|
|
|
|
|
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. |
|
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. |
|
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. |
|
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. |
|
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. |
|
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 |
|
7. |
Additional Paid-In Capital |
Stock options |
|
No stock options were exercised during the three month period ended March 31, 2014. During the three month period ended March 31, 2013 a total of 50,000 stock options were exercised for 50,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $23 thousand, resulting in an increase in additional paid-in capital of $23 thousand. |
|
Compensation expenses for stock-based compensation of $32 thousand and $18 thousand were recorded during the three-month periods ended March 31, 2014 and 2013 respectively. The entire amount expensed in 2014 relates to stock options granted to employees and directors. Of the amount expensed in 2013, $13 thousand relates to stock options granted to employees and directors and $5 thousand relates to options granted to independent third party consultants. As at March 31, 2014 the Company has $194 thousand (2013 - $50 thousand) of unrecognized stock-based compensation. |
|
Warrants |
|
During the three month period ended March 31, 2014 a total of 1,666,388 (2013 - 362,500) warrants were exercised for 1,666,388 (2013 - 362,500) common shares having a par value of $0 thousand in aggregate, for cash consideration of $1,064 thousand (2013 - $172 thousand), resulting in an increase in additional paid-in capital of $1,064 thousand (2013 - $171 thousand). |
|
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. |
|
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. |
|
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. |
|
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 |
|
|
|
|
|
|