INTELGENX TECHNOLOGIES CORP., 10-Q filed on 5/13/2014
Quarterly Report
Document and Entity Information
3 Months Ended
Mar. 31, 2014
May 8, 2014
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Mar. 31, 2014 
 
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
 
63,215,656 
Entity Current Reporting Status
Yes 
 
Entity Voluntary Filers
No 
 
Entity Well Known Seasoned Issuer
No 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q1 
 
Consolidated Balance Sheets (USD $)
Mar. 31, 2014
Dec. 31, 2013
Current
 
 
Cash and cash equivalents
$ 5,166 
$ 5,005 
Accounts receivable
26 
144 
Prepaid expenses
92 
133 
Investment tax credits receivable
285 
268 
Total Current Assets
5,569 
5,550 
Leasehold Improvements and Equipment, net
664 
588 
Intangible Assets
70 
79 
Total Assets
6,303 
6,217 
Current
 
 
Accounts payable and accrued liabilities
283 
593 
Deferred license revenue
358 
308 
Total Current Liabilities
641 
901 
Deferred License Revenue, non-current portion
231 
308 
Total Liabilities
872 
1,209 
Shareholders' Equity
 
 
Capital Stock
Additional Paid-in-Capital
22,030 
20,934 
Accumulated Deficit
(16,544)
(16,102)
Accumulated Other Comprehensive Income
(56)
175 
Total Shareholders' Equity
5,431 
5,008 
Total Liabilities and Stockholders' Equity
$ 6,303 
$ 6,217 
Consolidated Statement of Shareholders' Equity (USD $)
Capital Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Income [Member]
Total
Beginning Balance at Dec. 31, 2013
$ 1 
$ 20,934 
$ (16,102)
$ 175 
$ 5,008 
Beginning Balance (Shares) at Dec. 31, 2013
60,984,267 
 
 
 
 
Foreign currency translation adjustment
 
 
 
(231)
(231)
Warrants exercised
 
1,064 
 
 
1,064 
Warrants exercised (Shares)
1,666,388 
 
 
 
 
Stock-based compensation
 
32 
 
 
32 
Net loss for the period
 
 
(442)
 
(442)
Ending Balance at Mar. 31, 2014
$ 1 
$ 22,030 
$ (16,544)
$ (56)
$ 5,431 
Ending Balance (Shares) at Mar. 31, 2014
62,650,655 
 
 
 
 
Consolidated Statements of Comprehensive Loss (USD $)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Revenues
 
 
Royalties
$ 97 
$ 80 
License and other revenue
125 
77 
Total Revenues
222 
157 
Expenses
 
 
Research and development expense
188 
167 
Selling, general and administrative expense
460 
456 
Depreciation of tangible assets
10 
Amortization of intangible assets
10 
Total Costs and Expenses
664 
643 
Net Loss
(442)
(486)
Other Comprehensive Loss
 
 
Foreign currency translation adjustment
(231)
(36)
Comprehensive Loss
$ (673)
$ (522)
Basic and Diluted Weighted Average Number of Shares Outstanding
62,064,139 
50,236,255 
Basic and Diluted Loss Per Common Share
$ (0.01)
$ (0.01)
Consolidated Statements of Cash Flows (USD $)
3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
Funds Provided (Used) - Operating Activities
 
 
Net loss
$ (442)
$ (486)
Amortization and depreciation
16 
20 
Stock-based compensation
32 
18 
Total adjustments
(394)
(448)
Changes in assets and liabilities:
 
 
Accounts receivable
118 
1,112 
Prepaid expenses
41 
13 
Investment tax credits receivable
(17)
(30)
Accounts payable and accrued liabilities
(309)
(560)
Deferred revenue
(27)
(77)
Net change in assets and liabilities
(194)
458 
Net cash (used) / provided by operating activities
(588)
10 
Financing Activities
 
 
Proceeds from exercise of warrants
1,064 
195 
Net cash provided by financing activities
1,064 
195 
Investing Activities
 
 
Additions to property and equipment
(105)
(69)
Net cash used in investing activities
(105)
(69)
Increase in Cash and Cash Equivalents
371 
136 
Effect of Foreign Exchange on Cash and Cash Equivalents
(210)
(27)
Beginning of Period
5,005 
2,059 
End of Period
$ 5,166 
$ 2,168 
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, 2013. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. 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 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 were applicable for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

   
 

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 were effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

   
 

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 were effective for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. Entitles should apply the requirements prospectively from the day that liquidation becomes imminent. The adoption of this Statement did not have a material effect on the Company’s financial position or results of operations.

   
 

The FASB issued Update No. 2013-11, “Income Taxes (Topic 740)—Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”. The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. The amendments were effective for fiscal years, and interim periods within those years, beginning after December 15, 2013 and should be applied prospectively to all unrecognized tax benefits that exist at the effective date. 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

   
 

None of the new pronouncements issued by the FASB but not yet effective as of March 31, 2014 are applicable to the Company.

Intangible Assets
Intangible Assets [Text Block]
4.

Intangible Assets

   
 

As of March 31, 2014 NDA acquisition costs of $70 thousand (December 31, 2013 - $79 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 is being 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 is being amortized in income over a period of 39 months, which is the minimum period where sales of Forfivo XL® are expected to be exclusive.

   
 

In January, 2014 IntelGenx entered into a development and commercialization agreement with Par Pharmaceutical, Inc. for two products. The Company received $100 thousand upon execution of the agreement, of which $50 thousand has been recognized as deferred revenue until certain development milestones have been achieved.

   
 

As a result of this policy, the Company has a deferred revenue balance of $589 thousand at March 31, 2014 (December 31, 2013 - $616 thousand) that has not been recognized as revenue.

Capital Stock
Capital Stock [Text Block]
6.

Capital Stock


      March 31,     December 31,  
      2014     2013  
  Authorized -            
  100,000,000 common shares of $0.00001 par value            
  20,000,000 preferred shares of $0.00001 par value            
  Issued -            
  62,650,655 (December 31, 2013 - 60,984,267) common shares   $627     $610  
Related Party Transactions
Related Party Transactions [Text Block]
8.

Related Party Transactions

   
 

Included in management salaries are $15 thousand (2013 - $3 thousand) for options granted to the Chief Executive Officer and $11 thousand (2013 - $2 thousand) for options granted to the Chief Financial Officer under the 2006 Stock Option Plan and $3 thousand (2013 - $4 thousand) for options granted to non-employee directors. In addition, included in management salaries during the first three months of 2013 are $1 thousand for options granted to a director, who is also an employee of the Company.

   
 

Also included in management salaries are director fees of $22 thousand (2013 - $22 thousand) for attendance to board meetings and audit committee meetings. In addition, during the first three months of 2013 the Company paid $54 thousand in fees 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 565,000 warrants were exercised for 565,000 common shares having a par value of $0 thousand for cash consideration of approximately $370 thousand, resulting in an increase in additional paid-in capital of approximately $370 thousand.

Summary of Significant Accounting Policies (Policies)
Recently Issued Accounting Pronouncements [Policy Text Block]
 

Recently Issued Accounting Pronouncements

   
 

None of the new pronouncements issued by the FASB but not yet effective as of March 31, 2014 are applicable to the Company.

Capital Stock (Tables)
Schedule of Stock by Class [Table Text Block]
      March 31,     December 31,  
      2014     2013  
  Authorized -            
  100,000,000 common shares of $0.00001 par value            
  20,000,000 preferred shares of $0.00001 par value            
  Issued -            
  62,650,655 (December 31, 2013 - 60,984,267) common shares   $627     $610  
Intangible Assets (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
M
Intangible Assets 1
$ 70 
Intangible Assets 2
$ 79 
Intangible Assets 3
100.00% 
Intangible Assets 4
39 
Deferred License Revenue (Narrative) (Details) (USD $)
3 Months Ended
Mar. 31, 2014
M
Deferred License Revenue 1
$ 1,000,000 
Deferred License Revenue 2
39 
Deferred License Revenue 3
100,000 
Deferred License Revenue 4
50,000 
Deferred License Revenue 5
589,000 
Deferred License Revenue 6
$ 616,000 
Related Party Transactions (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Related Party Transactions 1
$ 15 
Related Party Transactions 2
Related Party Transactions 3
11 
Related Party Transactions 4
Related Party Transactions 5
Related Party Transactions 6
Related Party Transactions 7
Related Party Transactions 8
22 
Related Party Transactions 9
22 
Related Party Transactions 10
$ 54 
Subsequent Events (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended
Mar. 31, 2014
Subsequent Events 1
565,000 
Subsequent Events 2
565,000 
Subsequent Events 3
$ 0 
Subsequent Events 4
370 
Subsequent Events 5
$ 370 
Schedule of Stock by Class (Details) (USD $)
3 Months Ended
Mar. 31, 2014
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
62,650,655 
Capital Stock Schedule Of Stock By Class 6
60,984,267 
Capital Stock Schedule Of Stock By Class 7
627 
Capital Stock Schedule Of Stock By Class 8
$ 610