INTELGENX TECHNOLOGIES CORP., 10-Q filed on 8/10/2015
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2015
Aug. 10, 2015
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 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
Q2 
 
Consolidated Balance Sheet (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Current
 
 
Cash and cash equivalents
$ 2,663 
$ 4,399 
Accounts receivable
115 
652 
Prepaid expenses
75 
96 
Investment tax credits receivable
48 
108 
Total Current Assets
2,901 
5,255 
Leasehold Improvements and Equipment, net
2,404 
983 
Intangible Assets
16 
46 
Security Deposit
240 
Total Assets
5,561 
6,284 
Current
 
 
Accounts payable and accrued liabilities
604 
466 
Current portion of term loan
60 
Deferred license revenue
466 
1,245 
Total Current Liabilities
1,130 
1,711 
Term Loan
340 
Total Liabilities
1,470 
1,711 
Shareholders' Equity
 
 
Capital Stock
Additional Paid-in-Capital
22,768 
22,654 
Accumulated Deficit
(18,176)
(17,848)
Accumulated Other Comprehensive Loss
(502)
(234)
Total Shareholders' Equity
4,091 
4,573 
Total Liabilities and Stockholders' Equity
$ 5,561 
$ 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 Income [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
 
 
 
(268)
(268)
Options exercised
 
34 
 
 
34 
Options exercised (Shares)
75,000 
 
 
 
 
Stock-based compensation
 
80 
 
 
80 
Net loss for the period
 
 
(328)
 
(328)
Ending Balance at Jun. 30, 2015
$ 1 
$ 22,768 
$ (18,176)
$ (502)
$ 4,091 
Ending Balance (Shares) at Jun. 30, 2015
63,540,255 
 
 
 
 
Consolidated Statement of Comprehensive Loss (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Revenues
 
 
 
 
Royalties
$ 192 
$ 84 
$ 426 
$ 181 
License and other revenue
393 
76 
784 
201 
Total Revenues
585 
160 
1,210 
382 
Expenses
 
 
 
 
Cost of royalty and license revenue
19 
103 
Research and development expense
252 
225 
369 
413 
Selling, general and administrative expense
559 
543 
952 
1,003 
Depreciation of tangible assets
13 
14 
Amortization of intangible assets
10 
11 
19 
20 
Total Expenses
846 
786 
1,456 
1,450 
Operating loss
(261)
(626)
(246)
(1,068)
Interest income
12 
13 
12 
Financing and Interest expense
(17)
(95)
Net Loss
(275)
(614)
(328)
(1,056)
Other Comprehensive Loss
 
 
 
 
Foreign currency translation adjustment
55 
161 
(268)
(70)
Comprehensive Loss
$ (220)
$ (453)
$ (596)
$ (1,126)
Basic and Diluted Weighted Average Number of Shares Outstanding
63,501,519 
63,187,029 
63,483,487 
62,628,686 
Basic and Diluted 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, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Funds Provided (Used) - Operating Activities
 
 
 
 
Net loss
$ (275)
$ (614)
$ (328)
$ (1,056)
Amortization and depreciation
16 
18 
32 
34 
Stock-based compensation
59 
33 
80 
65 
Total adjustments
(200)
(563)
(216)
(957)
Changes in assets and liabilities:
 
 
 
 
Accounts receivable
(39)
(27)
537 
91 
Prepaid expenses
(3)
21 
40 
Investment tax credits receivable
74 
68 
60 
51 
Security deposit
(3)
(240)
Accounts payable and accrued liabilities
359 
(17)
138 
(327)
Deferred revenue
(390)
(77)
(779)
(104)
Net change in assets and liabilities
(2)
(52)
(263)
(249)
Net cash used by operating activities
(202)
(615)
(479)
(1,206)
Financing Activities
 
 
 
 
Proceeds from exercise of warrants and stock options
34 
555 
34 
1,619 
Net cash provided by financing activities
38 
555 
433 
1,619 
Issuance of term loans
399 
Investing Activities
 
 
 
 
Additions to property and equipment
(1,039)
(63)
(1,425)
(168)
Net cash used in investing activities
(1,039)
(63)
(1,425)
(168)
Increase (Decrease) in Cash and Cash Equivalents
(1,203)
(123)
(1,471)
245 
Effect of Foreign Exchange on Cash and Cash Equivalents
47 
135 
(265)
(72)
Cash and Cash Equivalents
 
 
 
 
Beginning of Period
3,819 
5,166 
4,399 
5,005 
End of Period
$ 2,663 
$ 5,178 
$ 2,663 
$ 5,178 
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 six months ended June 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 2015-05, 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.

ASU No. 2014-09, Revenues from Contracts with Customers (Topic 606)

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.

For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This ASU is to be applied retrospectively, with certain practical expedients allowed. Early application is not permitted. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Intangible Assets
Intangible Assets [Text Block]
4.

Intangible Assets

As of June 30, 2015 NDA acquisition costs of $16 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 June 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, to be amortized in income from October 2014 through September 2015.

As a result of this policy, IntelGenx has a deferred revenue balance of $466 thousand at June 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$500 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.

 

 

  June 30, 2015     June 30, 2014  
 

 

       
 

Term loan

  400     0  
 

Current portion

  60     0  
 

 

  340     0  

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

 

2015

$ 20  
 

2016

  80  
 

2017

  80  
 

2018

  80  
 

2019

  80  
 

Thereafter

  60  
Capital Stock
Capital Stock [Text Block]
8.

Capital Stock


 

 

  June 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 -

           
 

63,540,255 (December 31, 2014 - 63,465,255) common shares

$ 635   $ 635  
Related Party Transactions
Related Party Transactions [Text Block]
10.

Related Party Transactions

Included in management salaries are $1 thousand (2014 - $29 thousand) for options granted to the Chief Executive Officer, $3 thousand (2014: nil) for options granted to the VP Operations and $13 thousand (2014 - $22 thousand) for options granted to the Chief Financial Officer. Also included are $55 thousand (2014 - $8 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 $147 thousand (2014 - $88 thousand).

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

Basic and Diluted Loss Per Common Share
Basic and Diluted Loss Per Common Share [Text Block]
11.

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 and stock options have been excluded from the calculation of diluted loss per share since they are anti-dilutive.

Subsequent Events
Subsequent Events [Text Block]
12.

Subsequent Events

Subsequent to the end of the quarter, on July 20, 2015, 600 thousand options to purchase common stock were granted to the new Chief Financial Officer under the 2006 Stock Option Plan. The options have an exercise price of $0.58, vest of a period of 2 years at the rate of 25% every six months and expire 5 years after the grant date.

On July 30, 2015 75,000 stock options were exercised for 75,000 common shares for total cash consideration of CAD$28,500, resulting in an increase in additional paid-in capital of US$27,750.

Summary of Significant Accounting Policies (Policies)

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.

ASU No. 2014-09, Revenues from Contracts with Customers (Topic 606)

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.

For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This ASU is to be applied retrospectively, with certain practical expedients allowed. Early application is not permitted. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

Term loan (Tables)
 

 

  June 30, 2015     June 30, 2014  
 

 

       
 

Term loan

  400     0  
 

Current portion

  60     0  
 

 

  340     0  
 

2015

$ 20  
 

2016

  80  
 

2017

  80  
 

2018

  80  
 

2019

  80  
 

Thereafter

  60  
Capital Stock (Tables)
Schedule of Stock by Class [Table Text Block]
 

 

  June 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 -

           
 

63,540,255 (December 31, 2014 - 63,465,255) common shares

$ 635   $ 635  
Intangible Assets (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
M
Intangible Assets 1
$ 16 
Intangible Assets 2
$ 46 
Intangible Assets 3
100.00% 
Intangible Assets 4
39 
Bank indebtedness (Narrative) (Details) (CAD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 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 $)
6 Months Ended
Jun. 30, 2015
M
Deferred License Revenue 1
39 
Deferred License Revenue 2
$ 1,250,000 
Deferred License Revenue 3
466,000 
Deferred License Revenue 4
$ 1,245,000 
Term loan (Narrative) (Details) (CAD $)
6 Months Ended
Jun. 30, 2015
M
Term Loan 1
$ 500,000 
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
6 Months Ended
Jun. 30, 2015
Related Party Transactions 1
$ 1 
Related Party Transactions 2
29 
Related Party Transactions 3
Related Party Transactions 4
Related Party Transactions 5
13 
Related Party Transactions 6
22 
Related Party Transactions 7
55 
Related Party Transactions 8
Related Party Transactions 9
147 
Related Party Transactions 10
$ 88 
Subsequent Events (Narrative) (Details)
6 Months Ended
Jun. 30, 2015
USD ($)
Y
Jun. 30, 2015
CAD ($)
Subsequent Events 1
600,000 
600,000 
Subsequent Events 2
$ 0.58 
 
Subsequent Events 3
Subsequent Events 4
25.00% 
25.00% 
Subsequent Events 5
Subsequent Events 6
75,000 
75,000 
Subsequent Events 7
75,000 
75,000 
Subsequent Events 8
 
28,500 
Subsequent Events 9
$ 27,750 
 
Term loan (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Term Loan Term Loan 1
$ 400 
Term Loan Term Loan 2
Term Loan Term Loan 3
60 
Term Loan Term Loan 4
Term Loan Term Loan 5
340 
Term Loan Term Loan 6
$ 0 
Term loan principal repayments (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Term Loan Term Loan Principal Repayments 1
$ 20 
Term Loan Term Loan Principal Repayments 2
80 
Term Loan Term Loan Principal Repayments 3
80 
Term Loan Term Loan Principal Repayments 4
80 
Term Loan Term Loan Principal Repayments 5
80 
Term Loan Term Loan Principal Repayments 6
$ 60 
Schedule of Stock by Class (Details) (USD $)
6 Months Ended
Jun. 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
63,540,255 
Capital Stock Schedule Of Stock By Class 6
63,465,255 
Capital Stock Schedule Of Stock By Class 7
635,000 
Capital Stock Schedule Of Stock By Class 8
$ 635,000