU 2017-04 which eliminates Step 2 from the goodwill impairment test and eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2019. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2017-01 - Business Combinations (Topic 805) - Clarifying the Definition of a Business

The FASB issued ASU 2017-01 which clarifies the definition of a business and is intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted under certain circumstances and should be applied on a prospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-16 – Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory

The FASB issued ASU 2016-16 and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-02: Leases (Topic 842) Section A

The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Revenue from Contracts with Customers (Topic 606)

The FASB and IASB (the Boards) have issued converged standards on revenue recognition. ASU No. 2014-09 which affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

  Step 1: Identify the contract(s) with a customer.
  Step 2: Identify the performance obligations in the contract.
  Step 3: Determine the transaction price.
  Step 4: Allocate the transaction price to the performance obligations in the contract.
  Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In the year ended December 31, 2016, the FASB issued three new amendments related to Topic 606:

  1.

ASU 2016-08: Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) which was issued to add clarification to the implementation guidance on principle versus agent considerations. This amendment does not provide any changes to the previously issued ASU No. 2014-09 and is effective for the same reporting period which was deferred by one year in ASU 2015-14: Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date.

   

 

  2.

ASU 2016-10: Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing which was issued to clarifying the following two aspects of topic 606; identifying performance obligations and the licensing implementation guidance. This amendment does not provide any changes to the previously issued ASU No. 2014-09 and is effective for the same reporting period which was deferred by one year in ASU 2015-14: Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date.

   

 

  3.

ASU 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. With this amendment, the SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606. This amendment is effective immediately.

Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

This ASU is to be applied retrospectively, with certain practical expedients allowed. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Leasehold Improvements and Equipment
Leasehold Improvements and Equipment [Text Block]
4.

Leasehold Improvements and Equipment


 

 

              September 30,     December 31,  
 

 

              2017     2016  
 

 

        Accumulated     Net Carrying     Net Carrying  
 

 

  Cost     Depreciation     Amount     Amount  
 

 

                       
 

Manufacturing equipment

$ 3,367   $ 327   $ 3,040   $ 2,429  
 

Laboratory and office equipment

  1,364     577     787     807  
 

Computer equipment

  84     53     31     23  
 

Leasehold improvements

  3,219     554     2,665     2,471  
 

 

                       
 

 

$ 8,034   $ 1,511   $ 6,523   $ 5,730  

As at September 30, 2017 no depreciation has been recorded on manufacturing equipment in the amount of $718 as the equipment is not ready for use.

Bank Indebtedness
Bank Indebtedness [Text Block]
5.

Bank Indebtedness

The Company's credit facility is subject to review annually and consists of an operating demand line of credit of up to CAD$250 thousand and corporate credits cards of up to CAD$75 thousand. Borrowings under the operating demand line of credit bear interest at the Bank’s prime lending rate plus 2%. The credit facility and term loan (see note 7) are secured by a first ranking movable hypothec on all present and future movable property of the Company and a 50% guarantee by Export Development Canada, a Canadian Crown corporation export credit agency. The terms of the banking agreement require the Company to comply with certain debt service coverage and debt to net worth financial covenants on an annual basis at the end of the Company’s fiscal year. As at September 30, 2017, the Company has not drawn on its credit facility.

Deferred Revenue
Deferred Revenue [Text Block]
6.

Deferred Revenue

On August 5, 2016, the Company sold its U.S. royalty on future sales of Forfivo XL ® to SWK Holdings Corporation for $6 million. Under the terms of the agreement, SWK paid IntelGenx $6 million at closing. In return for, (i) 100% of any and all royalties or similar royalty amounts received on or after April 1, 2016, (ii) 100% of the $2 million milestone payment upon Edgemont reaching annual net sales of $15 million, and (iii) 35% of all potential future milestone payments.

The deferred revenue represents the remaining, unrecognized portion of the payment received for the royalty on future sales in the amount of $6 million less the Q2 royalties recognized in the second quarter of 2016 in the amount of $352 thousand. The deferred revenue will be recognized as other revenue on a straight-line basis until December 31, 2017.

10% of the proceeds were paid to our former development partner, Cary Pharmaceuticals Inc. This amount is included in prepaid expenses and will be recognized as cost of royalty, license and other revenue on a straight-line basis until December 31, 2017

Long-term Debt
Long-term Debt [Text Block]
7.

Long-term Debt

The components of the Company’s debt are as follows:

 

 

  September 30, 2017     December 31, 2016  
 

 

  $     $  
 

(in U.S. $ thousands)

           
 

Term loan facility

  2,394     2,636  
 

Secured loan

  574     633  
 

Total debt

  2,968     3,269  
 

Less: current portion

  776     704  
 

Total long-term debt

  2,192     2,565  

The Company’s term loan facility consists of a total of CAD$4 million bearing interest at the Bank’s prime lending rate plus 2.50% . The term loan is subject to the same security and financial covenants as the bank indebtedness (see note 5).

The secured loan has a principal balance authorized of CAD$1 million bearing interest at prime plus 7.3%, reimbursable in monthly principal payments of CAD$17 thousand from January 2017 to March 2021. The loan is secured by a second ranking on all present and future property of the Company. The terms of the banking agreement require the Company to comply with certain debt service coverage and debt to net worth financial covenants on an annual basis at the end of the Company’s fiscal year.

Principal repayments due in each of the next five years are as follows:

 

2017

$ 208 (CAD260)  
 

2018

  757 (CAD945)  
 

2019

  757 (CAD945)  
 

2020

  757 (CAD945)  
 

2021

  489 (CAD610)  
Convertible Debentures
Convertible Debentures [Text Block]
8.

Convertible Debentures

On July 12, 2017, the Company closed its previously announced prospectus offering (the “Offering”) of convertible unsecured subordinated debentures of the Corporation (the “Debentures”) for gross aggregate proceeds of CAD$6,838,000. Pursuant to the Offering, the Corporation issued an aggregate principal amount of CAD$6,838,000 of Debentures at a price of CAD$1,000 per Debenture. The Debentures will mature on June 30, 2020 and bear interest at annual rate of 8% payable semi-annually on the last day of June and December of each year, commencing on December 31, 2017. The Debentures will be convertible at the option of the holders at any time prior to the close of business on the earlier of June 30, 2020 and the business day immediately preceding the date specified by the Corporation for redemption of Debentures. The conversion price will be CAD$1.35 (the “Conversion Price”) per common share of the Corporation (“Share”), being a conversion rate of approximately 740 Shares per CAD$1,000 principal amount of Debentures, subject to adjustment in certain events.

On August 8, 2017, the Company closed a second tranche of its prospectus Offering of convertible unsecured subordinated debentures of the Corporation for which a first closing took place on July 12, pursuant to which it had raised additional gross proceeds of CAD$762,000.

Together with the principal amount of CAD$6,838,000 of Debentures issued on July 12, 2017, the Corporation issued a total aggregate principal amount of CAD$7,600,000 of Debentures at a price of CAD$1,000 per Debenture.

The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 were recorded against the liability. The accretion expense for the period ended September 30, 2017 amounts to CAD$74,000.

The components of the convertible debentures as at September 30, 2017 are as follows:

 

 

  September 30, 2017  
 

 

  $  
 

 

     
 

(in U.S. $ thousands)

     
 

Face value of convertible debentures

$ 6,090  
 

Transaction costs

  (991 )
 

Accretion

  59  
 

 

     
 

Convertible debentures

$ 5,158  

The accrued interest on the convertible debentures as September 30, 2017 amounts to $107 and is recorded in accounts payable and accrued liabilities.

Capital Stock
Capital Stock [Text Block]
9.

Capital Stock


 

 

  September 30,     December 31,  
 

 

  2017     2016  
 

Authorized -

           
 

100,000,000 common shares of $0.00001 par value

           
 

20,000,000 preferred shares of $0.00001 par value

           
 

Issued -

           
 

66,931,467 (December 31, 2016 - 64,812,020) common shares

$ 1   $ 1  
Related Party Transactions
Related Party Transactions [Text Block]
11.

Related Party Transactions

Included in management salaries are $3 (2016 - $2 thousand) for options granted to the Chief Executive Officer, $34 thousand (2016 - $45 thousand) for options granted to the Chief Financial Officer, $3 thousand (2016 - $9 thousand) for options granted to the former Vice President, Operations, $5 thousand (2016 - $4 thousand) for options granted to the Vice-President, Research and Development, $26 thousand (2016 - $1) for options granted to Vice-President, Business and Corporate Development and $Nil thousand (2016 - $21 thousand) for options granted to the former Vice President, Corporate Development under the 2016 Stock Option Plan and $128 thousand (2016 - $45 thousand) for options granted to non-employee directors.

Also included in management salaries are director fees of $206 thousand (2016 - $137 thousand).

The above related party transactions have been measured at the exchange amount which is the amount of the consideration established and agreed to by the related parties.

Basic and Diluted (Loss) Earnings per Common Share
Basic and Diluted (Loss) Earnings per Common Share [Text Block]
12.

Basic and Diluted (Loss) Earnings per Common Share

Basic and diluted (loss) earnings per common share is calculated based on the weighted average number of shares outstanding during the period. Common equivalent shares from stock options and warrants are also included in the diluted per share calculations unless the effect of the inclusion would be antidilutive.

Summary of Significant Accounting Policies (Policies)

Leasehold Improvements and Equipment

Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

 

On the declining balance method -

     
 

       Laboratory and office equipment

  20%  
 

       Computer equipment

  30%  
 

On the straight-line method -

     
 

       Leasehold improvements

  over the lease term  
 

       Manufacturing equipment

  5 – 10 years  

ASU 2017-09 – Stock Compensation (Topic 718) Scope of Modification Accounting

In May 2016, the FASB issued ASU 2017-09 which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The statement is effective for annual periods beginning after December 15, 2017. Early adoption is permitted in any interim or annual period for which financial statements have not yet been issued. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-18 – Statement of Cash Flows (Topic 230) Restricted Cash

In November 2016, the FASB issued ASU 2016-18 which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted or restricted cash equivalents. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-15 – Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments

In August 2016, the FASB issued ASU 2016-15 which clarifies how certain cash receipts and payments are to be presented in the Statement of cash flows. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016-01, which will significantly change practice for all entities. The targeted amendments to existing guidance are expected to include:

  1.

Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values.

     
  2.

Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.

     
  3.

Entities would make the assessment of the realizability of a deferred tax asset (DTA) related to an available- for-sale (AFS) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery.

     
  4.

Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment

The FASB issued ASU 2017-04 which eliminates Step 2 from the goodwill impairment test and eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2019. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2017-01 - Business Combinations (Topic 805) - Clarifying the Definition of a Business

The FASB issued ASU 2017-01 which clarifies the definition of a business and is intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted under certain circumstances and should be applied on a prospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-16 – Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory

The FASB issued ASU 2016-16 and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2016-02: Leases (Topic 842) Section A

The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.

These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.

The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Revenue from Contracts with Customers (Topic 606)

The FASB and IASB (the Boards) have issued converged standards on revenue recognition. ASU No. 2014-09 which affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps:

  Step 1: Identify the contract(s) with a customer.
  Step 2: Identify the performance obligations in the contract.
  Step 3: Determine the transaction price.
  Step 4: Allocate the transaction price to the performance obligations in the contract.
  Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

In the year ended December 31, 2016, the FASB issued three new amendments related to Topic 606:

  1.

ASU 2016-08: Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) which was issued to add clarification to the implementation guidance on principle versus agent considerations. This amendment does not provide any changes to the previously issued ASU No. 2014-09 and is effective for the same reporting period which was deferred by one year in ASU 2015-14: Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date.

   

 

  2.

ASU 2016-10: Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing which was issued to clarifying the following two aspects of topic 606; identifying performance obligations and the licensing implementation guidance. This amendment does not provide any changes to the previously issued ASU No. 2014-09 and is effective for the same reporting period which was deferred by one year in ASU 2015-14: Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date.

   

 

  3.

ASU 2016-11 Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting. With this amendment, the SEC Staff is rescinding the following SEC Staff Observer comments that are codified in Topic 605, Revenue Recognition, and Topic 932, Extractive Activities—Oil and Gas, effective upon adoption of Topic 606. This amendment is effective immediately.

Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

This ASU is to be applied retrospectively, with certain practical expedients allowed. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Significant Accounting Policies (Tables)
Schedule of Estimated Useful Lives of Leasehold Improvements and Equipment [Table Text Block]
 

On the declining balance method -

     
 

       Laboratory and office equipment

  20%  
 

       Computer equipment

  30%  
 

On the straight-line method -

     
 

       Leasehold improvements

  over the lease term  
 

       Manufacturing equipment

  5 – 10 years  
Leasehold Improvements and Equipment (Tables)
Schedule of Leasehold Improvements and Equipment [Table Text Block]
 

 

              September 30,     December 31,  
 

 

              2017     2016  
 

 

        Accumulated     Net Carrying     Net Carrying  
 

 

  Cost     Depreciation     Amount     Amount  
 

 

                       
 

Manufacturing equipment

$ 3,367   $ 327   $ 3,040   $ 2,429  
 

Laboratory and office equipment

  1,364     577     787     807  
 

Computer equipment

  84     53     31     23  
 

Leasehold improvements

  3,219     554     2,665     2,471  
 

 

                       
 

 

$ 8,034   $ 1,511   $ 6,523   $ 5,730  
Long-term Debt (Tables)
 

 

  September 30, 2017     December 31, 2016  
 

 

  $     $  
 

(in U.S. $ thousands)

           
 

Term loan facility

  2,394     2,636  
 

Secured loan

  574     633  
 

Total debt

  2,968     3,269  
 

Less: current portion

  776     704  
 

Total long-term debt

  2,192     2,565  
 

2017

$ 208 (CAD260)  
 

2018

  757 (CAD945)  
 

2019

  757 (CAD945)  
 

2020

  757 (CAD945)  
 

2021

  489 (CAD610)  
Convertible Debentures (Tables)
Schedule of Convertible Debt [Table Text Block]
 

 

  September 30, 2017  
 

 

  $  
 

 

     
 

(in U.S. $ thousands)

     
 

Face value of convertible debentures

$ 6,090  
 

Transaction costs

  (991 )
 

Accretion

  59  
 

 

     
 

Convertible debentures

$ 5,158  
Capital Stock (Tables)
Schedule of Stock by Class [Table Text Block]
 

 

  September 30,     December 31,  
 

 

  2017     2016  
 

Authorized -

           
 

100,000,000 common shares of $0.00001 par value

           
 

20,000,000 preferred shares of $0.00001 par value

           
 

Issued -

           
 

66,931,467 (December 31, 2016 - 64,812,020) common shares

$ 1   $ 1  
Leasehold Improvements and Equipment (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Leasehold Improvements And Equipment 1
$ 718 
Bank Indebtedness (Narrative) (Details) (CAD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2017
Bank Indebtedness 1
$ 250 
Bank Indebtedness 2
$ 75 
Bank Indebtedness 3
2.00% 
Bank Indebtedness 4
50.00% 
Deferred Revenue (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Deferred Revenue 1
$ 6,000,000 
Deferred Revenue 2
6,000,000 
Deferred Revenue 3
100.00% 
Deferred Revenue 4
100.00% 
Deferred Revenue 5
2,000,000 
Deferred Revenue 6
15,000,000 
Deferred Revenue 7
35.00% 
Deferred Revenue 8
6,000,000 
Deferred Revenue 9
$ 352,000 
Deferred Revenue 10
10.00% 
Long-term Debt (Narrative) (Details) (CAD $)
9 Months Ended
Sep. 30, 2017
Long-term Debt 1
$ 4,000,000 
Long-term Debt 2
2.50% 
Long-term Debt 3
1,000,000 
Long-term Debt 4
7.30% 
Long-term Debt 5
$ 17,000 
Convertible Debentures (Narrative) (Details)
9 Months Ended
Sep. 30, 2017
USD ($)
Sep. 30, 2017
CAD ($)
Convertible Debentures 1
 
$ 6,838,000 
Convertible Debentures 2
 
6,838,000 
Convertible Debentures 3
 
1,000 
Convertible Debentures 4
8.00% 
8.00% 
Convertible Debentures 5
 
1.35 
Convertible Debentures 6
740 
740 
Convertible Debentures 7
 
1,000 
Convertible Debentures 8
 
762,000 
Convertible Debentures 9
 
6,838,000 
Convertible Debentures 10
 
7,600,000 
Convertible Debentures 11
 
1,000 
Convertible Debentures 12
 
1,237,000 
Convertible Debentures 13
 
74,000 
Convertible Debentures 14
$ 107 
 
Related Party Transactions (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Related Party Transactions 1
$ 3 
Related Party Transactions 2
2,000 
Related Party Transactions 3
34,000 
Related Party Transactions 4
45,000 
Related Party Transactions 5
3,000 
Related Party Transactions 6
9,000 
Related Party Transactions 7
5,000 
Related Party Transactions 8
4,000 
Related Party Transactions 9
26,000 
Related Party Transactions 10
Related Party Transactions 11
Related Party Transactions 12
21,000 
Related Party Transactions 13
128,000 
Related Party Transactions 14
45,000 
Related Party Transactions 15
206,000 
Related Party Transactions 16
$ 137,000 
Schedule of Estimated Useful Lives of Leasehold Improvements and Equipment (Details)
9 Months Ended
Sep. 30, 2017
Y
Significant Accounting Policies Schedule Of Estimated Useful Lives Of Leasehold Improvements And Equipment 1
20.00% 
Significant Accounting Policies Schedule Of Estimated Useful Lives Of Leasehold Improvements And Equipment 2
30.00% 
Significant Accounting Policies Schedule Of Estimated Useful Lives Of Leasehold Improvements And Equipment 3
Significant Accounting Policies Schedule Of Estimated Useful Lives Of Leasehold Improvements And Equipment 4
10 
Schedule of Leasehold Improvements and Equipment (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 1
$ 3,367 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 2
327 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 3
3,040 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 4
2,429 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 5
1,364 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 6
577 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 7
787 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 8
807 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 9
84 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 10
53 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 11
31 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 12
23 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 13
3,219 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 14
554 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 15
2,665 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 16
2,471 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 17
8,034 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 18
1,511 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 19
6,523 
Leasehold Improvements And Equipment Schedule Of Leasehold Improvements And Equipment 20
$ 5,730 
Term loan (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Long-term Debt Term Loan 1
$ 2,394 
Long-term Debt Term Loan 2
2,636 
Long-term Debt Term Loan 3
574 
Long-term Debt Term Loan 4
633 
Long-term Debt Term Loan 5
2,968 
Long-term Debt Term Loan 6
3,269 
Long-term Debt Term Loan 7
776 
Long-term Debt Term Loan 8
704 
Long-term Debt Term Loan 9
2,192 
Long-term Debt Term Loan 10
$ 2,565 
Term loan principal repayments (Details)
9 Months Ended
Sep. 30, 2017
USD ($)
Sep. 30, 2017
CAD ($)
Long-term Debt Term Loan Principal Repayments 1
$ 208 
 
Long-term Debt Term Loan Principal Repayments 2
 
260 
Long-term Debt Term Loan Principal Repayments 3
757 
 
Long-term Debt Term Loan Principal Repayments 4
 
945 
Long-term Debt Term Loan Principal Repayments 5
757 
 
Long-term Debt Term Loan Principal Repayments 6
 
945 
Long-term Debt Term Loan Principal Repayments 7
757 
 
Long-term Debt Term Loan Principal Repayments 8
 
945 
Long-term Debt Term Loan Principal Repayments 9
489 
 
Long-term Debt Term Loan Principal Repayments 10
 
$ 610 
Schedule of Convertible Debt (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Convertible Debentures Schedule Of Convertible Debt 1
$ 6,090 
Convertible Debentures Schedule Of Convertible Debt 2
(991)
Convertible Debentures Schedule Of Convertible Debt 3
59 
Convertible Debentures Schedule Of Convertible Debt 4
$ 5,158 
Schedule of Stock by Class (Details) (USD $)
9 Months Ended
Sep. 30, 2017
Capital Stock Schedule Of Stock By Class 1
100,000,000 
Capital Stock Schedule Of Stock By Class 2
$ 0.00001 
Capital Stock Schedule Of Stock By Class 3
20,000,000 
Capital Stock Schedule Of Stock By Class 4
0.00001 
Capital Stock Schedule Of Stock By Class 5
66,931,467 
Capital Stock Schedule Of Stock By Class 6
64,812,020 
Capital Stock Schedule Of Stock By Class 7
Capital Stock Schedule Of Stock By Class 8
$ 1