INTELGENX TECHNOLOGIES CORP., 10-Q filed on 11/3/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2015
Nov. 2, 2015
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Sep. 30, 2015 
 
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
 
63,615,256 
Entity Current Reporting Status
Yes 
 
Entity Voluntary Filers
No 
 
Entity Well Known Seasoned Issuer
No 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Consolidated Balance Sheet (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2015
Dec. 31, 2014
Current
 
 
Cash and cash equivalents
$ 2,264 
$ 4,399 
Accounts receivable
878 
652 
Prepaid expenses
74 
96 
Investment tax credits receivable
67 
108 
Total Current Assets
3,283 
5,255 
Leasehold Improvements and Equipment, net
3,576 
983 
Intangible Assets
46 
Security Deposit
225 
Total Assets
7,090 
6,284 
Current
 
 
Accounts payable and accrued liabilities
1,340 
466 
Current portion of term loan
74 
Deferred license revenue
76 
1,245 
Total Current Liabilities
1,490 
1,711 
Term Loan
294 
Total Liabilities
1,784 
1,711 
Shareholders' Equity
 
 
Capital Stock
Additional Paid-in-Capital
22,821 
22,654 
Accumulated Deficit
(16,824)
(17,848)
Accumulated Other Comprehensive Loss
(692)
(234)
Total Shareholders' Equity
5,306 
4,573 
Total Liabilities and Stockholdrs Equity
$ 7,090 
$ 6,284 
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, 2014
$ 1 
$ 22,654 
$ (17,848)
$ (234)
$ 4,573 
Beginning Balance (Shares) at Dec. 31, 2014
63,465,255 
 
 
 
 
Foreign currency translation adjustment
 
 
 
(458)
(458)
Options exercised
 
62 
 
 
62 
Options exercised (Shares)
150,000 
 
 
 
 
Stock-based compensation
 
105 
 
 
105 
Net loss for the period
 
 
1,024 
 
1,024 
Ending Balance at Sep. 30, 2015
$ 1 
$ 22,821 
$ (16,824)
$ (692)
$ 5,306 
Ending Balance (Shares) at Sep. 30, 2015
63,615,255 
 
 
 
 
Consolidated Statement of Comprehensive Income (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Revenues
 
 
 
 
Royalties
$ 248 
$ 129 
$ 674 
$ 310 
License and other revenue
2,135 
323 
2,919 
524 
Total Revenues
2,383 
452 
3,593 
834 
Expenses
 
 
 
 
Cost of royalty and license revenue
189 
292 
Research and development expense
274 
359 
643 
772 
Selling, general and administrative expense
553 
521 
1,505 
1,524 
Depreciation of tangible assets
11 
19 
25 
Amortization of intangible assets
10 
29 
26 
Total Expenses
1,032 
897 
2,488 
2,347 
Operating income (loss)
1,351 
(445)
1,105 
(1,513)
Interest income
11 
20 
23 
Financing and Interest expense
(6)
(101)
Net Income (Loss)
1,352 
(434)
1,024 
(1,490)
Other Comprehensive Loss
 
 
 
 
Foreign currency translation adjustment
(195)
(256)
(458)
(326)
Comprehensive Income (Loss)
$ 1,157 
$ (690)
$ 566 
$ (1,816)
Basic Weighted Average Number of Shares Outstanding
63,589,984 
63,465,255 
63,606,739 
63,133,545 
Basic Earnings (Loss) Per Common Share
$ 0.02 
$ (0.01)
$ 0.01 
$ (0.03)
Diluted Weighted Average Number of Shares Outstanding
64,030,092 
63,465,255 
71,725,902 
63,133,545 
Diluted Earnings (Loss) Per Common Share
$ 0.02 
$ (0.01)
$ 0.01 
$ (0.03)
Consolidated Statement of Cash Flows (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2015
Sep. 30, 2014
Funds Provided (Used) - Operating Activities
 
 
 
 
Net income (loss)
$ 1,352 
$ (434)
$ 1,024 
$ (1,490)
Amortization and depreciation
16 
17 
48 
51 
Stock-based compensation
25 
17 
105 
82 
Total Adjustments
1,393 
(400)
1,177 
(1,357)
Changes in assets and liabilities:
 
 
 
 
Accounts receivable
(763)
(226)
92 
Prepaid expenses
18 
22 
58 
Investment tax credits receivable
(19)
(17)
41 
34 
Security deposit
15 
(225)
Accounts payable and accrued liabilities
736 
874 
(326)
Deferred revenue
(390)
(77)
(1,169)
(180)
Net change in assets and liabilities
(420)
(74)
(683)
(322)
Net cash provided (used) by operating activities
973 
(474)
494 
(1,679)
Financing Activities
 
 
 
 
Issuance of term loans
394 
Repayment of term loans
(6)
(6)
Proceeds from exercise of warrants and stock options
28 
62 
1,619 
Net cash provided by financing activities
22 
450 
1,619 
Investing Activities
 
 
 
 
Additions to property and equipment
(1,221)
(106)
(2,646)
(274)
Net cash used in investing activities
(1,221)
(106)
(2,646)
(274)
Decrease in Cash and Cash Equivalents
(226)
(580)
(1,702)
(334)
Effect of Foreign Exchange on Cash and Cash Equivalents
(173)
(222)
(433)
(295)
Cash and Cash Equivalents
 
 
 
 
Beginning of Period
2,663 
5,178 
4,399 
5,005 
End of Period
$ 2,264 
$ 4,376 
$ 2,264 
$ 4,376 
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, 2014. Operating results for the three months and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. 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 ASU No. 2014-08 which enhances convergence between U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments in the ASU change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business, or a major equity method investment. In addition, the new guidance requires expands disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU were effective in the first quarter of 2015 for public organizations with calendar year ends. 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

ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments

The FASB issued this Update which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The amendments in this Update apply to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not yet been issued.

For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-14, Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date

The FASB and IASB have deferred the effective date of following amendment for all entities by one year.

The FASB and IASB (the Boards) have issued converged standards on revenue recognition. ASU No. 2014-09 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.

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.

All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in Update 2014-0 9 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in Update 2014-09.

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.

ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory

The amendments in this Update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). 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. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.

The Board has amended some of the other guidance in Topic 330 to more clearly articulate the requirements for the measurement and disclosure of inventory. However, the Board does not intend for those clarifications to result in any changes in practice. Other than the change in the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory within the scope of this Update, there are no other substantive changes to the guidance on measurement of inventory.

The amendments in this Update do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost.

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. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets.

The amendments are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-04, Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

The amendments in ASU 2015-04 permit an entity with a fiscal year-end that does not coincide with a month-end a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan.

The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted. The amendments should be applied prospectively. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

The amendments in ASU 2015-03 are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.

The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis

The amendments in ASU 2015-02 are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new standard reduces the number of consolidation models and improves current GAAP by:

-Placing more emphasis on risk of loss when determining a controlling financial interest.

-Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE).

-Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.

The amendments are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

The amendments in ASU 2015-01 eliminate from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The FASB heard from stakeholders that the concept of extraordinary items causes uncertainty because it is unclear when an item should be considered both unusual and infrequent. Additionally, some stakeholders said that although users find information about unusual or infrequent events and transactions useful, they do not find the extraordinary item classification and presentation necessary to identify those events and transactions. Other stakeholders noted that it is extremely rare in current practice for a transaction or event to meet the requirements to be presented as an extraordinary item. This ASU will also align more closely U.S. GAAP income statement presentation guidance with IAS 1, Presentation of Financial Statements, which prohibits the presentation and disclosure of extraordinary items. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2014-15, Presentation of Financial Statements —Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

The FASB has issued ASU No. 2014-15 which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

The FASB has issued ASU No. 2014-13 which will apply to a reporting entity that is required to consolidate a collateralized financing entity under the Variable Interest Entities guidance. The fair value of the financial assets of a collateralized financing entity, as determined under GAAP, may differ from the fair value of its financial liabilities even when the financial liabilities have recourse only to the financial assets. Before this ASU, there was no specific guidance in GAAP on how a reporting entity should account for that difference. The amendments in this ASU provide an alternative to Topic 820, Fair Value Measurement, for measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity to eliminate that difference. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted as of the beginning of an annual period. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for shared-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period.

The FASB has issued ASU No. 2014-12 which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this Statement 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 September 30, 2015 NDA acquisition costs of $6 thousand (December 31, 2014 - $46 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.

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$55 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, 2015, the Company has not drawn on its credit facility.

Deferred License Revenue
Deferred License Revenue [Text Block]
6.

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.

Pursuant to the execution of a licensing agreement for Forfivo XL®, IntelGenx received an upfront fee from Edgemont Pharmaceuticals (“Edgemont”) in the first quarter of 2012, which IntelGenx 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 the fourth quarter of 2014, Edgemont exercised its right to extend the license for the exclusive marketing of Forfivo XL®. In accordance with the terms for exercising such right, IntelGenx invoiced $1.25 million to Edgemont and recognized the full amount as deferred revenue, which was recognized as revenue from October 2014 through September 2015.

As a result of this policy, IntelGenx has a deferred revenue balance of $76 thousand at September 30, 2015 (December 31, 2014 - $1,245 thousand) that has not been recognized as revenue.

Term loan
Term loan [Text Block]
7.

Term loan

The Company’s term loan facility consists of CAD$492 thousand bearing interest at the Bank’s prime lending rate plus 2.50%, and CAD$3 million bearing interest at a fixed rate to be determined at drawdown. The term loan is subject to the same security and financial covenants as the bank indebtedness (see note 5).

The CAD$3 million tranche of the term loan will be disbursed subsequent to meeting certain conditions. There is a moratorium on capital repayments for the first 6 months of each drawdown, at which point the term loan will be repayable in monthly instalments over 60 months.

      September 30, 2015     September 30, 2014  
       $      $  
               
  Term loan   368     0  
               
  Current portion   74     0  
               
      294     0  

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

  2015 $ 18  
  2016   75  
  2017   75  
  2018   75  
  2019   75  
  Thereafter   50  
Capital Stock
Capital Stock [Text Block]
8.

Capital Stock


    September 30,     December 31,  
    2015     2014  
Authorized -            
100,000,000 common shares of $0.00001 par value            
20,000,000 preferred shares of $0.00001 par value            
Issued -
  63,615,255 (December 31, 2014 - 63,465,255) common shares
$ 636   $ 635  
Income Tax
Income Tax [Text Block]
10.

Income taxes

Income taxes reported differ from the amount computed by applying the statutory rates to net income. The reasons are as follows:

    For the Three-Month Period     For the Nine-Month Period  
    Ended September 30,           Ended September 30,  
                         
    2015     2014     2015     2014  
Statutory income taxes $ 393     ($117 ) $ 305     ($401 )
Net operating losses for which no tax benefits have been recorded   0     13     0     169  
Net operating losses of prior years applied against current period   (450 )   0     (484 )   0  
Excess of depreciation over capital cost allowance   6     2     7     2  
Non-deductible expenses   7     5     28     22  
Undeducted research and development expenses   44     97     144     208  
                         
  $ 0   $ 0   $ 0   $ 0  

As at December 31, 2014, management determined that enough uncertainty existed relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance. Although management believes that certain of the net operating losses will be applied against earnings in 2015, management continues to believe that enough uncertainty exists relative to the realization of the remaining deferred income tax asset balances such that no recognition of deferred income tax assets is warranted.

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

Related Party Transactions

Included in management salaries are $1 thousand (2014 - $30 thousand) for options granted to the Chief Executive Officer, $6 thousand (2014: nil) for options granted to the VP Operations and $25 thousand (2014 - $33 thousand) for options granted to the Chief Financial Officer. Also included are $61 thousand (2014 - $11 thousand) for options granted to non-employee directors. All options were granted under the 2006 Stock Option Plan.

Also included in management salaries are director fees of $198 thousand (2014 - $139 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 Earnings (Loss) Per Common Share
Basic and Diluted Earnings (Loss) Per Common Share [Text Block]
12.

Basic and Diluted Earnings (Loss) Per Common Share

Basic and diluted earnings (loss) 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)

ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments

The FASB issued this Update which requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The amendments in this Update apply to all entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not yet been issued.

For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-14, Revenue From Contracts With Customers (Topic 606), Deferral of the Effective Date

The FASB and IASB have deferred the effective date of following amendment for all entities by one year.

The FASB and IASB (the Boards) have issued converged standards on revenue recognition. ASU No. 2014-09 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:

ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory

The amendments in this Update more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). 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. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.

The Board has amended some of the other guidance in Topic 330 to more clearly articulate the requirements for the measurement and disclosure of inventory. However, the Board does not intend for those clarifications to result in any changes in practice. Other than the change in the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory within the scope of this Update, there are no other substantive changes to the guidance on measurement of inventory.

The amendments in this Update do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost.

ASU 2015-05, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement

The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets.

The amendments are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-04, Compensation - Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets

The amendments in ASU 2015-04 permit an entity with a fiscal year-end that does not coincide with a month-end a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity’s fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan.

The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted. The amendments should be applied prospectively. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs

The amendments in ASU 2015-03 are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.

The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis

The amendments in ASU 2015-02 are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new standard reduces the number of consolidation models and improves current GAAP by:

-Placing more emphasis on risk of loss when determining a controlling financial interest.

-Reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE).

-Changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs.

The amendments are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2015-01, Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items

The amendments in ASU 2015-01 eliminate from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The FASB heard from stakeholders that the concept of extraordinary items causes uncertainty because it is unclear when an item should be considered both unusual and infrequent. Additionally, some stakeholders said that although users find information about unusual or infrequent events and transactions useful, they do not find the extraordinary item classification and presentation necessary to identify those events and transactions. Other stakeholders noted that it is extremely rare in current practice for a transaction or event to meet the requirements to be presented as an extraordinary item. This ASU will also align more closely U.S. GAAP income statement presentation guidance with IAS 1, Presentation of Financial Statements, which prohibits the presentation and disclosure of extraordinary items. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2014-15, Presentation of Financial Statements —Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern

The FASB has issued ASU No. 2014-15 which is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. The amendments are effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2014-13, Consolidation (Topic 810): Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity

The FASB has issued ASU No. 2014-13 which will apply to a reporting entity that is required to consolidate a collateralized financing entity under the Variable Interest Entities guidance. The fair value of the financial assets of a collateralized financing entity, as determined under GAAP, may differ from the fair value of its financial liabilities even when the financial liabilities have recourse only to the financial assets. Before this ASU, there was no specific guidance in GAAP on how a reporting entity should account for that difference. The amendments in this ASU provide an alternative to Topic 820, Fair Value Measurement, for measuring the financial assets and the financial liabilities of a consolidated collateralized financing entity to eliminate that difference. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted as of the beginning of an annual period. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

ASU 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for shared-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period.

The FASB has issued ASU No. 2014-12 which requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718, Compensation – Stock Compensation, as it relates to awards with performance conditions that affect vesting to account for such awards. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this Statement is not expected to have a material effect on the Company`s financial position or results of operations.

Term loan (Tables)
      September 30, 2015     September 30, 2014  
       $      $  
               
  Term loan   368     0  
               
  Current portion   74     0  
               
      294     0  
  2015 $ 18  
  2016   75  
  2017   75  
  2018   75  
  2019   75  
  Thereafter   50  
Capital Stock (Tables)
Schedule of Stock by Class [Table Text Block]
    September 30,     December 31,  
    2015     2014  
Authorized -            
100,000,000 common shares of $0.00001 par value            
20,000,000 preferred shares of $0.00001 par value            
Issued -
  63,615,255 (December 31, 2014 - 63,465,255) common shares
$ 636   $ 635  
Income Tax (Tables)
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]
    For the Three-Month Period     For the Nine-Month Period  
    Ended September 30,           Ended September 30,  
                         
    2015     2014     2015     2014  
Statutory income taxes $ 393     ($117 ) $ 305     ($401 )
Net operating losses for which no tax benefits have been recorded   0     13     0     169  
Net operating losses of prior years applied against current period   (450 )   0     (484 )   0  
Excess of depreciation over capital cost allowance   6     2     7     2  
Non-deductible expenses   7     5     28     22  
Undeducted research and development expenses   44     97     144     208  
                         
  $ 0   $ 0   $ 0   $ 0  
Intangible Assets (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
M
Intangible Assets 1
$ 6 
Intangible Assets 2
$ 46 
Intangible Assets 3
100.00% 
Intangible Assets 4
39 
Bank indebtedness (Narrative) (Details) (CAD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Bank Indebtedness 1
$ 250 
Bank Indebtedness 2
$ 55 
Bank Indebtedness 3
2.00% 
Bank Indebtedness 4
50.00% 
Deferred License Revenue (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30, 2015
M
Deferred License Revenue 1
39 
Deferred License Revenue 2
$ 1,250,000 
Deferred License Revenue 3
76,000 
Deferred License Revenue 4
$ 1,245,000 
Term loan (Narrative) (Details) (CAD $)
9 Months Ended
Sep. 30, 2015
M
Term Loan 1
$ 492,000 
Term Loan 2
2.50% 
Term Loan 3
3,000,000 
Term Loan 4
$ 3,000,000 
Term Loan 5
Term Loan 6
60 
Related Party Transactions (Narrative) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Related Party Transactions 1
$ 1 
Related Party Transactions 2
30 
Related Party Transactions 3
Related Party Transactions 4
Related Party Transactions 5
25 
Related Party Transactions 6
33 
Related Party Transactions 7
61 
Related Party Transactions 8
11 
Related Party Transactions 9
198 
Related Party Transactions 10
$ 139 
Term loan (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Term Loan Term Loan 1
$ 368 
Term Loan Term Loan 2
Term Loan Term Loan 3
74 
Term Loan Term Loan 4
Term Loan Term Loan 5
294 
Term Loan Term Loan 6
$ 0 
Term loan principal repayments (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Term Loan Term Loan Principal Repayments 1
$ 18 
Term Loan Term Loan Principal Repayments 2
75 
Term Loan Term Loan Principal Repayments 3
75 
Term Loan Term Loan Principal Repayments 4
75 
Term Loan Term Loan Principal Repayments 5
75 
Term Loan Term Loan Principal Repayments 6
$ 50 
Schedule of Stock by Class (Details) (USD $)
9 Months Ended
Sep. 30, 2015
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
63,615,255 
Capital Stock Schedule Of Stock By Class 6
63,465,255 
Capital Stock Schedule Of Stock By Class 7
636 
Capital Stock Schedule Of Stock By Class 8
$ 635 
Schedule of Effective Income Tax Rate Reconciliation (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2015
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 1
$ 393 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 2
117 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 3
305 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 4
401 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 5
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 6
13 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 7
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 8
169 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 9
(450)
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 10
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 11
(484)
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 12
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 13
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 14
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 15
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 16
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 17
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 18
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 19
28 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 20
22 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 21
44 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 22
97 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 23
144 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 24
208 
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 25
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 26
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 27
Income Tax Schedule Of Effective Income Tax Rate Reconciliation 28
$ 0