INTELGENX TECHNOLOGIES CORP., 10-Q filed on 8/8/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2013
Aug. 6, 2013
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2013 
 
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
 
52,710,421 
Entity Current Reporting Status
Yes 
 
Entity Voluntary Filers
No 
 
Entity Well Known Seasoned Issuer
No 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q2 
 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Current
 
 
Cash and cash equivalents
$ 2,284 
$ 2,059 
Accounts receivable
360 
1,282 
Prepaid expenses
94 
102 
Investment tax credits receivable
268 
213 
Total Current Assets
3,006 
3,656 
Leasehold Improvements and Equipment, net
507 
387 
Intangible Assets
97 
116 
Total Assets
3,610 
4,159 
Current
 
 
Accounts payable and accrued liabilities
336 
1,058 
Deferred license revenue
308 
308 
Total Current Liabilities
644 
1,366 
Deferred License Revenue, non-current portion
461 
615 
Total Liabilities
1,105 
1,981 
Shareholders' Equity
 
 
Capital Stock
Additional Paid-in-Capital
17,171 
16,342 
Accumulated Deficit
(14,859)
(14,463)
Accumulated Other Comprehensive Income
192 
299 
Total Shareholders' Equity
2,505 
2,178 
Total Liabilities and Shareholders' Equity
$ 3,610 
$ 4,159 
Consolidated Statement of Comprehensive Income (Loss) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Revenues
 
 
 
 
Royalties
$ 14 
$ 0 
$ 91 
$ 0 
License and other revenue
533 
20 
613 
120 
Total Revenues
547 
20 
704 
120 
Expenses
 
 
 
 
Research and development expense
48 
310 
215 
551 
Selling, general and administrative expense
394 
332 
850 
771 
Amortization of tangible assets
17 
17 
Amortization of intangible assets
19 
Total Costs and Expenses
458 
651 
1,101 
1,339 
Profit (Loss) from Operations
89 
(631)
(397)
(1,219)
Other Income
 
 
 
 
Interest and other income
Total Other Income
Net Profit (Loss)
90 
(630)
(396)
(1,214)
Other Comprehensive Income (Loss)
 
 
 
 
Foreign currency translation adjustment
(71)
(73)
(107)
19 
Comprehensive Profit (Loss)
$ 19 
$ (703)
$ (503)
$ (1,195)
Basic and Diluted Weighted Average Number of Shares Outstanding
51,166,323 
49,622,028 
51,133,173 
49,473,279 
Basic and Diluted Profit (Loss) Per Common Share
$ 0.00 
$ (0.01)
$ (0.01)
$ (0.02)
Consolidated Statement of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Funds Provided (Used) - Operating Activities
 
 
 
 
Net profit (loss)
$ 90 
$ (630)
$ (396)
$ (1,214)
Amortization
16 
36 
17 
Stock-based compensation
30 
14 
48 
29 
Total Adjustments
136 
(607)
(312)
(1,168)
Changes in assets and liabilities
 
 
 
 
Accounts receivable
(190)
(145)
922 
(127)
Prepaid and other assets
(5)
(15)
Other receivables
(25)
(20)
(55)
229 
Accounts payable and other accrued liabilities
(163)
(115)
(724)
(383)
Deferred revenue
(76)
(153)
1,000 
Net change in assets and liabilities
(459)
(280)
(2)
704 
Net cash provided (used) by operating activities
(323)
(887)
(314)
(464)
Financing Activities
 
 
 
 
Proceeds from exercise of warrants and stock options
587 
782 
234 
Net cash provided by financing activities
587 
782 
234 
Investing Activities
 
 
 
 
Additions to property and equipment
(92)
(53)
(161)
(242)
Net cash used in investing activities
(92)
(53)
(161)
(242)
Increase (Decrease) in Cash and Cash Equivalents
172 
(939)
307 
(472)
Effect of Foreign Exchange on Cash and Cash Equivalents
(56)
(65)
(82)
22 
Cash and Cash Equivalents
 
 
 
 
Beginning of Period
2,168 
4,059 
2,059 
3,505 
End of Period
$ 2,284 
$ 3,055 
$ 2,284 
$ 3,055 
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 Income [Member]
Total
Beginning Balance at Dec. 31, 2012
$ 0 
$ 16,342 
$ (14,463)
$ 299 
$ 2,178 
Beginning Balance (Shares) at Dec. 31, 2012
49,890,421 
 
 
 
 
Foreign currency translation adjustment
 
 
 
(107)
(107)
Warrants exercised
750 
 
 
751 
Warrants exercised (Shares)
1,584,000 
 
 
 
 
Options exercised
 
31 
 
 
31 
Options exercised (Shares)
75,000 
 
 
 
 
Stock-based compensation
 
48 
 
 
48 
Net loss for the period
 
 
(396)
 
(396)
Ending Balance at Jun. 30, 2013
$ 1 
$ 17,171 
$ (14,859)
$ 192 
$ 2,505 
Ending Balance (Shares) at Jun. 30, 2013
51,549,421 
 
 
 
 
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, 2012. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. 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

Revenue Recognition and Disclosures

In December 2011, the FASB issued Update No. 2011-11, “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities”. The objective of this Update is to provide enhanced disclosures that will enable users of financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position. This includes the effect or potential effect of rights of setoff associated with an entity’s recognized assets and recognized liabilities within the scope of this Update. The amendments require enhanced disclosures by requiring improved information about derivatives, repurchase agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with specific criteria or subject to a master netting arrangement or similar agreement. In January 2013, the FASB also issued Update No. 2013-01, which clarifies that ordinary trade receivables and receivables are not in the scope of ASU 2011-11. ASU 2011-11and ASU 2013-01are effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. Retrospective disclosure is required for all comparative periods presented. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

In February 2013, the FASB has issued Update No. 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”. This Update has been issued to improve the transparency of reporting these reclassifications. The amendments in this Update supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 and 2011-12 for all public and private organizations. The amendments would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual), effective for reporting periods beginning after December 15, 2012. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

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

Significant Accounting Policies

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued Update No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05”. The amendments in this Update supersede changes to those paragraphs in Update 2011-05 that pertain to how, when, and where reclassification adjustments are presented. The adoption of this amendment is not expected to have a material effect on the Company’s financial position or results of operations, but may affect the presentation of Other Comprehensive Income in the Company’s financial statements.

In February 2013, the FASB issued Update No. 2013-04, “Liabilities (Topic 405)—Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date”. The amendments in this Update provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. For public entities, the amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments shall be applied retrospectively to all prior periods presented for those obligations that exist at the beginning of the fiscal year of adoption. Early adoption is permitted. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

In March 2013, the FASB issued Update No. 2013-05, “Foreign Currency Matters (Topic 830)—Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity”. The amendments in this Update resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. For public entities, the amendments in this ASU are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. Early adoption is permitted. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

In April 2013, the FASB issued Update No. 2013-07, “Presentation of Financial Statements – Liquidation Basis of Accounting”. The objective of this Update is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. These amendments are effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entities should apply the requirements prospectively from the day that liquidation becomes imminent. Early adoption is permitted. The adoption of this amendment is not expected to have a material effect on the Company’s financial position or results of operations.

Intangible Assets
Intangible Assets [Text Block]
4.

Intangible Assets

As of June 30, 2013 NDA acquisition costs of $97 thousand (December 31, 2012 - $116 thousand) were recorded as intangible assets on the Company’s balance sheet and represent the net book value of the final progress payment related to the acquisition of 100% ownership of Forfivo XL™. The asset will be amortized over its estimated useful life of 39 months. The Company commenced amortization upon commercial launch of the product in October 2012.

Deferred License Revenue
Deferred License Revenue [Text Block]
5.

Deferred License Revenue

Deferred license revenue represents upfront payments received for the granting of licenses to the Company’s patents, intellectual property, and proprietary technology, for commercialization. Deferred license revenue is recognized in income over the period where sales of the licensed products will occur.

Upon entering into the licensing agreement with Edgemont Pharmaceuticals the Company received an upfront fee of $1 million, which the Company recognized as deferred license revenue. The deferred license revenue will be amortized in income over a period of 39 months, which is the minimum period where sales of Forfivo XL™ are expected to be exclusive. As a result of this policy, the Company has a deferred revenue balance of $769 thousand at June 30, 2013 that has not been recognized as revenue.

Capital Stock
Capital Stock [Text Block]
6.

Capital Stock


      June 30,     December 31,  
      2013     2012  
  Authorized -
100,000,000 common shares of $0.00001 par value
20,000,000 preferred shares of $0.00001 par value
 
 
   
 
 
  Issued -
51,549,421 (December 31, 2012 - 49,890,421) common shares
 
$515
   
$499
 
Related Party Transactions
Related Party Transactions [Text Block]
8.

Related Party Transactions

   
 

Included in management salaries for the six months ended June 30, 2013 are $5 thousand (2012 - $3 thousand) for options granted to the Chief Executive Officer, $10 thousand (2012 - $Nil) for options granted to the Chief Operating Officer and $9 thousand (2012 - $3 thousand) for options granted to the Chief Financial Officer under the 2006 Stock Option Plan and $6 thousand (2012 - $13 thousand) for options granted to non-employee directors.

   
 

Also included in management salaries are director fees of $44 thousand (2012 - $55 thousand) for attendance to board meetings and audit committee meetings and $66 thousand (2012 - $Nil) for fees paid to a director under a management consultancy agreement.

   
 

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 Per Common Share
Basic and Diluted Loss Per Common Share [Text Block]
9.

Basic and Diluted Loss Per Common Share

   
 

Basic and diluted loss per common share is calculated based on the weighted average number of shares outstanding during the period. The warrants, share-based compensation and convertible notes have been excluded from the calculation of diluted loss per share since they are anti-dilutive.

Subsequent Events
Subsequent Events [Text Block]
10.

Subsequent Events

   
 

Subsequent to the end of the quarter, 1,161,000 warrants were exercised for 1,161,000 common shares having a par value of $0 thousand for cash consideration of approximately $550 thousand, resulting in an increase in additional paid-in capital of approximately $550 thousand.

Comparative Figures
Comparative Figures [Text Block]
11.

Comparative Figures

   
 

Certain reclassifications of June 30, 2012 amounts have been made to facilitate comparison with the current period.

Capital Stock (Tables)
Schedule of Stock by Class [Table Text Block]
      June 30,     December 31,  
      2013     2012  
  Authorized -
100,000,000 common shares of $0.00001 par value
20,000,000 preferred shares of $0.00001 par value
 
 
   
 
 
  Issued -
51,549,421 (December 31, 2012 - 49,890,421) common shares
 
$515
   
$499
 
Intangible Assets (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2013
M
Intangible Assets 1
$ 97 
Intangible Assets 2
$ 116 
Intangible Assets 3
100.00% 
Intangible Assets 4
39 
Deferred License Revenue (Narrative) (Details) (USD $)
6 Months Ended
Jun. 30, 2013
M
Deferred License Revenue 1
$ 1,000,000 
Deferred License Revenue 2
39 
Deferred License Revenue 3
$ 769,000 
Related Party Transactions (Narrative) (Details) (USD $)
6 Months Ended
Jun. 30, 2013
Related Party Transactions 1
$ 5,000 
Related Party Transactions 2
3,000 
Related Party Transactions 3
10,000 
Related Party Transactions 4
Related Party Transactions 5
9,000 
Related Party Transactions 6
3,000 
Related Party Transactions 7
6,000 
Related Party Transactions 8
13,000 
Related Party Transactions 9
44,000 
Related Party Transactions 10
55,000 
Related Party Transactions 11
66,000 
Related Party Transactions 12
$ 0 
Subsequent Events (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Subsequent Events 1
1,161,000 
Subsequent Events 2
1,161,000 
Subsequent Events 3
$ 0 
Subsequent Events 4
550 
Subsequent Events 5
$ 550 
Schedule of Stock by Class (Details) (USD $)
6 Months Ended
Jun. 30, 2013
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
51,549,421 
Capital Stock Schedule Of Stock By Class 6
49,890,421 
Capital Stock Schedule Of Stock By Class 7
515 
Capital Stock Schedule Of Stock By Class 8
$ 499 
Schedule of 480,000 Stock Options Valuation - April 24, 2013 (Details) (USD $)
6 Months Ended
Jun. 30, 2013
Y
Additional Paid-in Capital Schedule Of 480,000 Stock Options Valuation - April 24, 2013 1
78.00% 
Additional Paid-in Capital Schedule Of 480,000 Stock Options Valuation - April 24, 2013 2
3.83 
Additional Paid-in Capital Schedule Of 480,000 Stock Options Valuation - April 24, 2013 3
0.34% 
Additional Paid-in Capital Schedule Of 480,000 Stock Options Valuation - April 24, 2013 4
$ 0 
Schedule of 200,000 Stock Options Valuation - April 24, 2013 (Details) (USD $)
6 Months Ended
Jun. 30, 2013
Y
Additional Paid-in Capital Schedule Of 200,000 Stock Options Valuation - April 24, 2013 1
77.00% 
Additional Paid-in Capital Schedule Of 200,000 Stock Options Valuation - April 24, 2013 2
3.13 
Additional Paid-in Capital Schedule Of 200,000 Stock Options Valuation - April 24, 2013 3
0.34% 
Additional Paid-in Capital Schedule Of 200,000 Stock Options Valuation - April 24, 2013 4
$ 0