IntelGenx Technologies Corp.: Form 10-Q - Filed by newsfilecorp.com

0001062993-18-003231.txt : 20180809 0001062993-18-003231.hdr.sgml : 20180809 20180809160417 ACCESSION NUMBER: 0001062993-18-003231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 66 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180809 DATE AS OF CHANGE: 20180809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IntelGenx Technologies Corp. CENTRAL INDEX KEY: 0001098880 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 870638336 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-31187 FILM NUMBER: 181004987 BUSINESS ADDRESS: STREET 1: 6420 ABRAMS CITY: SAINT LAURENT STATE: A8 ZIP: H4S 1Y2 BUSINESS PHONE: 514-331-7440 MAIL ADDRESS: STREET 1: 6420 ABRAMS CITY: SAINT LAURENT STATE: A8 ZIP: H4S 1Y2 FORMER COMPANY: FORMER CONFORMED NAME: BIG FLASH CORP DATE OF NAME CHANGE: 19991112 10-Q 1 form10q.htm FORM 10-Q IntelGenx Technologies Corp.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to________

Commission File Number 000-31187

INTELGENX TECHNOLOGIES CORP.
(Exact name of small business issuer as specified in its charter)

Delaware 87-0638336

(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

6420 Abrams, Ville Saint Laurent, Quebec H4S 1Y2, Canada
(Address of principal executive offices)

(514) 331-7440
(Issuer's telephone number)
(Former Name, former Address, if changed since last report)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ] (Do not check if a smaller reporting company)	Smaller reporting company	[X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

APPLICABLE TO CORPORATE ISSUERS:

70,989,337 shares of the issuer’s common stock, par value $.00001 per share, were issued and outstanding as of August 5, 2018.

IntelGenx Technologies Corp.
Form 10-Q

TABLE OF CONTENTS

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Consolidated Balance Sheet	4

	Statement of Shareholders’ Equity	5

	Statement of Operations and Comprehensive Loss	6

	Statement of Cash Flows	7

	Notes to Financial Statements	8

Item 2.	Management's Discussion and Analysis and Results of Operations	19

Item 3.	Controls and Procedures	34

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 3.	Defaults upon Senior Securities	35

Item 4.	Reserved	35

Item 5.	Other Information	35

Item 6.	Exhibits	35

	Signatures	36

IntelGenx Technologies Corp.

Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

Contents

Consolidated Balance Sheet	4

Consolidated Statement of Shareholders' Equity	5

Consolidated Statement of Comprehensive Loss	6

Consolidated Statement of Cash Flows	7

Notes to Consolidated Financial Statements	8 - 21

IntelGenx Technologies Corp.

Consolidated Balance Sheet
(Expressed in Thousands of U.S. Dollars ($000’s) Except Share and Per Share Data)
(Unaudited)

		June 30,			December 31,
		2018			2017
Assets
Current
Cash	$	2,321		$	1,591
Short-term investments		1,362			3,313
Accounts receivable		485			623
Prepaid expenses		590			203
Investment tax credits receivable		451			314
Total current assets		5,209			6,044
Leasehold improvements and equipment, net (note 5)		6,149			6,346
Security deposits		733			757
Total assets	$	12,091		$	13,147
Liabilities
Current
Accounts payable and accrued liabilities		2,000			1,305
Current portion of long-term debt (note 7)		736			772
Total current liabilities		2,736			2,077
Deferred lease obligations		50			50
Long-term debt (note 7)		1,539			1,992
Convertible debentures (note 8)		5,094			5,199
Convertible notes (note 9)		997			-
Total liabilities		10,416			9,318

Subsequent event (note 15)
Shareholders' equity
Capital Stock, common shares, $0.00001 par value; 200,000,000 shares authorized; 70,547,267 shares issued and outstanding (2017: 67,031,467 common shares) (note 10)		1			1
Additional paid-in capital (note 11)		27,872			25,253
Accumulated deficit		(25,453	)		(20,788	)
Accumulated other comprehensive loss		(745	)		(637	)
Total Shareholders’ Equity		1,675			3,829
	$	12,091		$	13,147

See accompanying notes

Approved on Behalf of the Board:
/s/ Bernd J. Melchers	Director
/s/ Horst G. Zerbe	Director

IntelGenx Technologies Corp.

Consolidated Statement of Shareholders' Equity
For the Period Ended June 30, 2018
(Expressed in Thousands of U.S. Dollars ($000’s) Except Share and Per Share Data)
(Unaudited)

										Accumulated
					Additional					Other			Total
	Capital Stock				Paid-In		Accumulated			Comprehensive			Shareholders'
	Number		Amount		Capital		Deficit			Loss			Equity

Balance - December 31, 2017	67,031,467	$	1	$	25,253	$	(20,788	)	$	(637	)	$	3,829

Other comprehensive loss	-		-		-		-			(108	)		(108	)

Common stock issued, net of transaction costs of $167 (note 9)	2,540,800		-		1,460		-			-			1,460

Warrants issued, net of transaction costs of $50 (note 9)	-		-		437		-			-			437

Agents’ warrants issued (note 9)	-		-		50		-			-			50

Warrants exercised (note 11)	950,000		-		536		-			-			536

Options exercised (note 11)	25,000		-		13		-			-			13

Stock-based compensation (note 11)	-		-		123		-			-			123

Net loss for the period	-		-		-		(4,665	)		-			(4,665	)

Balance – June 30, 2018	70,547,267	$	1	$	27,872	$	(25,453	)	$	(745	)	$	1,675

See accompanying notes

IntelGenx Technologies Corp.

Consolidated Statement of Comprehensive Loss
(Expressed in Thousands of U.S. Dollars ($000’s) Except Share and Per Share Data)
(Unaudited)

		For the Three-Month Period						For the Six-Month Period
		Ended June 30,						Ended June 30,
		2018			2017			2018			2017

Revenues

License and other revenue (note 12)	$	234		$	1,126		$	473		$	2,479

Total revenues		234			1,126			473			2,479

Expenses

Cost of royalty and license revenue		-			89			-			181
Research and development expense		857			654			1,654			1,298
Selling, general and administrative expense		1,322			826			2,602			1,730
Depreciation of tangible assets		179			170			362			340

Total expenses		2,358			1,739			4,618			3,549

Operating loss		(2,124	)		(613	)		(4,145	)		(1,070	)

Interest income		-			1			-			3

Net financing and interest expense		(277	)		(54	)		(520	)		(111	)


Net loss		(2,401	)		(666	)		(4,665	)		(1,178	)

Other comprehensive (loss) income

Foreign currency translation adjustment		(35	)		116			(107	)		160

Change in fair value		4			-			(1	)		-

Comprehensive loss	$	(2,432	)	$	(550	)	$	(4,773	)	$	(1,018	)

Basic and diluted weighted average number of shares outstanding		68,877,428			65,493,394			68,346,126			65,399,853

Basic and diluted loss per common share (note 14)	$	(0.04	)	$	(0.01	)	$	(0.07	)	$	(0.02	)

See accompanying notes

IntelGenx Technologies Corp.

Consolidated Statement of Cash Flows
(Expressed in thousands of U.S. Dollars ($000’s) Except Share and Per Share Data)
(Unaudited)

		For the Three-Month Period						For the Six-Month Period
		Ended June 30,						Ended June 30,
		2018			2017			2018			2017

Funds (used) provided -

Operating activities

Net loss	$	(2,401	)	$	(666	)	$	(4,665	)	$	(1,178	)
Depreciation		179			170			362			340
Stock-based compensation		73			53			123			223
Accretion expense		94			-			167			-
DSU expense		232			-			232			-
Interest payable by issuance of common shares		238			-			238			-
		(1,585	)		(443	)		(3,543	)		(615	)
Changes in non-cash items related to operations:
Accounts receivable		170			61			138			677
Prepaid expenses		(215	)		24			(387	)		162
Investment tax credits receivable		(68	)		(35	)		(137	)		33
Security deposits		(11	)		(18	)		(11	)		(24	)
Accounts payable and accrued liabilities		199			(161	)		239			(445	)
Deferred revenue		-			(870	)		-			(1,754	)
Deferred lease obligations		-			2			-			3
Net change in non-cash items related to operations		75			(997	)		(158	)		(1,348	)

Net cash used in operating activities		(1,510	)		(1,440	)		(3,701	)		(1,963	)

Financing activities
Repayment of term loans		(185	)		(251	)		(372	)		(354	)
Proceeds from exercise of warrants and stock options		154			679			549			1,016
Net proceeds from private placement		3,004			-			3,004			-
Transaction costs of private placement		(82	)		-			(82	)		-
Net cash provided by financing activities		2,891			428			3,099			662

Investing activities
Additions to leasehold improvements and equipment		(16	)		(233	)		(454	)		(455	)
Redemption of short-term investments		393			2,025			1,908			2,325
Net cash provided by (used in) investing activities		377			1,792			1,454			1,870

Increase in cash		1,758			780			852			569

Effect of foreign exchange on cash		(55	)		95			(122	)		(6	)

Cash

Beginning of period		618			300			1,591			612

End of period	$	2,321		$	1,175		$	2,321		$	1,175

See accompanying notes

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

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, 2017. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses are recognized when incurred.

	The consolidated financial statements include the accounts of the Company and its subsidiary companies. On consolidation, all inter-entity transactions and balances have been eliminated.

	The financial statements are expressed in U.S. funds.

	Management has performed an evaluation of the Company’s activities through the date and time these financial statements were issued and concluded that there are no additional significant events requiring recognition or disclosure.

2.	Going Concern

	The Company has financed its operations to date primarily through public offerings of its common stock, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, research and development revenues and the sale of U.S. royalty on future sales of Forfivo XL^®. The Company has devoted substantially all of its resources to its drug development efforts, conducting clinical trials to further advance the product pipeline, the expansion of its facilities, protecting its intellectual property and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product pipeline and ultimately upon its ability to attain profitable operations. As of June 30, 2018, the Company had cash and short-term investments totaling approximately $3,683. The Company does not have sufficient existing cash and short-term investments to support operations for the next year following the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to alleviate these conditions include pursuing one or more of the following steps to raise additional funding, none of which can be guaranteed or are entirely within the Company’s control:

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

2.	Going Concern (Cont'd)

	•	Raise funding through the possible sale of the Company’s common stock, including public or private equity financings.

	•	Raise funding through debt financing.

	•	Continue to seek partners to advance product pipeline.

	•	Initiate oral film manufacturing activities.

	•	Initiate contract oral film manufacturing activities.

	As of June 30, 2018, there are also 3,120,902 warrants outstanding at an exercise price of $0.5646 which expire on December 31, 2018.

	If the Company is unable to raise capital when needed or on attractive terms, or if it is unable to procure partnership arrangements to advance its programs, the Company would be forced to delay, reduce or eliminate its research and development programs.

	The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

3.	Adoption of New Accounting Standards

	The Company adopted Topic 606 Revenue from Contracts with Customers with a date of the initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below.

	This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those good or services. To determine revenue recognition for arrangements subject to the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and identifies performance obligations that are distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when (or as) the performance obligation is satisfied.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

3.	Adoption of New Accounting Standards (Cont’d)

	ASC 606 uses the terms “contract asset” and “contract liability” to describe what might more commonly be known as “accrued revenue” and “deferred revenue”. The Company has adopted the terminology used in ASC 606 to describe such balances.

	The Company’s accounting policies for its revenue streams are disclosed in Note 4 below. Apart from providing more extensive disclosures on the Company’s revenue transactions, the application of ASC 606 has not had a significant impact on the financial position and/or financial performance of the Company.

	The FASB issued ASU 2017-09, Stock compensation, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The statement is effective for annual periods beginning after December 15, 2017. The Company has made an accounting policy choice to recognize the effect of awards for which the requisite service is not rendered when the award is forfeited (that is, recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award shall be reversed in the period that the award is forfeited. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2017-01, Business Combinations, which clarifies the definition of a business and is intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-18, Statement of Cash Flows, which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted or restricted cash equivalents. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-16, Income taxes, and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-15, Statement of Cash Flows, which clarifies how certain cash receipts and payments are to be presented in the Statement of cash flows. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this statement did not have a material effect on the Company’s financial position or results.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

3.	Adoption of New Accounting Standards (Cont’d)

	The FASB issued ASU 2016-01, Financial Instruments. The targeted amendments to existing guidance include:

	1.	Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values.

	2.	Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.

	3.	Entities would make the assessment of the realizability of a deferred tax asset (DTA) related to an available- for-sale (AFS) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery.

	4.	Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities.

	For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

4.	Significant Accounting Policies

	Revenue Recognition

	Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

	Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue- producing transaction, that are collected by the Company from a customer, are excluded from revenue.

	The following is a description of principal activities – separated by nature – from which the Company generates its revenue.

	Research and Development Revenue

	Revenues with corporate collaborators are recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

4.	Significant Accounting Policies (Cont’d)

	Licensing and Collaboration Arrangements

	The Company may enter into licensing and collaboration agreements for product development, licensing, supply and manufacturing for its product pipeline. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations. These contracts are analyzed to identify all performance obligations forming part of these contracts. The transaction price of the contract is then determined. The transaction price is allocated between all performance obligations on a relative standalone selling price basis. The stand-alone selling price is estimated based on the comparable market prices, expected cost plus margin and the Company’s historical experience.

	Licenses are considered to be right-to-use licenses. As such, the Company recognizes the licenses revenues at a point in time, upon granting the licenses.

	Milestone payments are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, research and other revenues in the period during which the adjustment is recognized. The process of successfully achieving the criteria for the milestone payments is highly uncertain. Consequently, there is significant risk that the Company may not earn all of the milestone payments for each of its contracts.

	Royalties are typically calculated as a percentage of net sales realized by the Company’s licensees of its products (including their sub-licensees), as specifically defined in each agreement. The licensees’ sales generally consist of revenues from product sales of the Company’s product pipeline and net sales are determined by deducting the following: estimates for chargebacks, rebates, sales incentives and allowances, returns and losses and other customary deductions in each region where the Company has licensees. Revenues arising from royalties are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

	Leasehold Improvements and Equipment

	Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

4.	Significant Accounting Policies (Cont’d)

	On the declining balance method -

	Laboratory and office equipment	20%
	Computer equipment	30%

	On the straight-line method -

	Leasehold improvements	over the lease term
	Manufacturing equipment	5 – 10 years

Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income. Expenditures for repair and maintenance are expensed as incurred.

Recent Accounting Pronouncements

ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

The FASB issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

ASU 2018-02 – Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

The FASB issued ASU 2018-02 which provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. These amendments are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact of the Statement on its consolidated financial statements.

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment

The FASB issued ASU 2017-04 which eliminates Step 2 from the goodwill impairment test and eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2019. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

4.	Significant Accounting Policies (Cont’d)

	ASU 2016-02: Leases (Topic 842) Section A

	The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

5.	Leasehold Improvements and Equipment

								December 31,
						June 30, 2018		2017
				Accumulated		Net Carrying		Net Carrying
		Cost		Depreciation		Amount		Amount

Manufacturing equipment	$	3,615	$	478	$	3,137	$	2,953
Laboratory and office equipment		1,319		664		655		759
Computer equipment		102		62		40		44
Leasehold improvements		3,100		783		2,317		2,590

	$	8,136	$	1,987	$	6,149	$	6,346

	From the balance of manufacturing equipment, an amount of $1,164 thousand (2017: $822 thousand) represents assets which are not yet in service as at June 30, 2018

6.	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 ($190 thousand) and corporate credits cards of up to CAD$75 and $60 thousand, and foreign exchange contracts limited to CAD$425 thousand ($323 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 for an amount of CAD$4,250,000 ($3,227,000) plus 20%, 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, 2018, the Company has not drawn on its credit facility.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

7.	Long-term debt

	The components of the Company’s debt are as follows:

	June 30, 2018	December 31, 2017
	$	$



Term loan facility	1,845	2,233
Secured loan	430	531
Total debt	2,275	2,764

Less: current portion	736	772

Total long-term debt	1,539	1,992

The Company’s term loan facility consists of a total of CAD$4 million ($3.04 million) bearing interest at the Bank’s prime lending rate plus 2.50%, with monthly principal repayments of CAD$62 thousand ($47 thousand). The term loan is subject to the same security and financial covenants as the bank indebtedness (see note 6).

The secured loan has a principal balance authorized of CAD$1 million ($759 thousand) bearing interest at prime plus 7.3%, reimbursable in monthly principal payments of CAD$17 thousand ($13 thousand) from January 2017 to March 2021. The loan is secured by a second ranking on all present and future property of the Company. 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.

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

2018	377 (CAD 496)
2019	717 (CAD 945)
2020	717 (CAD 945)
2021	464 (CAD 610)

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

8.	Convertible Debentures

	On July 12, 2017, the Company closed its previously announced prospectus offering (the “Offering”) of convertible unsecured subordinated debentures of the Corporation (the “Debentures”) for gross aggregate proceeds of CAD$6,838,000. Pursuant to the Offering, the Corporation issued an aggregate principal amount of CAD$6,838,000 of Debentures at a price of CAD$1,000 per Debenture. The Debentures will mature on June 30, 2020 and bear interest at annual rate of 8% payable semi-annually on the last day of June and December of each year, commencing on December 31, 2017. The interest may be paid in common shares at the option of the Corporation. The Debentures will be convertible at the option of the holders at any time prior to the close of business on the earlier of June 30, 2020 and the business day immediately preceding the date specified by the Corporation for redemption of Debentures. The conversion price will be CAD$1.35 (the “Conversion Price”) per common share of the Corporation (“Share”), being a conversion rate of approximately 740 Shares per CAD$1,000 principal amount of Debentures, subject to adjustment in certain events.

	On August 8, 2017, the Company closed a second tranche of its prospectus Offering of convertible unsecured subordinated debentures of the Corporation for which a first closing took place on July 12, pursuant to which it had raised additional gross proceeds of CAD$762,000.

	Together with the principal amount of CAD$6,838,000 of Debentures issued on July 12, 2017, the Corporation issued a total aggregate principal amount of CAD$7,600,000 of Debentures at a price of CAD$1,000 per Debenture.

	The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to CAD$185,000 ($145,000).

	The components of the convertible debentures are as follows:

		June 30,			December 31,
		2018			2017


Face value of the convertible debentures	$	5,771		$	6,058
Transaction costs		(939	)		(986	)
Accretion		262			127
Convertible debentures	$	5,094		$	5,199

The accrued interest on the convertible debentures for the six-month period ended June 30, 2018 amounts to CAD$304 thousand ($238 thousand) and is recorded in financing and interest expense and accrued liabilities. On July 3, 2018, the accrued interest was paid by issuance of 307,069 common shares.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

9.	Private Placement

	On May 8, 2018, the Company closed its previously announced offering by way of private placement (the “Offering”). In connection with the Offering, the Company issued 320 units (the “Units”) at a subscription price of $10,000 per Unit for gross proceeds of $3,200,000. A related party of the Company participated in the Offering and subscribed for an aggregate of two Units.

	Each Unit is comprised of (i) 7,940 common shares of the Corporation (“Common Shares”), (ii) a $5,000 convertible 6% note (a “Note”), and (iii) 7,690 warrants to purchase common shares of the Corporation (“Warrants”). Each Note bears interest at a rate of 6% (payable quarterly, in arrears, with the first payment being due on September 1, 2018), matures on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitles its holder to purchase one Common Share at a price of $0.80 per Common Share until June 1, 2021.

	In connection with the Offering, the Company paid to the Agents a cash commission of approximately $157,800 in the aggregate and issued non-transferable agents’ warrants to the Agents, entitling the Agents to purchase 243,275 common shares at a price of $0.80 per share until June 1, 2021. Management has determined the value of the agents’ warrants to be $50,000.

	The proceeds of the Units are attributed to liability and equity components based on the fair value of each component as follows:

		Gross proceeds		Transaction costs		Net proceeds

Common stock	$	1,627	$	167	$	1,460
Convertible notes		1,086		111		975
Warrants		487		50		437
	$	3,200	$	328	$	2,872

The convertible notes have been recorded as a liability. Total transactions costs in the amount of U.S.$111 thousand were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to U.S. $22,000.

The components of the convertible notes are as follows:

		June 30,
		2018


Attributed value of net proceeds to convertible notes	$	975
Accretion		22
Convertible notes	$	997

The interest on the convertible notes for the six-month period ended June 30, 2018 amounts to $14 thousand and is recorded in financing and interest expense.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

10.

Capital Stock

		June 30,		December 31,
		2018		2017
Authorized -

200,000,000 common shares of $0.00001 par value 20,000,000 preferred shares of $0.00001 par value

Issued -

70,547,267 (December 31, 2017 - 67,031,467) common shares	$	1	$	1

11.	Additional Paid-In Capital

	Stock options

	On January 16, 2018, 100,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.79. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $44 thousand.

	On April 10, 2018, 275,000 options to purchase common stock were granted to employees under the 2016 Stock Option Plan. The options have an exercise price of $0.66. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $99 thousand.

	On June 11, 2018, 800,000 options to purchase common stock were granted to officers and employees under the 2016 Stock Option Plan. The options have an exercise price of $0.76. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $334 thousand.

	During the six-month period ended June 30, 2018 a total of 25,000 stock options were exercised for 25,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $13 thousand, resulting in an increase in additional paid-in capital of $13 thousand.

	During the six-month period ended June 30, 2017, on January 18, 2017, 300,000 options to purchase common stock were granted to non-employee directors under the 2016 Stock Option Plan. The options have an exercise price of $0.89. The options vest immediately and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $114 thousand.

	During the six-month period ended June 30, 2017 a total of 135,000 stock options were exercised for 135,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $62 thousand, resulting in an increase in additional paid-in capital of $62 thousand.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

11.	Additional Paid-In Capital (Cont’d)


	Compensation expenses for stock-based compensation of $123 thousand and $223 thousand were recorded during the six-month periods ended June 30, 2018 and 2017, respectively. An amount of $119 thousand expensed in the six-month period of 2018 relates to stock options granted to employees and directors and an amount of $4 thousand relates to stock options granted to a consultant. An amount of $220 thousand expensed in the six- month period of 2017 relates to stock options granted to employees and directors and an amount of $3 thousand relates to stock options granted to a consultant. As at June 30, 2018, the Company has $550 thousand (2017 - $188 thousand) of unrecognized stock-based compensation.

	Warrants

	During the six-month period ended June 30, 2018 a total of 950,000 warrants were exercised for 950,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $536 thousand, resulting in an increase in additional paid-in capital of approximately $536 thousand. During the six-month period ended June 30, 2017 a total of 1,690,000 warrants were exercised for 1,690,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $954 thousand, resulting in an increase in additional paid-in capital of approximately $954 thousand.

	Deferred Share Units (“DSUs”)

	Effective February 7, 2018, the Board approved a Deferred Share Unit Plan (DSU Plan) to compensate non- employee directors as part of their annual remuneration. Under the DSU Plan, the Board may grant Deferred Share Units (“DSUs”) to the participating directors at its discretion and, in addition, each participating director may elect to receive all or a portion of his or her annual cash stipend in the form of DSUs. To the extent DSUs are granted, the amount of compensation that is deferred is converted into a number of DSUs, as determined by the market price of our Common Stock on the effective date of the election. These DSUs are converted back into a cash amount at the expiration of the deferral period based on the market price of our Common Stock on the expiration date and paid to the director in cash in accordance with the payout terms of the DSU Plan. As the DSUs are on a cash-only basis, no shares of Common Stock will be reserved or issued in connection with the DSUs. On May 16, 2018, 287,355 DSUs have been granted under the DSU Plan as of the date of this filing, accordingly, an amount of $232 thousand has been recognized in management salaries.

	Performance and Restricted Share Units (“PRSUs”)

	At the Annual Meeting on May 8, 2018, the shareholders approved the IntelGenx Technologies Corp. Performance and Restricted Share Unit Plan (PRSU Plan) which the Board of Directors had approved on March 19, 2018. The primary purpose of this PRSU Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified executive officers of the Company and its Subsidiaries and to reward such executive officers for their contributions toward the long-term goals and success of the Company and to enable and encourage such executive officers to acquire shares of Common Stock as long-term investments and proprietary interests in the Company. No rewards have been issued under the PRSU Plan as of June 30, 2018.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

12.	Revenues

	The following table presents our revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues:

		June 30, 2018		June 30, 2017


Research and development agreements	$	473	$	245
Licensing agreements		-		405
Deferred revenue (sale of future royalties)		-		1,829
	$	473	$	2,479

The following table presents our revenues disaggregated by timing of recognition:

		June 30, 2018		June 30, 2017


Product and services transferred at point in time	$	-	$	405
Products and services transferred over time		473		2,074
	$	473	$	2,479

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

		June 30, 2018		June 30, 2017

Europe	$	410		245
Canada		63		375
U.S.		-		1,829
Other foreign countries		-		30
	$	473	$	2,479

Remaining performance obligations

As at June 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $329 representing research and development agreements, the majority of which is expected to be recognized in the next twelve months. The Company is also eligible to receive up to $4,051 in research and development milestone payments; up to $28,751 in commercial sales milestone payments. In addition, the Company is entitled to receive royalties on potential sales.

IntelGenx Technologies Corp.

Notes to Consolidated Interim Financial Statements
June 30, 2018
(Expressed in U.S. Funds)
(Unaudited)

12.	Revenues (Cont’d)

	The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company applies the transition practical expedient in paragraph 606-10-65-1(f)(3) and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue for the year ended December 31, 2018.

13.	Related Party Transactions

	Included in management salaries for the six-month period ended June 30, 2018 are $17 thousand (2017 - $Nil) for options granted to the Chief Executive Officer, $7 thousand (2017 - $30 thousand) for options granted to the Chief Financial Officer, $Nil (2017 - $3 thousand) for options granted to the former Vice President, Operations, $6 thousand (2017 - $3 thousand) for options granted to the Vice-President, Research and Development, $23 thousand (2017 – $17 thousand) for options granted to Vice-President, Business and Corporate Development under the 2016 Stock Option Plan and $6 thousand (2017 - $124 thousand) for options granted to non-employee directors.

	Also included in management salaries for the six-month period ended June 30, 2018 are director fees of $124 thousand (2017 - $136 thousand) and DSU of $232 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.

14.	Basic and Diluted Loss Per Common Share

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

15.	Subsequent Event

	On July 3, 2018, the Company granted 100,000 options to purchase common stock to a consultant. The stock options are exercisable at $0.78 per share and vest over 2 years at 25% every six months.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations Introduction to Management’s Discussion and Analysis

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) comments on our business operations, performance, financial position and other matters for the three-month and six-month periods ended June 30, 2018 and 2017.

Unless otherwise indicated, all financial and statistical information included herein relates to continuing operations of the Company. Unless otherwise indicated or the context otherwise requires, the words, “IntelGenx, “Company”, “we”, “us”, and “our” refer to IntelGenx Technologies Corp. and its subsidiaries, including IntelGenx Corp.

This MD&A should be read in conjunction with the accompanying unaudited Consolidated Financial Statements and Notes thereto. We also encourage you to refer to the Company’s MD&A for the year ended December 31, 2017. In preparing this MD&A, we have taken into account information available to us up to August 9, 2018, the date of this MD&A, unless otherwise indicated.

Additional information relating to the Company, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 (the “2017 Form 10-K”), is available on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission (the “SEC”) website at www.sec.gov.

All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements included or incorporated by reference in this MD&A constitute forward-looking statements within the meaning of applicable securities laws. All statements contained in this MD&A that are not clearly historical in nature are forward-looking, and the words “anticipate”, “believe”, “continue”, “expect”, “estimate”, “intend”, “may”, “plan”, “will”, “shall” and other similar expressions are generally intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but on management’s expectations regarding future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Forward-looking statements involve significant known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from those implied by forward-looking statements. These factors should be considered carefully and you should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this MD&A or incorporated by reference herein are based upon what management believes to be reasonable assumptions, there is no assurance that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A or as of the date specified in the documents incorporated by reference herein, as the case may be. We undertake no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statements were made or to reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. The factors set forth in Item 1A., "Risk Factors" of the 2016 Form 10-K, as well as any cautionary language in this MD&A, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. Before you invest in the common stock, you should be aware that the occurrence of the events described as risk factors and elsewhere in this report could have a material adverse effect on our business, operating results and financial condition.

Company Background

We are a drug delivery company established in 2003 and headquartered in Montreal, Quebec, Canada. Our focus is on the development of novel oral immediate-release and controlled-release products for the pharmaceutical market.

More recently, we have made the strategic decision to enter the oral film market and have implemented commercial oral film manufacturing capability. This enables us to offer our partners a comprehensive portfolio of pharmaceutical services, including pharmaceutical R&D, clinical monitoring, regulatory support, tech transfer and manufacturing scale-up, and commercial manufacturing.

Our business strategy is to develop pharmaceutical products based on our proprietary drug delivery technologies and, once the viability of a product has been demonstrated, license the commercial rights to partners in the pharmaceutical industry. In certain cases, we rely upon partners in the pharmaceutical industry to fund the development of the licensed products, complete the regulatory approval process with the FDA or other regulatory agencies relating to the licensed products, and assume responsibility for marketing and distributing such products.

In addition, we may choose to pursue the development of certain products until the project reaches the marketing and distribution stage. We will assess the potential for successful development of a product and associated costs, and then determine at which stage it is most prudent to seek a partner, balancing such costs against the potential for additional returns earned by partnering later in the development process.

Our primary growth strategies are based on three pillars: (1) out licensing commercial rights of our existing pipeline products, (2) partnering on contract development and manufacturing projects leveraging our VersaFilm™ technology, (3) expanding our current pipeline through:

	•	identifying lifecycle management opportunities for existing market leading pharmaceutical products,

	•	develop oral film products that provide tangible patient benefits,

	•	development of new drug delivery technologies,

	•	repurposing existing drugs for new indications, and

	•	developing generic drugs where high technology barriers to entry exist in reproducing branded films.

Contract Development and Manufacturing based on VersaFilm™ technology

We have established a state-of-the-art manufacturing facility for the future manufacture of our VersaFilm™ products. We believe that this (1) represents a profitable business opportunity, (2) will reduce our dependency upon third-party contract manufacturers, thereby protecting our manufacturing process know-how and intellectual property, and (3) allows us to offer our development partners a full service from product conception through to supply of the finished product.

Lifecycle Management Opportunities

We are seeking to position our delivery technologies as an opportunity for lifecycle management of products for which patent protection of the active ingredient is nearing expiration. While the patent for the underlying substance cannot be extended, patent protection can be obtained for a new and improved formulation by filing an application with the FDA under Section 505(b)(2) of the U.S. Federal Food, Drug and Cosmetic Act. Such applications, known as a “505(b)(2) NDA”, are permitted for new drug products that incorporate previously approved active ingredients, even if the proposed new drug incorporates an approved active ingredient in a novel formulation or for a new indication. A 505(b)(2) NDA may include information regarding safety and efficacy of a proposed drug that comes from studies not conducted by or for the applicant. The first formulation for a respective active ingredient filed with the FDA under a 505(b)(2) application may qualify for up to three years of market exclusivity upon approval. Based upon a review of past partnerships between third party drug delivery companies and pharmaceutical companies, management believes that drug delivery companies which possess innovative technologies to develop these special dosage formulations present an attractive opportunity to pharmaceutical companies. Accordingly, we believe “505(b)(2) products” represent a viable business opportunity for us.

Product Opportunities that provide Tangible Patient Benefits

Our focus will be on developing oral film products leveraging our VersaFilm™ technology that provide tangible patient benefits versus existing drug delivery forms. Patients with difficulties swallowing medication, pediatrics or geriatrics may benefit from oral films due to the ease of use. Similarly, we are working on oral films to improve bio-availability and/or response time versus existing drugs and thereby reducing side effects.

Development of New Drug Delivery Technologies

The rapidly disintegrating film technology contained in our VersaFilm™, and our AdVersa® mucosal adhesive tablet, are two examples of our efforts to develop alternate technology platforms. As we work with various partners on different products, we seek opportunities to develop new proprietary technologies.

Repurposing Existing Drugs

We are working on the repurposing of already approved drugs for new indications using our VersaFilm™ film technology. This program represents a viable growth strategy for us as it will allow for reduced development costs, improved success rates and shorter approval times. We believe that through our repurposing program we will be able minimize the risk of developmental failure and create value for us and potential partners.

Generic Drugs with High Barriers to Entry

We plan to pursue the development of generic drugs that have certain barriers to entry, e.g., where product development and manufacturing is complex and can limit the number of potential entrants into the generic market. We plan to pursue such projects only if the number of potential competitors is deemed relatively insignificant.

Corporate

Manufacturing facility

We currently manufacture products only for clinical and testing purposes in our own facility and we do not yet manufacture products for commercial use. In order to establish ourselves as a full-service partner for our thin film products, we invested approximately $6.5 million to establish a state-of-the-art manufacturing facility for the commercial manufacture of products developed using our VersaFilm™ drug delivery technology. Since we recently received our cGMP-compliant rating from Health Canada for manufacturing and packaging activities, we anticipate the manufacturing of our products to commence on the first half of 2019.

Expansion to the existing Manufacturing Facility

On March 6, 2017 IntelGenx executed an agreement to lease approximately an additional 11,000 square feet in a property located at 6410 Abrams, St-Laurent, Quebec. The Lease has an 8 year and 5-month term commencing on October 1, 2017 and IntelGenx has retained two options to extend the Lease, with each option being for an additional five years. Under the terms of the Lease IntelGenx will be required to pay base rent of approximately CA$74 thousand (approximately $59 thousand) per year, which will increase at a rate of CA$0.25 ($0.20) per square foot every two years. IntelGenx plans to use the newly leased space to expand its manufacture of oral film VersaFilm TM.

The Company has initiated a project to expand the existing manufacturing facility, the timing of which will be dictated in part by the completion of agreements with our commercial partners as well as obtaining the necessary funding. This expansion became necessary following requests by commercial partners to increase manufacturing capacity and provide solvent film manufacturing capabilities. The new facility should create a fivefold increase of our production capacity in addition to offering a one-stop shopping opportunity to our partners and provide better protection of our Intellectual Property. The Company has signed agreements in the amount of Euro1,911 thousand with three suppliers with respect to equipment for solvent film manufacturing. As at June 30, 2018 an amount of Euro988 thousand has been paid.

Most recent key developments

On May 8, 2018, IntelGenx announced the closing of an offering by way of private placement. In connection with the Offering, the Company issued 320 units at a subscription price of $10,000 per Unit for gross proceeds of $3,200,000. The Corporation intends to use the proceeds for its Montelukast phase 2a clinical trial and for general working capital purposes. Each Unit is comprised of (i) 7,940 common shares of the Corporation, (ii) a $5,000 convertible 6% note, and (iii) 7,690 warrants to purchase common shares of the Corporation. Each Note bears interest at a rate of 6% (payable quarterly, in arrears, with the first payment being due on September 1, 2018), matures on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitles its holder to purchase one Common Share at a price of $0.80 per Common Share until June 1, 2021.

Cantone Research, Inc. acted as placement agent in respect of certain sales under the U.S. portion of the Offering and Leede Jones Gable Inc. acted as placement agent in respect of the Canadian portion of the Offering. In connection with the Offering, the Company paid to the Agents a cash commission of approximately $157,800 in the aggregate and issued non-transferable agents’ warrants to the Agents, entitling the Agents to purchase 243,275 common shares at a price of $0.80 per share until June 1, 2021. The Common Shares, Notes and Warrants issued to Canadian residents and the agents’ warrants issued to Leede Jones Gable Inc. are subject to a four-month statutory hold period until September 9, 2018.

A related party of the Company participated in the Offering and subscribed for an aggregate of two Units.

On May 14, 2018, IntelGenx announced that all patent litigation between the Company, Par Pharmaceutical, Inc., Indivior, Inc., Indivior UK Limited, and Aquestive Therapeutics, Inc. (formerly MonoSol Rx, LLC) related to Suboxone® film had been settled. The settlement agreement permits Par to begin selling a generic version of Suboxone® film on January 1, 2023, or earlier under certain circumstances. Par is IntelGenx’s commercial and development partner for a generic version of Suboxone® sublingual film product, which is indicated for the treatment of opioid dependence.

On June 11, 2018, IntelGenx announced that the Company’s board of directors granted options to acquire a total of 800,000 common shares under the 2016 Stock Option Plan. Of the total stock options granted, 200,000 were granted to each of Horst G. Zerbe, Chief Executive Officer and President and Andre Godin, Executive Vice President and Chief Financial Officer. Furthermore, 100,000 stock options were granted to each of two officers of IntelGenx Corp., Nadine Paiement, Vice President Research and Development and Dana Matzen, Vice President of Business and Corporate Development. Also included in the total number of options granted are 200,000 granted to two employees of IntelGenx Corp. The options have an exercise price of $0.76 (CAD$0.99), vest over a period of two years at the rate of 25% every six months and expire on June 10, 2028.

On June 19, 2018, IntelGenx announced that the European Patent Office had issued a “Notice of Intention to Grant” for the Company’s European Patent Application Number 14832172.2 entitled, “Instantly Wettable Oral Film Dosage Form Without Surfactant or Polyalcohol." This is the first key patent allowed in Europe for the Company’s VersaFilm™ technology. Once the administrative process is complete, the patent that issues from this application will provide intellectual property protection for the formulation of the Company’s VersaFilm™ technology used in its Rizaport^® product, an oral thin film formulation of rizatriptan benzoate for the treatment of acute migraines, in Europe through 2034. IntelGenx received a similar formulation patent covering its Rizaport^® VersaFilm™ technology from the United States Patent and Trademark Office in 2016 and has additional applications pending in other countries.

On July 3, 2018, IntelGenx issued 307,069 common shares of the Corporation at a deemed price of CAD$0.99 per Common Share in payment of an aggregate of $304,000 in interest owing on the Corporation’s 8.00% convertible unsecured subordinated debentures due June 30, 2020. Under the terms of the trust indenture governing the Debentures, the Corporation has the option to pay the semi-annual interest on the Debentures in either cash or Common Shares, subject to customary conditions set forth in the Indenture.

All amounts are expressed in thousands of U.S. dollars unless otherwise stated.

Currency rate fluctuations

Our operating currency is Canadian dollars, while our reporting currency is U.S. dollars. Accordingly, our results of operations and balance sheet position have been affected by currency rate fluctuations. In summary, our financial statements for the six-month period ended June 30, 2018 report an accumulated other comprehensive loss due to foreign currency translation adjustments of $745 primarily due to the fluctuations in the rates used to prepare our financial statements, $107 of which negatively impacted our comprehensive loss for the six-month period ended June 30, 2018. The following Management Discussion and Analysis takes this into consideration whenever material.

Reconciliation of Comprehensive Loss to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Adjusted EBITDA is a non-US GAAP financial measure. A reconciliation of the Adjusted EBITDA is presented in the table below. The Company uses adjusted financial measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than US-GAAP do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA to measure its performance from one period to the next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and because the Company believes it provides meaningful information on the Company’s financial condition and operating results.

IntelGenx obtains its Adjusted EBITDA measurement by adding to comprehensive loss, finance income and costs, depreciation and amortization, income taxes and foreign currency translation adjustment incurred during the period. IntelGenx also excludes the effects of certain non-monetary transactions recorded, such as share-based compensation, for its Adjusted EBITDA calculation. The Company believes it is useful to exclude these items as they are either non-cash expenses, items that cannot be influenced by management in the short term, or items that do not impact core operating performance. Excluding these items does not imply they are necessarily nonrecurring. Share-based compensation costs are a component of employee and consultant’s remuneration and can vary significantly with changes in the market price of the Company’s shares. Foreign currency translation adjustments are a component of other comprehensive income and can vary significantly with currency fluctuations from one period to another. In addition, other items that do not impact core operating performance of the Company may vary significantly from one period to another. As such, Adjusted EBITDA provides improved continuity with respect to the comparison of the Company’s operating results over a period of time. Our method for calculating Adjusted EBITDA may differ from that used by other corporations.

Reconciliation of Non-US-GAAP Financial Information

	Three-month period				Six-month period
	ended June 30,				ended June 30,
	2018		2017		2018		2017
	$		$		$		$
Comprehensive loss	(2,432	)	(550	)	(4,773	)	1,018	)
Add (deduct):
Depreciation	179		170		362		340
Finance costs	277		54		520		111
Finance income	-		(1	)	-		(3	)
Share-based compensation	73		53		123		223
Other comprehensive loss (income)	31		(116	)	108		(160	)

Adjusted EBITDA	(1,872	)	(390	)	(3,660	)	(507	)

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Adjusted EBITDA decreased by $1,482 for the three-month period ended June 30, 2018 to ($1,872) compared to ($390) for the three-month period ended June 30, 2017. The decrease in Adjusted EBITDA of $1,482 for the three-month period ended June 30, 2018 is mainly attributable to a decrease in revenues of $892, an increase in SG&A expenses of $480 before consideration of stock-based compensation and an increase in R&D expenses of $199 before consideration of stock-based compensation. Adjusted EBITDA decreased by $3,153 for the six-month period ended June 30, 2018 to ($3,660) compared to ($507) for the six-month period ended June 30, 2018. The decrease in Adjusted EBITDA of $3,153 for the six-month period ended June 30, 2018 is mainly attributable to a decrease in revenues of $2,006, an increase in SG&A expenses of $977 before consideration of stock-based compensation and an increase in R&D expenses of $351 before consideration of stock-based compensation.

Results of operations for the three-month and six-month periods ended June 30, 2018 compared with the three-month and six-month periods ended June 30, 2017.

		Three-month period						Six-month period
		ended June 30,						ended June 30,
		2018			2017			2018		2017
Revenue	$	234		$	1,126		$	473		2,479
Cost of Royalty and License Revenue		-			89			-		181
Research and Development Expenses		857			654			1,654		1,298
Selling, General and Administrative Expenses		1,322			826			2,602		1,730
Depreciation of tangible assets		179			170			362		340
Operating loss		(2,124	)		(613	)		(4,145	)	(1,070	)
Net loss		(2,401	)		(666	)		(4,665	)	(1,178	)
Comprehensive loss		(2,432	)		(550	)		(4,773	)	(1,018	)

Revenue

Total revenues for the three-month period ended June 30, 2018 amounted to $234, representing a decrease of $892 or 79% compared to $1,126 for the three-month period ended June 30, 2017. Total revenues for the six-month period ended June 30, 2018 amounted to $473, representing a decrease of $2,006 or 81% compared to $2,479 for the six-month period ended June 30, 2017. The decrease for the three-month period ended June 30, 2018 compared to the last year’s corresponding period is mainly attributable to a decrease in deferred revenues on monetization of $915. The decrease for the six-month period ended June 30, 2018 compared to the last year’s corresponding period is mainly attributable to a decrease in upfronts of $405, deferred revenues on monetization of $1,829 offset by an increase in R&D revenues of $228.

Cost of royalty and license revenue

We recorded $Nil for the cost of royalty and license revenue in the three-month period ended June 30, 2018 compared with $89 in the same period of 2017. We recorded $Nil for the cost of royalty and license revenue in the six-month period ended June 30, 2018 compared with $181 in the same period of 2017. This expense relates to a Project Transfer Agreement that was executed in May 2010 with one of our former development partners whereby we acquired full rights to, and ownership of, Forfivo XL^®, our novel, high strength formulation of Bupropion hydrochloride, the active ingredient in Wellbutrin XL^®. Pursuant to the Project Transfer Agreement and following commercial launch of Forfivo XL^®in October 2012, we are required, after recovering an aggregate $200 for management fees previously paid, to pay our former development partner 10% of net product sales received from the sale of Forfivo XL^®. We recovered the final portion of the management fees in December 2014, thereby invoking payments to our former development partner. Following the monetization of Forfivo XL^®’s royalties, we are required to record 10% of the deferred revenues from the monetization as cost of royalty and license revenue until December 31, 2017 which represented $Nil for the first half of 2018.

Research and development (“R&D”) expenses

R&D expenses for the three-month period ended June 30, 2018 amounted to $857, representing an increase of $203 or 31%, compared to $654 for the three-month period ended June 30, 2017. R&D expenses for the six-month period ended June 30, 2018 amounted to $1,654, representing an increase of $356 or 27%, compared to $1,298 for the six-month period ended June 30, 2017.

The increase in R&D expenses for the three-month period ended June 30, 2018 is mainly attributable to an increase in study costs of $207, an increase in R&D salaries due to hiring of additional employees of $117 as well as an increase in analytical costs of $97, offset by a decrease in lab supplies of $165. The increase in R&D expenses for the six-month period ended June 30, 2018 is mainly attributable to an increase in study costs of $364, an increase in R&D salaries due to hiring of additional employees of $228 as well as an increase in analytical costs of $135, offset by a decrease in lab supplies of $214.

In the three-month period ended June 30, 2018 we recorded estimated Research and Development Tax Credits and refunds of $78, compared with $30 that was recorded in the same period of the previous year. In the six-month period ended June 30, 2018 we recorded estimated Research and Development Tax Credits and refunds of $157, compared with $60 that was recorded in the same period of the previous year.

Selling, general and administrative (“SG&A”) expenses

SG&A expenses for the three-month period ended June 30, 2018 amounted to $1,322, representing an increase of $496 or 60%, compared to $826 for the three-month period ended June 30, 2017. SG&A expenses for the six-month period ended June 30, 2018 amounted to $2,602 representing an increase of $872 or 50%, compared to $1,730 for the six-month period ended June 30, 2017.

The increase in SG&A expenses for the three-month period ended June 30, 2018 is mainly attributable to an increase in salaries and compensation expenses of $338, rent and utilities expenses of $56, manufacturing expense of $73 and general office expenses of $28. The increase in SG&A expenses for the six-month period ended June 30, 2018 is mainly attributable to an increase in salaries and compensation expenses of $325, professional fees of $312, manufacturing expense of $114, rent and utilities expenses of $92 and office and general expenses of $87. The increase in professional fees were mainly related to costs attributable to the aborted capital raise as well as the Laboval acquisition which is currently on hold. These expenses are deemed to be non-recurring in nature.

Depreciation of tangible assets

In the three-month period ended June 30, 2018 we recorded an expense of $179 for the depreciation of tangible assets, compared with an expense of $170 for the same period of the previous year. In the six-month period ended June 30, 2018 we recorded an expense of $362 for the depreciation of tangible assets, compared with an expense of $340 for the same period of the previous year.

Share-based compensation expense, warrants and stock-based payments

Share-based compensation warrants and share-based payments expense for the three-month period ended June 30, 2018 amounted to $73 compared to $53 for the three-month period ended June 30, 2017. Share-based compensation warrants and share-based payments expense for the six-month period ended June 30, 2018 amounted to $123 compared to $223 for the six-month period ended June 30, 2017.

We expensed approximately $68 in the three-month period ended June 30, 2018 for options granted to our employees in 2016, 2017 and 2018 under the 2016 Stock Option Plan, approximately $3 for options granted to non-employee directors in 2016 and 2017, and approximately $2 for options granted to a consultant in 2016, compared with $47, $5, and $1, respectively that was expensed in the same period of the previous year.

We expensed approximately $113 in the six-month period ended June 30, 2018 for options granted to our employees in 2016, 2017 and 2018 under the 2016 Stock Option Plan, approximately $6 for options granted to non-employee directors in 2016 and 2017, and approximately $4 for options granted to a consultant in 2016, compared with $96, $124, and $3, respectively that was expensed in the same period of the previous year.

There remains approximately $550 in stock-based compensation to be expensed in fiscal 2018 and 2019, of which $549 relates to the issuance of options to our employees and directors during 2016 to 2018 and $1 relates to the issuance of options to a consultant in 2016. We anticipate the issuance of additional options and warrants in the future, which will continue to result in stock-based compensation expense.

Key items from the balance sheet

								Percentage
		June 30,		December		Increase/		Increase/
		2018		31, 2017		(Decrease)		(Decrease)
Current Assets	$	5,209	$	6,044	$	(835	)	(14%	)
Leasehold improvements and Equipment, net		6,149		6,346		(197	)	(3%	)
Security Deposits		733		757		(24	)	(3%	)
Current Liabilities		2,736		2,077		659		32%
Deferred lease obligation		50		50		0		0%
Long-term debt		1,539		1,992		(453	)	(23%	)
Convertible debentures		5,094		5,199		(105	)	(2%	)
Convertible notes		997		-		997		100%
Capital Stock		1		1		0		0%
Additional Paid-in-Capital		27,872		25,253		2,619		10%

Going Concern

The Company has financed its operations to date primarily through public offerings of its common stock, convertible debentures, convertible notes, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, research and development revenues and the sale of U.S. royalty on future sales of Forfivo XL®. The Company has devoted substantially all of its resources to its drug development efforts, conducting clinical trials to further advance the product pipeline, the expansion of its facilities, protecting its intellectual property and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product pipeline and ultimately upon its ability to attain profitable operations. As of June 30, 2018, the Company had cash and short-term investments totaling approximately $3,683. The Company does not have sufficient existing cash and short-term investments to support operations for the next year following the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to alleviate these conditions include pursuing one or more of the following steps to raise additional funding, none of which can be guaranteed or are entirely within the Company’s control:

	•	Raise funding through the possible sale of the Company’s common stock, including public or private equity financings.
	•	Raise funding through debt financing.
	•	Continue to seek partners to advance product pipeline.
	•	Initiate oral film manufacturing activities.
	•	Initiate contract oral film manufacturing activities.

As of June 30, 2018, there are also 3,120,902 warrants outstanding at an exercise price of $0.5646 which expire on December 15, 2018.

If the Company is unable to raise capital when needed or on attractive terms, or if it is unable to procure partnership arrangements to advance its programs, the Company would be forced to delay, reduce or eliminate its research and development programs.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

Current assets

Current assets totaled $5,209 as at June 30, 2018 compared with $6,044 at December 31, 2017. The decrease of $835 is mainly attributable to decreases in short-term investments of $1,951 and accounts receivable of $138, offset by increases in cash of $730, prepaids of $387 and investment tax credits receivable of $137.

Cash

Cash totaled $2,321 as at June 30, 2018 representing an increase of $730 compared with the balance of $1,591 as at December 31, 2017. The increase in cash on hand relates to net cash used by operating activities of $3,715, offset by net cash provided by financing activities of $3,099 and net cash provided by investing activities of $1,454.

Accounts receivable

Accounts receivable totaled $485 as at June 30, 2018 representing a decrease of $138 compared with the balance of $623 as at December 31, 2017. The main reason for the decrease is related to the collection in 2018 of revenues accounted for as at December 31, 2017.

Prepaid expenses

As at June 30, 2018 prepaid expenses totaled $590 compared with $203 as of December 31, 2017. The increase in prepaid expenses is attributable to a payment of CAD$275 with respect to the Laboval acquisition (from which CAD$200 is refundable if the acquisition does not take place), and an advance payment for R&D materials in the amount of $250.

Investment tax credits receivable

R&D investment tax credits receivable totaled approximately $451 as at June 30, 2018 compared with $314 as at December 31, 2017. The increase is attributable to the accrual estimated and recorded for the first half of 2018.

Leasehold improvements and equipment

As at June 30, 2018, the net book value of leasehold improvements and equipment amounted to $6,149, compared to $6,346 at December 31, 2017. In the six-month period ended June 30, 2018 additions to assets totaled $454 and mainly comprised of $444 for manufacturing equipment, $5 for office equipment and $5 for computer equipment.

Security deposit

A security deposit in the amount of CAD$300 in respect of an agreement to lease approximately 17,000 square feet in a property located at 6420 Abrams, St-Laurent, Quebec, Canada was recorded as at June 30, 2018. Security deposits in the amount of CAD$650 for the term loans and CAD$15 for utilities were also recorded as at June 30, 2018.

Accounts payable and accrued liabilities

Accounts payable and accrued liabilities totaled $2,000 as at June 30, 2018 compared with $1,305 as at December 31, 2017. The increase is mainly attributable to the convertible debenture interest accrual in the amount of $231, the accrual for DSUs to independent board of Director members in the amount of $224 and payables related to R&D expenses incurred in the six-month period ended June 30, 2018.

Long-term debt

Long-term debt totaled $2,275 as at June 30, 2018 (December 31, 2017 - $2,764). An amount of $1,845 is attributable to term loan from the lender 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 reimbursement of the term loan started in September 2015 and should be fully reimbursed by October 2021.

An amount of $430 is attributable to a second loan secured by a second ranking on all present and future property of the Company reimbursable in monthly principal payments starting January 2017 to December 2021.

Convertible debentures

Convertible debentures totaled $5,094 as at June 30, 2018 as compared to $5,199 as at December 31, 2017. The Corporation issued a total aggregate principal amount of CAD$7,600,000 of debentures at a price of CAD$1,000 per debenture in July 2017 and August 2017. The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to CAD$185,000 ($Nil in 2017). The interest on the convertible debentures as at June 30, 2018 amounts to CAD$304,000 ($Nil in 2017) and is recorded in Financing and interest expense and accrued liabilities. In July 2018, the accrued interest was paid in shares.

Convertible notes

Convertible notes totaled $997 as at June 30, 2018 as compared to $Nil as at December 31, 2017. The convertible notes have been recorded as a liability. Total transactions costs in the amount of $111 thousand were recorded against the liability. The accretion expense for the period ended June 30, 2018 amounts to $22. The interest in the convertible notes as at June 30, 2018 amounts to $14 ($Nil in 2017) and is recorded in Financing and interest expense.

Shareholders’ equity

As at June 30, 2018 we had accumulated a deficit of $25,453 compared with an accumulated deficit of $20,788 as at December 31, 2017. Total assets amounted to $12,091 and shareholders’ equity totaled $1,675 as at June 30, 2018, compared with total assets and shareholders’ equity of $13,147 and $3,829 respectively, as at December 31, 2017.

Capital stock

As at June 30, 2018 capital stock amounted to $0.705 (December 31, 2017: $0.670) . Capital stock is disclosed at its par value with the excess of proceeds shown in Additional Paid-in-Capital.

Additional paid-in-capital

Additional paid-in capital totaled $27,872 as at June 30, 2018, as compared to $25,253 as at December 31, 2017. Additional paid in capital increased by $2,619 from which $1,460 was the value of the common stock issued in the May 2018 private placement offering, $549 came from proceeds from exercise of warrants and stock options, $437 was the value of the warrants issued in the May 2018 private placement, $123 from stock based compensation attributable to the amortization of stock options granted to employees and directors, and $50 was the value attributed to the Agents’ warrants in the May 2018 private placement transaction.

As of June 30, 2018, there are also 3,120,902 warrants outstanding at an exercise price of $0.5646 which expire on December 15, 2018.

Taxation

As at December 31, 2017, the date of our latest annual tax return, we had Canadian and provincial net operating losses of approximately $9,560 (December 31, 2016: $7,585) and $10,052 (December 31, 2016: $7,763) respectively, which may be applied against earnings of future years. Utilization of the net operating losses is subject to significant limitations imposed by the change in control provisions. Canadian and provincial losses will be expiring between 2027 and 2037. A portion of the net operating losses may expire before they can be utilized.

As at December 31, 2017, we had non-refundable tax credits of $1,553 thousand (2016: $1,190 thousand) of which $8 thousand is expiring in 2026, $10 thousand is expiring in 2027, $180 thousand is expiring in 2028, $158 thousand is expiring in 2029, $134 thousand is expiring in 2030, $143 thousand is expiring in 2031, $179 thousand is expiring in 2032 and $119 thousand is expiring in 2033, $90 thousand expiring in 2034, $106 thousand is expiring in 2035, $146 thousand expiring in 2036 and $280 thousand expiring in 2037. We also had undeducted research and development expenses of $7,532 thousand (2016: $5,438 thousand) with no expiration date.

The deferred tax benefit of these items was not recognized in the accounts as it has been fully provided for.

Key items from the statement of cash flows

										Percentage
		June 30,			June 30,			Increase/		Increase/
		2018			2017			(Decrease)		(Decrease)

Operating Activities	$	(3,701	)	$	(1,963	)	$	(1,738	)	(89%	)
Financing Activities		3,099			662			2,437		368%
Investing Activities		1,454			1,870			(416	)	(22%	)
Cash - end of period		2,321			1,175			1,146		98%

Statement of cash flows

Net cash used in operating activities was $3,701 for the six-month period ended June 30, 2018, compared to $1,963 for the six-month period ended June 30, 2017. For the six-month period ended June 30, 2018, net cash used by operating activities consisted of a net loss of $4,665 (2017: $1,178) before depreciation, accretion expense, stock-based compensation, DSU expense and interest payable by issuance of common shares in the amount of $1,122 (2017: $563) and a decrease in non-cash operating elements of working capital of $158 (2017: $1,348).

The net cash provided by financing activities was $3,099 for the six-month period ended June 30, 2018, compared to $662 provided in the same period of the previous year. An amount of $3,004 derives from the proceeds of a private placement (2017: $nil) and an amount of $549 derives from proceeds from exercise of warrants and stock options (2017: $1,016) offset by repayment of term loans for an amount of $372 (2017: $354) and the transaction costs related to the private placement of $82 (2017: $nil).

Net cash provided by investing activities amounted to $1,454 for the six-month period ended June 30, 2018 compared to $1,870 in the same period of 2017. The net cash provided by investing activities for the six-month period ended June 30, 2018 relates to the redemption of short term investments of $1,908 (2017: $2,325), offset by the purchase of fixed assets of $454 (2017: $455).

The balance of cash as at June 30, 2018 amounted to $2,321, compared to $1,175 as at June 30, 2017.

Subsequent Event

On July 3, 2018, the Company granted 100,000 options to purchase common stock to a consultant. The stock options are exercisable at $0.78 per share and vest over 2 years at 25% every six months.

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

Item 3. Controls and Procedures.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based upon that evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to cause the material information required to be disclosed by us in the reports that we file or submit under the Exchange Act to be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. There have been no significant changes in our internal controls or in other factors which could significantly affect internal controls subsequent to the date we carried out our evaluation.

PART II

Item 1.

Legal Proceedings

This Item is not applicable

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

This Item is not applicable.

Item 3.

Defaults Upon Senior Securities

This Item is not applicable.

Item 4.

(Reserved)

Item 5.

Other Information

This Item is not applicable.

Item 6.

Exhibits

Exhibit 31.1	Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2	Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1	Certification of C.E.O. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTELGENX TECHNOLOGIES CORP.


Date: August 9, 2018	By:	/s/	Horst G. Zerbe
			Horst G. Zerbe
			President, C.E.O. and Director



Date: August 9, 2018	By:	/s/	Andre Godin
			Andre Godin
			Principal Accounting Officer

EX-31.1 2 exhibit31-1.htm EXHIBIT 31.1 IntelGenx Technologies Corp.: Exhibit 31.1 - Filed by newsfilecorp.com

Exhibit 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Horst G. Zerbe, Chief Executive Officer of IntelGenx Technologies Corp. (the "registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of IntelGenx Technologies Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2018	/s/ Horst G. Zerbe
	Horst G. Zerbe
	Chief Executive Officer

EX-31.2 3 exhibit31-2.htm EXHIBIT 31.2 IntelGenx Technologies Corp.: Exhibit 31.2 - Filed by newsfilecorp.com

Exhibit 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andre Godin, Principal Accounting Officer of IntelGenx Technologies Corp. (the "registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of IntelGenx Technologies Corp.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2018

/s/ Andre Godin

Andre Godin

Principal Accounting Officer

EX-32.1 4 exhibit32-1.htm EXHIBIT 32.1 IntelGenx Technologies Corp.: Exhibit 32.1 - Filed by newsfilecorp.com

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of IntelGenx Technologies Corp. (the "Company") on Form 10-Q for the period ending June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Horst G. Zerbe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Horst G. Zerbe
____________________________
Horst G. Zerbe
Chief Executive Officer
August 9, 2018

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

EX-32.2 5 exhibit32-2.htm EXHIBIT 32.2 IntelGenx Technologies Corp.: Exhibit 32.2 - Filed by newsfilecorp.com

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of IntelGenx Technologies Corp. (the "Company") on Form 10-Q for the period ending June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andre Godin, Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Andre Godin
________________________
Andre Godin
Principal Accounting Officer
August 9, 2018

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<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> <b>1.</b> </td> <td align="left" width="95%"> <b>Basis of Presentation</b> </td> </tr> <tr> <td> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">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.</p> </td> </tr> <tr> <td> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">These financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2017. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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.</p> </td> </tr> <tr> <td> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">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.</p> </td> </tr> <tr> <td> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The financial statements are expressed in U.S. funds.</p> </td> </tr> <tr> <td> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">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.</p> </td> </tr> </table>

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<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> <b>4.</b> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Significant Accounting Policies</b> </p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Revenue Recognition</b> </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue- producing transaction, that are collected by the Company from a customer, are excluded from revenue.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The following is a description of principal activities – separated by nature – from which the Company generates its revenue.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Research and Development Revenue</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Revenues with corporate collaborators are recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Licensing and Collaboration Arrangements</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The Company may enter into licensing and collaboration agreements for product development, licensing, supply and manufacturing for its product pipeline. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations. These contracts are analyzed to identify all performance obligations forming part of these contracts. The transaction price of the contract is then determined. The transaction price is allocated between all performance obligations on a relative standalone selling price basis. The stand-alone selling price is estimated based on the comparable market prices, expected cost plus margin and the Company’s historical experience.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Licenses are considered to be right-to-use licenses. As such, the Company recognizes the licenses revenues at a point in time, upon granting the licenses.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Milestone payments are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, research and other revenues in the period during which the adjustment is recognized. The process of successfully achieving the criteria for the milestone payments is highly uncertain. Consequently, there is significant risk that the Company may not earn all of the milestone payments for each of its contracts.</p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Royalties are typically calculated as a percentage of net sales realized by the Company’s licensees of its products (including their sub-licensees), as specifically defined in each agreement. The licensees’ sales generally consist of revenues from product sales of the Company’s product pipeline and net sales are determined by deducting the following: estimates for chargebacks, rebates, sales incentives and allowances, returns and losses and other customary deductions in each region where the Company has licensees. Revenues arising from royalties are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.</p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Leasehold Improvements and Equipment</b> </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:</p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left">On the declining balance method -</td> <td align="left" width="50%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left"> </td> <td align="left" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff">       Laboratory and office equipment</td> <td align="left" bgcolor="#e6efff" width="50%"> 20% </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">       Computer equipment</td> <td align="left" width="50%"> 30% </td> </tr> <tr> <td width="5%"> </td> <td align="left" bgcolor="#e6efff"> </td> <td align="left" bgcolor="#e6efff" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">On the straight-line method -</td> <td align="left" width="50%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" bgcolor="#e6efff"> </td> <td align="left" bgcolor="#e6efff" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">       Leasehold improvements</td> <td align="left" width="50%">over the lease term</td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff">       Manufacturing equipment</td> <td align="left" bgcolor="#e6efff" width="50%"> 5 – 10 years </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">Upon retirement or disposal, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in income. Expenditures for repair and maintenance are expensed as incurred.</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>Recent Accounting Pronouncements</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2018-02 – Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2018-02 which provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. These amendments are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact of the Statement on its consolidated financial statements.</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2017-04 which eliminates Step 2 from the goodwill impairment test and eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2019. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>ASU 2016-02: Leases (Topic 842) Section A</b> </p> </td> </tr> <tr> <td width="5%"> </td> <td> </td> </tr> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> </td> </tr> </table>

<p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>Recent Accounting Pronouncements</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2018-07 to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2018-02 – Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2018-02 which provides financial statement preparers with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded. These amendments are effective for fiscal years beginning after December 15, 2018. The Company is currently evaluating the impact of the Statement on its consolidated financial statements.</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> <b>ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment</b> </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The FASB issued ASU 2017-04 which eliminates Step 2 from the goodwill impairment test and eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2019. Early adoption is permitted in any interim or annual period and should be applied on a retrospective basis. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>ASU 2016-02: Leases (Topic 842) Section A</b> </p> </td> </tr> <tr> <td width="5%"> </td> <td> </td> </tr> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.</p> </td> </tr> </table>

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left">On the declining balance method -</td> <td align="left" width="50%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left"> </td> <td align="left" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff">       Laboratory and office equipment</td> <td align="left" bgcolor="#e6efff" width="50%"> 20% </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">       Computer equipment</td> <td align="left" width="50%"> 30% </td> </tr> <tr> <td width="5%"> </td> <td align="left" bgcolor="#e6efff"> </td> <td align="left" bgcolor="#e6efff" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">On the straight-line method -</td> <td align="left" width="50%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" bgcolor="#e6efff"> </td> <td align="left" bgcolor="#e6efff" width="50%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left">       Leasehold improvements</td> <td align="left" width="50%">over the lease term</td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff">       Manufacturing equipment</td> <td align="left" bgcolor="#e6efff" width="50%"> 5 – 10 years </td> </tr> </table>

20%

30%

P5Y

P10Y

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td valign="top" width="5%"> <b>5.</b> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Leasehold Improvements and Equipment</b> </p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">December 31,</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center"> <b>June 30, 2018</b> </div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">2017</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">Accumulated</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center"> <b>Net Carrying</b> </div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">Net Carrying</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Cost</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Depreciation</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center"> <b>Amount</b> </div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Amount</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Manufacturing equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 3,615 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 478 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> <b> 3,137 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,953 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Laboratory and office equipment</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 1,319 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 664 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> <b> 655 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 759 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Computer equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 102 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 62 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> <b> 40 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 44 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Leasehold improvements</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 3,100 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 783 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <b> 2,317 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 2,590 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td bgcolor="#e6efff" valign="bottom"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 8,136 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 1,987 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> <b> 6,149 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 6,346 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> From the balance of manufacturing equipment, an amount of $1,164 thousand (2017: $822 thousand) represents assets which are not yet in service as at June 30, 2018 </p> </td> </tr> </table>

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">December 31,</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center"> <b>June 30, 2018</b> </div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">2017</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="12%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">Accumulated</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center"> <b>Net Carrying</b> </div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="12%"> <div align="center">Net Carrying</div> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Cost</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Depreciation</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center"> <b>Amount</b> </div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <div align="center">Amount</div> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="12%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Manufacturing equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 3,615 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 478 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> <b> 3,137 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 2,953 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Laboratory and office equipment</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 1,319 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 664 </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> <b> 655 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="12%"> 759 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Computer equipment</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 102 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 62 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> <b> 40 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="12%"> 44 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Leasehold improvements</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 3,100 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 783 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> <b> 2,317 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="12%"> 2,590 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td bgcolor="#e6efff" valign="bottom"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td bgcolor="#e6efff" valign="bottom" width="12%"> </td> <td bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 8,136 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 1,987 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> <b> 6,149 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="12%"> 6,346 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

3615000

478000

3137000

2953000

1319000

664000

655000

759000

102000

62000

40000

44000

3100000

783000

2317000

2590000

8136000

1987000

1164000

822000

250000

190000

75000

60000

425000

323000

0.02

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 for an amount of CAD$4,250,000 ($3,227,000) plus 20%, and a 50% guarantee by Export Development Canada, a Canadian Crown corporation export credit agency.

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>December 31, 2017</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%">$</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%">$</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Term loan facility</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 1,845 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 2,233 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Secured loan</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 430 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 531 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Total debt</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 2,275 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 2,764 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Less: current portion</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 736 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 772 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">Total long-term debt</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 1,539 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 1,992 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

1845000

2233000

430000

531000

2275000

2764000

736000

772000

1539000

1992000

377000

496000

717000

945000

717000

945000

464000

610000

4000000

3040000

bearing interest at the Bank’s prime lending rate plus 2.50%

62000

47000

1000000

759000000

bearing interest at prime plus 7.3%

17000

13000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> <b>8.</b> </td> <td align="left" width="95%">   <b>Convertible Debentures</b> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On July 12, 2017, the Company closed its previously announced prospectus offering (the “Offering”) of convertible unsecured subordinated debentures of the Corporation (the “Debentures”) for gross aggregate proceeds of CAD$6,838,000. Pursuant to the Offering, the Corporation issued an aggregate principal amount of CAD$6,838,000 of Debentures at a price of CAD$1,000 per Debenture. The Debentures will mature on June 30, 2020 and bear interest at annual rate of 8% payable semi-annually on the last day of June and December of each year, commencing on December 31, 2017. The interest may be paid in common shares at the option of the Corporation. The Debentures will be convertible at the option of the holders at any time prior to the close of business on the earlier of June 30, 2020 and the business day immediately preceding the date specified by the Corporation for redemption of Debentures. The conversion price will be CAD$1.35 (the “Conversion Price”) per common share of the Corporation (“Share”), being a conversion rate of approximately 740 Shares per CAD$1,000 principal amount of Debentures, subject to adjustment in certain events. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On August 8, 2017, the Company closed a second tranche of its prospectus Offering of convertible unsecured subordinated debentures of the Corporation for which a first closing took place on July 12, pursuant to which it had raised additional gross proceeds of CAD$762,000. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> Together with the principal amount of CAD$6,838,000 of Debentures issued on July 12, 2017, the Corporation issued a total aggregate principal amount of CAD$7,600,000 of Debentures at a price of CAD$1,000 per Debenture. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to CAD$185,000 ($145,000). </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The components of the convertible debentures are as follows:</p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30,</b> </td> <td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>December 31,</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Face value of the convertible debentures</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 5,771 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 6,058 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Transaction costs</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> (939 </b> </td> <td align="left" valign="bottom" width="2%"> <b>)</b> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> (986 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Accretion</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 262 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 127 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">Convertible debentures</td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 5,094 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 5,199 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> The accrued interest on the convertible debentures for the six-month period ended June 30, 2018 amounts to CAD$304 thousand ($238 thousand) and is recorded in financing and interest expense and accrued liabilities. On July 3, 2018, the accrued interest was paid by issuance of 307,069 common shares. </p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30,</b> </td> <td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>December 31,</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Face value of the convertible debentures</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 5,771 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 6,058 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Transaction costs</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> (939 </b> </td> <td align="left" valign="bottom" width="2%"> <b>)</b> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> (986 </td> <td align="left" valign="bottom" width="2%">)</td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Accretion</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 262 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 127 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">Convertible debentures</td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 5,094 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 5,199 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

5771000

6058000

939000

986000

262000 127000

6838000

1000

0.08

1.35

740

762000

7600000

1000

1237000

185000 145000

304000

238000

307069

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> <b>9.</b> </td> <td align="left" width="95%">   <b>Private Placement</b> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On May 8, 2018, the Company closed its previously announced offering by way of private placement (the “Offering”). In connection with the Offering, the Company issued 320 units (the “Units”) at a subscription price of $10,000 per Unit for gross proceeds of $3,200,000. A related party of the Company participated in the Offering and subscribed for an aggregate of two Units. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> Each Unit is comprised of (i) 7,940 common shares of the Corporation (“Common Shares”), (ii) a $5,000 convertible 6% note (a “Note”), and (iii) 7,690 warrants to purchase common shares of the Corporation (“Warrants”). Each Note bears interest at a rate of 6% (payable quarterly, in arrears, with the first payment being due on September 1, 2018), matures on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitles its holder to purchase one Common Share at a price of $0.80 per Common Share until June 1, 2021. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> In connection with the Offering, the Company paid to the Agents a cash commission of approximately $157,800 in the aggregate and issued non-transferable agents’ warrants to the Agents, entitling the Agents to purchase 243,275 common shares at a price of $0.80 per share until June 1, 2021. Management has determined the value of the agents’ warrants to be $50,000. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The proceeds of the Units are attributed to liability and equity components based on the fair value of each component as follows:</p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Gross proceeds</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Transaction costs</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Net proceeds</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" valign="bottom"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Common stock</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 1,627 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 167 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 1,460 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Convertible notes</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 1,086 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 111 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 975 </b> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Warrants</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 487 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 50 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 437 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 3,200 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 328 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 2,872 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> The convertible notes have been recorded as a liability. Total transactions costs in the amount of U.S.$111 thousand were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to U.S. $22,000. </p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The components of the convertible notes are as follows:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="80%"> <tr valign="top"> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30,</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2018</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Attributed value of net proceeds to convertible notes</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 975 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Accretion</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 22 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">Convertible notes</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 997 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> </div> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> The interest on the convertible notes for the six-month period ended June 30, 2018 amounts to $14 thousand and is recorded in financing and interest expense. </p>

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Gross proceeds</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Transaction costs</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="right" nowrap="nowrap" valign="bottom" width="17%"> <b>Net proceeds</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" valign="bottom"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> <td align="right" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> </td> <td align="right" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Common stock</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 1,627 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 167 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 1,460 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Convertible notes</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 1,086 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 111 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 975 </b> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Warrants</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 487 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 50 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 437 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 3,200 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 328 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 2,872 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

1627000 167000 1460000 1086000 111000 975000 487000 50000 437000 3200000 328000 2872000 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="80%"> <tr valign="top"> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30,</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2018</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" valign="bottom">Attributed value of net proceeds to convertible notes</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 975 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Accretion</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 22 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">Convertible notes</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 997 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

975000

22000

320

10000

3200000

7940

5000

7690 0.06

0.80

157800

243275

0.80 50000 111000

22000

14000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" valign="bottom"> </td> <td align="left" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>June 30,</b> </td> <td align="center" nowrap="nowrap" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" valign="bottom" width="17%"> <b>December 31,</b> </td> <td align="left" nowrap="nowrap" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Authorized -</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" valign="bottom"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom"> 200,000,000 common shares of $0.00001 par value <br/>   20,000,000 preferred shares of $0.00001 par value </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" valign="bottom"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Issued -</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="17%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td align="left" valign="bottom"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="left" valign="bottom" width="17%"> </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> 70,547,267 (December 31, 2017 - 67,031,467) common shares </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 1 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 1 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

20000000

0.00001

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> <b>11.</b> </td> <td align="left" width="95%">   <b>Additional Paid-In Capital</b> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <b>Stock options</b> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On January 16, 2018, 100,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.79. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $44 thousand. </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On April 10, 2018, 275,000 options to purchase common stock were granted to employees under the 2016 Stock Option Plan. The options have an exercise price of $0.66. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $99 thousand. </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> On June 11, 2018, 800,000 options to purchase common stock were granted to officers and employees under the 2016 Stock Option Plan. The options have an exercise price of $0.76. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $334 thousand. </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> During the six-month period ended June 30, 2018 a total of 25,000 stock options were exercised for 25,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $13 thousand, resulting in an increase in additional paid-in capital of $13 thousand. </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> During the six-month period ended June 30, 2017, on January 18, 2017, 300,000 options to purchase common stock were granted to non-employee directors under the 2016 Stock Option Plan. The options have an exercise price of $0.89. The options vest immediately and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $114 thousand. </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> During the six-month period ended June 30, 2017 a total of 135,000 stock options were exercised for 135,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $62 thousand, resulting in an increase in additional paid-in capital of $62 thousand. </p> </td> </tr> </table> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td align="left"> </td> <td align="left"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> Compensation expenses for stock-based compensation of $123 thousand and $223 thousand were recorded during the six-month periods ended June 30, 2018 and 2017, respectively. An amount of $119 thousand expensed in the six-month period of 2018 relates to stock options granted to employees and directors and an amount of $4 thousand relates to stock options granted to a consultant. An amount of $220 thousand expensed in the six- month period of 2017 relates to stock options granted to employees and directors and an amount of $3 thousand relates to stock options granted to a consultant. As at June 30, 2018, the Company has $550 thousand (2017 - $188 thousand) of unrecognized stock-based compensation. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Warrants</b> </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> During the six-month period ended June 30, 2018 a total of 950,000 warrants were exercised for 950,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $536 thousand, resulting in an increase in additional paid-in capital of approximately $536 thousand. During the six-month period ended June 30, 2017 a total of 1,690,000 warrants were exercised for 1,690,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $954 thousand, resulting in an increase in additional paid-in capital of approximately $954 thousand. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Deferred Share Units (“DSUs”)</b> </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> Effective February 7, 2018, the Board approved a Deferred Share Unit Plan (DSU Plan) to compensate non- employee directors as part of their annual remuneration. Under the DSU Plan, the Board may grant Deferred Share Units (“DSUs”) to the participating directors at its discretion and, in addition, each participating director may elect to receive all or a portion of his or her annual cash stipend in the form of DSUs. To the extent DSUs are granted, the amount of compensation that is deferred is converted into a number of DSUs, as determined by the market price of our Common Stock on the effective date of the election. These DSUs are converted back into a cash amount at the expiration of the deferral period based on the market price of our Common Stock on the expiration date and paid to the director in cash in accordance with the payout terms of the DSU Plan. As the DSUs are on a cash-only basis, no shares of Common Stock will be reserved or issued in connection with the DSUs. On May 16, 2018, 287,355 DSUs have been granted under the DSU Plan as of the date of this filing, accordingly, an amount of $232 thousand has been recognized in management salaries. </p> </td> </tr> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Performance and Restricted Share Units (“PRSUs”)</b> </p> </td> </tr> <tr> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> </p> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">At the Annual Meeting on May 8, 2018, the shareholders approved the IntelGenx Technologies Corp. Performance and Restricted Share Unit Plan (PRSU Plan) which the Board of Directors had approved on March 19, 2018. The primary purpose of this PRSU Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified executive officers of the Company and its Subsidiaries and to reward such executive officers for their contributions toward the long-term goals and success of the Company and to enable and encourage such executive officers to acquire shares of Common Stock as long-term investments and proprietary interests in the Company. No rewards have been issued under the PRSU Plan as of June 30, 2018.</p> </td> </tr> </table>

100000

0.79

P2Y

0.25 P10Y

44000

275000

0.66

P2Y

0.25 P10Y

99000

800000

0.76

P2Y

0.25 P10Y

334000

25000

13000

300000

0.89

P10Y

114000

135000

62000

119000

4000

220000

3000

550000

188000

950000 0

536000

1690000 0

954000

954000 287355

232000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td valign="top" width="5%"> <b>12.</b> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;"> <b>Revenues</b> </p> </td> </tr> <tr> <td width="5%"> </td> <td> </td> </tr> <tr> <td width="5%"> </td> <td> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The following table presents our revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues:</p> </td> </tr> </table> <br/> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Research and development agreements</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 245 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Licensing agreements</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> 405 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Deferred revenue (sale of future royalties)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 1,829 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The following table presents our revenues disaggregated by timing of recognition:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Product and services transferred at point in time</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b>   - </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 405 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Products and services transferred over time</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 2,074 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Europe</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 410 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 245 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Canada</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 63 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> 375 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">U.S.</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 1,829 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Other foreign countries</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 30 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;">Remaining performance obligations</p> <p align="justify" style="margin-left: 5%; font-family: times, serif; font-size: 10pt;"> As at June 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation is $329 representing research and development agreements, the majority of which is expected to be recognized in the next twelve months. The Company is also eligible to receive up to $4,051 in research and development milestone payments; up to $28,751 in commercial sales milestone payments. In addition, the Company is entitled to receive royalties on potential sales. </p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr> <td> </td> <td width="95%"> </td> </tr> <tr valign="top"> <td align="left"> </td> <td align="left" width="95%"> <p align="justify" style="font-family: times, serif; font-size: 10pt;margin:inherit;">The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company applies the transition practical expedient in paragraph 606-10-65-1(f)(3) and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue for the year ended December 31, 2018.</p> </td> </tr> </table>

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Research and development agreements</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 245 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Licensing agreements</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> 405 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Deferred revenue (sale of future royalties)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 1,829 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

473000

245000

405000

1829000

2479000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Product and services transferred at point in time</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b>   - </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 405 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Products and services transferred over time</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 2,074 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

405000

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2074000

<table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times, serif;" width="100%"> <tr valign="top"> <td width="5%"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2018</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b>June 30, 2017</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> <tr> <td width="5%"> </td> <td valign="bottom"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> <td valign="bottom" width="1%"> </td> <td valign="bottom" width="17%"> </td> <td valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">Europe</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> 410 </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 245 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" valign="bottom">Canada</td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> <b> 63 </b> </td> <td align="left" valign="bottom" width="2%"> </td> <td align="left" valign="bottom" width="1%"> </td> <td align="right" valign="bottom" width="17%"> 375 </td> <td align="left" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom">U.S.</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="1%"> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="17%"> 1,829 </td> <td align="left" bgcolor="#e6efff" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">Other foreign countries</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> <b> - </b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="1%"> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="17%"> 30 </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="2%"> </td> </tr> <tr valign="top"> <td width="5%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%"> <b>$</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> <b> 473 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="1%">$</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="17%"> 2,479 </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="2%"> </td> </tr> </table>

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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2018	Aug. 05, 2018
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
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		70,989,337
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current
Cash	$ 2,321	$ 1,591
Short-term investments	1,362	3,313
Accounts receivable	485	623
Prepaid expenses	590	203
Investment tax credits receivable	451	314
Total current assets	5,209	6,044
Leasehold improvements and equipment, net	6,149	6,346
Security deposits	733	757
Total assets	12,091	13,147
Current
Accounts payable and accrued liabilities	2,000	1,305
Current portion of long-term debt	736	772
Total current liabilities	2,736	2,077
Deferred lease obligations	50	50
Long-term debt	1,539	1,992
Convertible debentures	5,094	5,199
Convertible notes	997	0
Total liabilities	10,416	9,318
Shareholders' equity
Capital Stock, common shares, $0.00001 par value; 200,000,000 shares authorized; 70,547,267 shares issued and outstanding (2017: 67,031,467 common shares)	1	1
Additional paid-in capital	27,872	25,253
Accumulated deficit	(25,453)	(20,788)
Accumulated other comprehensive loss	(745)	(637)
Total Shareholders' Equity	1,675	3,829
Total liabilities and Stockholders' Equity	$ 12,091	$ 13,147

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Common Stock, Par Value Per Share	$ 0.00001	$ 0.00001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares, Issued	70,547,267	67,031,467
Common Stock, Shares, Outstanding	70,547,267	67,031,467

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Consolidated Statement of Shareholders' Equity - 6 months ended Jun. 30, 2018 - USD ($) $ in Thousands	Capital Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Loss [Member]	Total
Beginning Balance at Dec. 31, 2017	$ 1	$ 25,253	$ (20,788)	$ (637)	$ 3,829
Beginning Balance (Shares) at Dec. 31, 2017	67,031,467
Other comprehensive loss				(108)	(108)
Common stock issued, net of transaction costs of $167		1,460			1,460
Common stock issued, net of transaction costs of $167 (Shares)	2,540,800
Warrants issued, net of transaction costs of $50		437			437
Agents warrants issued		50			50
Warrants exercised		536			536
Warrants exercised (Shares)	950,000
Options exercised		13			$ 13
Options exercised (Shares)	25,000				25,000
Stock-based compensation		123			$ 123
Net loss for the period			(4,665)		(4,665)
Ending Balance at Jun. 30, 2018	$ 1	$ 27,872	$ (25,453)	$ (745)	$ 1,675
Ending Balance (Shares) at Jun. 30, 2018	70,547,267

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Consolidated Statement of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	18 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2018
Revenues
License and other revenue	$ 234	$ 1,126	$ 473	$ 2,479
Total revenues	234	1,126	473	2,479
Expenses
Cost of royalty and license revenue	0	89	0	181
Research and development expense	857	654	1,654	1,298
Selling, general and administrative expense	1,322	826	2,602	1,730
Depreciation of tangible assets	179	170	362	340
Total expenses	2,358	1,739	4,618	3,549
Operating loss	(2,124)	(613)	(4,145)	(1,070)
Interest income	0	1	0	3
Net financing and interest expense	(277)	(54)	(520)	(111)
Net loss	(2,401)	(666)	(4,665)	(1,178)
Other comprehensive (loss) income
Foreign currency translation adjustment	(35)	116	(107)	160
Change in fair value	4	0	(1)	0
Comprehensive loss	$ (2,432)	$ (550)	$ (4,773)	$ (1,018)
Basic and diluted:
Basic and diluted weighted average number of shares outstanding	68,877,428	65,493,394	68,346,126	65,399,853
Basic and diluted loss per common share	$ (0.04)	$ (0.01)	$ (0.07)	$ (0.02)

XML 17 R6.htm IDEA: XBRL DOCUMENT

Consolidated Statement of Cash Flows - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Funds (used) provided - Operating activities
Net loss	$ (2,401)	$ (666)	$ (4,665)	$ (1,178)
Depreciation	179	170	362	340
Stock-based compensation	73	53	123	223
Accretion expense	94	0	167	0
DSU expense	232	0	232	0
Interest payable by issuance of common shares	238	0	238	0
Total Adjustments	(1,585)	(443)	(3,543)	(615)
Changes in non-cash items related to operations:
Accounts receivable	170	61	138	677
Prepaid expenses	(215)	24	(387)	162
Investment tax credits receivable	(68)	(35)	(137)	33
Security deposits	(11)	(18)	(11)	(24)
Accounts payable and accrued liabilities	199	(161)	239	(445)
Deferred revenue	0	(870)	0	(1,754)
Deferred lease obligations	0	2	0	3
Net change in non-cash items related to operations	75	(997)	(158)	(1,348)
Net cash used in operating activities	(1,510)	(1,440)	(3,701)	(1,963)
Financing activities
Repayment of term loans	(185)	(251)	(372)	(354)
Proceeds from exercise of warrants and stock options	154	679	549	1,016
Net proceeds from private placement	3,004	0	3,004	0
Transaction costs of private placement	(82)	0	(82)	0
Net cash provided by financing activities	2,891	428	3,099	662
Investing activities
Additions to leasehold improvements and equipment	(16)	(233)	(454)	(455)
Redemption of short-term investments	393	2,025	1,908	2,325
Net cash provided by (used in) investing activities	377	1,792	1,454	1,870
Increase in cash	1,758	780	852	569
Effect of foreign exchange on cash	(55)	95	(122)	(6)
Cash
Beginning of period	618	300	1,591	612
End of period	$ 2,321	$ 1,175	$ 2,321	$ 1,175

XML 18 R7.htm IDEA: XBRL DOCUMENT

Basis of Presentation

6 Months Ended

Jun. 30, 2018

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, 2017. Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. 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.

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Going Concern

6 Months Ended

Jun. 30, 2018

Going Concern [Text Block]

2.	Going Concern

	The Company has financed its operations to date primarily through public offerings of its common stock, bank loans, royalty, up-front and milestone payments, license fees, proceeds from exercise of warrants and options, research and development revenues and the sale of U.S. royalty on future sales of Forfivo XL ^® . The Company has devoted substantially all of its resources to its drug development efforts, conducting clinical trials to further advance the product pipeline, the expansion of its facilities, protecting its intellectual property and general and administrative functions relating to these operations. The future success of the Company is dependent on its ability to develop its product pipeline and ultimately upon its ability to attain profitable operations. As of June 30, 2018, the Company had cash and short-term investments totaling approximately $3,683. The Company does not have sufficient existing cash and short-term investments to support operations for the next year following the issuance of these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans to alleviate these conditions include pursuing one or more of the following steps to raise additional funding, none of which can be guaranteed or are entirely within the Company’s control:

	•	Raise funding through the possible sale of the Company’s common stock, including public or private equity financings.

	•	Raise funding through debt financing.

	•	Continue to seek partners to advance product pipeline.

	•	Initiate oral film manufacturing activities.

	•	Initiate contract oral film manufacturing activities.

	As of June 30, 2018, there are also 3,120,902 warrants outstanding at an exercise price of $0.5646 which expire on December 31, 2018.

	If the Company is unable to raise capital when needed or on attractive terms, or if it is unable to procure partnership arrangements to advance its programs, the Company would be forced to delay, reduce or eliminate its research and development programs.

	The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The accompanying financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due.

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Adoption of New Accounting Standards

6 Months Ended

Jun. 30, 2018

Adoption of New Accounting Standards [Text Block]

3.	Adoption of New Accounting Standards

	The Company adopted Topic 606 Revenue from Contracts with Customers with a date of the initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below.

	This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those good or services. To determine revenue recognition for arrangements subject to the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and identifies performance obligations that are distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when (or as) the performance obligation is satisfied.


	ASC 606 uses the terms “contract asset” and “contract liability” to describe what might more commonly be known as “accrued revenue” and “deferred revenue”. The Company has adopted the terminology used in ASC 606 to describe such balances.

	The Company’s accounting policies for its revenue streams are disclosed in Note 4 below. Apart from providing more extensive disclosures on the Company’s revenue transactions, the application of ASC 606 has not had a significant impact on the financial position and/or financial performance of the Company.

	The FASB issued ASU 2017-09, Stock compensation, which provides guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. The statement is effective for annual periods beginning after December 15, 2017. The Company has made an accounting policy choice to recognize the effect of awards for which the requisite service is not rendered when the award is forfeited (that is, recognize the effect of forfeitures in compensation cost when they occur). Previously recognized compensation cost for an award shall be reversed in the period that the award is forfeited. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2017-01, Business Combinations, which clarifies the definition of a business and is intended to help companies evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-18, Statement of Cash Flows, which requires that the statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted or restricted cash equivalents. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-16, Income taxes, and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

	The FASB issued ASU 2016-15, Statement of Cash Flows, which clarifies how certain cash receipts and payments are to be presented in the Statement of cash flows. The statement is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of this statement did not have a material effect on the Company’s financial position or results.


	The FASB issued ASU 2016-01, Financial Instruments. The targeted amendments to existing guidance include:

	1.	Equity investments that do not result in consolidation and are not accounted for under the equity method would be measured at fair value through net income, unless they qualify for the proposed practicability exception for investments that do not have readily determinable fair values.

	2.	Changes in instrument-specific credit risk for financial liabilities that are measured under the fair value option would be recognized in other comprehensive income.

	3.	Entities would make the assessment of the realizability of a deferred tax asset (DTA) related to an available- for-sale (AFS) debt security in combination with the entity’s other DTAs. The guidance would eliminate one method that is currently acceptable for assessing the realizability of DTAs related to AFS debt securities. That is, an entity would no longer be able to consider its intent and ability to hold debt securities with unrealized losses until recovery.

	4.	Disclosure of the fair value of financial instruments measured at amortized cost would no longer be required for entities that are not public business entities.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this statement did not have a material effect on the Company’s financial position or results.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Significant Accounting Policies [Text Block]

4.	Significant Accounting Policies

	Revenue Recognition

	Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

	Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue- producing transaction, that are collected by the Company from a customer, are excluded from revenue.

	The following is a description of principal activities – separated by nature – from which the Company generates its revenue.

	Research and Development Revenue

	Revenues with corporate collaborators are recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement.

	Licensing and Collaboration Arrangements

	The Company may enter into licensing and collaboration agreements for product development, licensing, supply and manufacturing for its product pipeline. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations. These contracts are analyzed to identify all performance obligations forming part of these contracts. The transaction price of the contract is then determined. The transaction price is allocated between all performance obligations on a relative standalone selling price basis. The stand-alone selling price is estimated based on the comparable market prices, expected cost plus margin and the Company’s historical experience.

	Licenses are considered to be right-to-use licenses. As such, the Company recognizes the licenses revenues at a point in time, upon granting the licenses.

	Milestone payments are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, research and other revenues in the period during which the adjustment is recognized. The process of successfully achieving the criteria for the milestone payments is highly uncertain. Consequently, there is significant risk that the Company may not earn all of the milestone payments for each of its contracts.

	Royalties are typically calculated as a percentage of net sales realized by the Company’s licensees of its products (including their sub-licensees), as specifically defined in each agreement. The licensees’ sales generally consist of revenues from product sales of the Company’s product pipeline and net sales are determined by deducting the following: estimates for chargebacks, rebates, sales incentives and allowances, returns and losses and other customary deductions in each region where the Company has licensees. Revenues arising from royalties are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

	Leasehold Improvements and Equipment

	Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

	On the declining balance method -

	Laboratory and office equipment	20%
	Computer equipment	30%

	On the straight-line method -

	Leasehold improvements	over the lease term
	Manufacturing equipment	5 – 10 years

Recent Accounting Pronouncements

ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

ASU 2018-02 – Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment

	ASU 2016-02: Leases (Topic 842) Section A

	The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

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Leasehold Improvements and Equipment

6 Months Ended

Jun. 30, 2018

Leasehold Improvements and Equipment [Text Block]

5.	Leasehold Improvements and Equipment

								December 31,
						June 30, 2018		2017
				Accumulated		Net Carrying		Net Carrying
		Cost		Depreciation		Amount		Amount

Manufacturing equipment	$	3,615	$	478	$	3,137	$	2,953
Laboratory and office equipment		1,319		664		655		759
Computer equipment		102		62		40		44
Leasehold improvements		3,100		783		2,317		2,590

	$	8,136	$	1,987	$	6,149	$	6,346

From the balance of manufacturing equipment, an amount of $1,164 thousand (2017: $822 thousand) represents assets which are not yet in service as at June 30, 2018

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Bank indebtedness

6 Months Ended

Jun. 30, 2018

Bank indebtedness [Text Block]

6.	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 ($190 thousand) and corporate credits cards of up to CAD$75 and $60 thousand, and foreign exchange contracts limited to CAD$425 thousand ($323 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 for an amount of CAD$4,250,000 ($3,227,000) plus 20%, 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, 2018, the Company has not drawn on its credit facility.

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Long-term debt

6 Months Ended

Jun. 30, 2018

Long-term debt [Text Block]

7.	Long-term debt

	The components of the Company’s debt are as follows:

	June 30, 2018	December 31, 2017
	$	$



Term loan facility	1,845	2,233
Secured loan	430	531
Total debt	2,275	2,764

Less: current portion	736	772

Total long-term debt	1,539	1,992

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

2018	377 (CAD496)
2019	717 (CAD945)
2020	717 (CAD945)
2021	464 (CAD610)

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Convertible Debentures

6 Months Ended

Jun. 30, 2018

Convertible Debentures [Text Block]

8.	Convertible Debentures

	On July 12, 2017, the Company closed its previously announced prospectus offering (the “Offering”) of convertible unsecured subordinated debentures of the Corporation (the “Debentures”) for gross aggregate proceeds of CAD$6,838,000. Pursuant to the Offering, the Corporation issued an aggregate principal amount of CAD$6,838,000 of Debentures at a price of CAD$1,000 per Debenture. The Debentures will mature on June 30, 2020 and bear interest at annual rate of 8% payable semi-annually on the last day of June and December of each year, commencing on December 31, 2017. The interest may be paid in common shares at the option of the Corporation. The Debentures will be convertible at the option of the holders at any time prior to the close of business on the earlier of June 30, 2020 and the business day immediately preceding the date specified by the Corporation for redemption of Debentures. The conversion price will be CAD$1.35 (the “Conversion Price”) per common share of the Corporation (“Share”), being a conversion rate of approximately 740 Shares per CAD$1,000 principal amount of Debentures, subject to adjustment in certain events.

	On August 8, 2017, the Company closed a second tranche of its prospectus Offering of convertible unsecured subordinated debentures of the Corporation for which a first closing took place on July 12, pursuant to which it had raised additional gross proceeds of CAD$762,000.

	Together with the principal amount of CAD$6,838,000 of Debentures issued on July 12, 2017, the Corporation issued a total aggregate principal amount of CAD$7,600,000 of Debentures at a price of CAD$1,000 per Debenture.

	The convertible debentures have been recorded as a liability. Total transactions costs in the amount of CAD$1,237,000 were recorded against the liability. The accretion expense for the six-month period ended June 30, 2018 amounts to CAD$185,000 ($145,000).

	The components of the convertible debentures are as follows:

		June 30,			December 31,
		2018			2017


Face value of the convertible debentures	$	5,771		$	6,058
Transaction costs		(939	)		(986	)
Accretion		262			127
Convertible debentures	$	5,094		$	5,199

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Private Placement

6 Months Ended

Jun. 30, 2018

Private Placement [Text Block]

9.	Private Placement

	On May 8, 2018, the Company closed its previously announced offering by way of private placement (the “Offering”). In connection with the Offering, the Company issued 320 units (the “Units”) at a subscription price of $10,000 per Unit for gross proceeds of $3,200,000. A related party of the Company participated in the Offering and subscribed for an aggregate of two Units.

	Each Unit is comprised of (i) 7,940 common shares of the Corporation (“Common Shares”), (ii) a $5,000 convertible 6% note (a “Note”), and (iii) 7,690 warrants to purchase common shares of the Corporation (“Warrants”). Each Note bears interest at a rate of 6% (payable quarterly, in arrears, with the first payment being due on September 1, 2018), matures on June 1, 2021 and is convertible into Common Shares at a conversion price of $0.80 per Common Share. Each Warrant entitles its holder to purchase one Common Share at a price of $0.80 per Common Share until June 1, 2021.

	In connection with the Offering, the Company paid to the Agents a cash commission of approximately $157,800 in the aggregate and issued non-transferable agents’ warrants to the Agents, entitling the Agents to purchase 243,275 common shares at a price of $0.80 per share until June 1, 2021. Management has determined the value of the agents’ warrants to be $50,000.

	The proceeds of the Units are attributed to liability and equity components based on the fair value of each component as follows:

		Gross proceeds		Transaction costs		Net proceeds

Common stock	$	1,627	$	167	$	1,460
Convertible notes		1,086		111		975
Warrants		487		50		437
	$	3,200	$	328	$	2,872

The components of the convertible notes are as follows:

		June 30,
		2018


Attributed value of net proceeds to convertible notes	$	975
Accretion		22
Convertible notes	$	997

The interest on the convertible notes for the six-month period ended June 30, 2018 amounts to $14 thousand and is recorded in financing and interest expense.

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Capital Stock

6 Months Ended

Jun. 30, 2018

Capital Stock [Text Block]

10.

Capital Stock

		June 30,		December 31,
		2018		2017
Authorized -

200,000,000 common shares of $0.00001 par value 20,000,000 preferred shares of $0.00001 par value

Issued -

70,547,267 (December 31, 2017 - 67,031,467) common shares	$	1	$	1

XML 28 R17.htm IDEA: XBRL DOCUMENT

Additional Paid-In Capital

6 Months Ended

Jun. 30, 2018

Additional Paid-In Capital [Text Block]

11.	Additional Paid-In Capital

	Stock options

	On January 16, 2018, 100,000 options to purchase common stock were granted to an employee under the 2016 Stock Option Plan. The options have an exercise price of $0.79. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $44 thousand.

	On April 10, 2018, 275,000 options to purchase common stock were granted to employees under the 2016 Stock Option Plan. The options have an exercise price of $0.66. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $99 thousand.

	On June 11, 2018, 800,000 options to purchase common stock were granted to officers and employees under the 2016 Stock Option Plan. The options have an exercise price of $0.76. The options granted vest over a period of 2 years at a rate of 25% every six months and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $334 thousand.

	During the six-month period ended June 30, 2018 a total of 25,000 stock options were exercised for 25,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $13 thousand, resulting in an increase in additional paid-in capital of $13 thousand.

	During the six-month period ended June 30, 2017, on January 18, 2017, 300,000 options to purchase common stock were granted to non-employee directors under the 2016 Stock Option Plan. The options have an exercise price of $0.89. The options vest immediately and expire 10 years after the grant date. The stock options were accounted for at their fair value, as determined by the Black-Scholes valuation model, of approximately $114 thousand.

	During the six-month period ended June 30, 2017 a total of 135,000 stock options were exercised for 135,000 common shares having a par value of $0 thousand in aggregate, for cash consideration of $62 thousand, resulting in an increase in additional paid-in capital of $62 thousand.


	Compensation expenses for stock-based compensation of $123 thousand and $223 thousand were recorded during the six-month periods ended June 30, 2018 and 2017, respectively. An amount of $119 thousand expensed in the six-month period of 2018 relates to stock options granted to employees and directors and an amount of $4 thousand relates to stock options granted to a consultant. An amount of $220 thousand expensed in the six- month period of 2017 relates to stock options granted to employees and directors and an amount of $3 thousand relates to stock options granted to a consultant. As at June 30, 2018, the Company has $550 thousand (2017 - $188 thousand) of unrecognized stock-based compensation.

	Warrants

	During the six-month period ended June 30, 2018 a total of 950,000 warrants were exercised for 950,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $536 thousand, resulting in an increase in additional paid-in capital of approximately $536 thousand. During the six-month period ended June 30, 2017 a total of 1,690,000 warrants were exercised for 1,690,000 common shares having a par value of $Nil in aggregate, for cash consideration of approximately $954 thousand, resulting in an increase in additional paid-in capital of approximately $954 thousand.

	Deferred Share Units (“DSUs”)

	Effective February 7, 2018, the Board approved a Deferred Share Unit Plan (DSU Plan) to compensate non- employee directors as part of their annual remuneration. Under the DSU Plan, the Board may grant Deferred Share Units (“DSUs”) to the participating directors at its discretion and, in addition, each participating director may elect to receive all or a portion of his or her annual cash stipend in the form of DSUs. To the extent DSUs are granted, the amount of compensation that is deferred is converted into a number of DSUs, as determined by the market price of our Common Stock on the effective date of the election. These DSUs are converted back into a cash amount at the expiration of the deferral period based on the market price of our Common Stock on the expiration date and paid to the director in cash in accordance with the payout terms of the DSU Plan. As the DSUs are on a cash-only basis, no shares of Common Stock will be reserved or issued in connection with the DSUs. On May 16, 2018, 287,355 DSUs have been granted under the DSU Plan as of the date of this filing, accordingly, an amount of $232 thousand has been recognized in management salaries.

	Performance and Restricted Share Units (“PRSUs”)

	At the Annual Meeting on May 8, 2018, the shareholders approved the IntelGenx Technologies Corp. Performance and Restricted Share Unit Plan (PRSU Plan) which the Board of Directors had approved on March 19, 2018. The primary purpose of this PRSU Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified executive officers of the Company and its Subsidiaries and to reward such executive officers for their contributions toward the long-term goals and success of the Company and to enable and encourage such executive officers to acquire shares of Common Stock as long-term investments and proprietary interests in the Company. No rewards have been issued under the PRSU Plan as of June 30, 2018.

XML 29 R18.htm IDEA: XBRL DOCUMENT

Revenues

6 Months Ended

Jun. 30, 2018

Revenues [Text Block]

12.	Revenues

	The following table presents our revenues disaggregated by revenue source. Sales and usage-based taxes are excluded from revenues:

		June 30, 2018		June 30, 2017


Research and development agreements	$	473	$	245
Licensing agreements		-		405
Deferred revenue (sale of future royalties)		-		1,829
	$	473	$	2,479

The following table presents our revenues disaggregated by timing of recognition:

		June 30, 2018		June 30, 2017


Product and services transferred at point in time	$	-	$	405
Products and services transferred over time		473		2,074
	$	473	$	2,479

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

		June 30, 2018		June 30, 2017

Europe	$	410		245
Canada		63		375
U.S.		-		1,829
Other foreign countries		-		30
	$	473	$	2,479

Remaining performance obligations

The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Company applies the transition practical expedient in paragraph 606-10-65-1(f)(3) and does not disclose the amount of the transaction price allocated to the remaining performance obligations and an explanation of when the Company expects to recognize that amount as revenue for the year ended December 31, 2018.

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Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Text Block]

13.	Related Party Transactions

	Included in management salaries for the six-month period ended June 30, 2018 are $17 thousand (2017 - $Nil) for options granted to the Chief Executive Officer, $7 thousand (2017 - $30 thousand) for options granted to the Chief Financial Officer, $Nil (2017 - $3 thousand) for options granted to the former Vice President, Operations, $6 thousand (2017 - $3 thousand) for options granted to the Vice-President, Research and Development, $23 thousand (2017 – $17 thousand) for options granted to Vice-President, Business and Corporate Development under the 2016 Stock Option Plan and $6 thousand (2017 - $124 thousand) for options granted to non-employee directors.

	Also included in management salaries for the six-month period ended June 30, 2018 are director fees of $124 thousand (2017 - $136 thousand) and DSU of $232 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.

XML 31 R20.htm IDEA: XBRL DOCUMENT

Basic and Diluted Loss Per Common Share

6 Months Ended

Jun. 30, 2018

Basic and Diluted Loss Per Common Share [Text Block]

14.	Basic and Diluted Loss Per Common Share

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

XML 32 R21.htm IDEA: XBRL DOCUMENT

Subsequent Event

6 Months Ended

Jun. 30, 2018

Subsequent Event [Text Block]

15.	Subsequent Event

	On July 3, 2018, the Company granted 100,000 options to purchase common stock to a consultant. The stock options are exercisable at $0.78 per share and vest over 2 years at 25% every six months.

XML 33 R22.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Revenue Recognition [Policy Text Block]

	Revenue Recognition

	Revenue is measured based on a consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

	Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue- producing transaction, that are collected by the Company from a customer, are excluded from revenue.

	The following is a description of principal activities – separated by nature – from which the Company generates its revenue.

	Research and Development Revenue

	Revenues with corporate collaborators are recognized as the performance obligations are satisfied over time, and the related expenditures are incurred pursuant to the terms of the agreement.

	Licensing and Collaboration Arrangements

	The Company may enter into licensing and collaboration agreements for product development, licensing, supply and manufacturing for its product pipeline. The terms of the agreements may include non-refundable signing and licensing fees, milestone payments and royalties on any product sales derived from collaborations. These contracts are analyzed to identify all performance obligations forming part of these contracts. The transaction price of the contract is then determined. The transaction price is allocated between all performance obligations on a relative standalone selling price basis. The stand-alone selling price is estimated based on the comparable market prices, expected cost plus margin and the Company’s historical experience.

	Licenses are considered to be right-to-use licenses. As such, the Company recognizes the licenses revenues at a point in time, upon granting the licenses.

	Milestone payments are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, research and other revenues in the period during which the adjustment is recognized. The process of successfully achieving the criteria for the milestone payments is highly uncertain. Consequently, there is significant risk that the Company may not earn all of the milestone payments for each of its contracts.

	Royalties are typically calculated as a percentage of net sales realized by the Company’s licensees of its products (including their sub-licensees), as specifically defined in each agreement. The licensees’ sales generally consist of revenues from product sales of the Company’s product pipeline and net sales are determined by deducting the following: estimates for chargebacks, rebates, sales incentives and allowances, returns and losses and other customary deductions in each region where the Company has licensees. Revenues arising from royalties are considered variable consideration. As such, the Company estimates variable consideration at the most likely amount to which we expect to be entitled. The estimated amounts are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Leasehold Improvements and Equipment [Policy Text Block]

	Leasehold Improvements and Equipment

	Leasehold improvements and equipment are recorded at cost. Provisions for depreciation are based on their estimated useful lives using the methods as follows:

	On the declining balance method -

	Laboratory and office equipment	20%
	Computer equipment	30%

	On the straight-line method -

	Leasehold improvements	over the lease term
	Manufacturing equipment	5 – 10 years

Recent Accounting Pronouncements [Policy Text Block]

Recent Accounting Pronouncements

ASU 2018-07 – Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

ASU 2018-02 – Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment

	ASU 2016-02: Leases (Topic 842) Section A

	The FASB issued ASU 2016-02 to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for a public business entity for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this Statement on its consolidated financial statements.

XML 34 R23.htm IDEA: XBRL DOCUMENT

Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Estimated Useful Lives of Leasehold Improvements and Equipment [Table Text Block]

	On the declining balance method -

	Laboratory and office equipment	20%
	Computer equipment	30%

	On the straight-line method -

	Leasehold improvements	over the lease term
	Manufacturing equipment	5 – 10 years

XML 35 R24.htm IDEA: XBRL DOCUMENT

Leasehold Improvements and Equipment (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Leasehold Improvements and Equipment [Table Text Block]

								December 31,
						June 30, 2018		2017
				Accumulated		Net Carrying		Net Carrying
		Cost		Depreciation		Amount		Amount

Manufacturing equipment	$	3,615	$	478	$	3,137	$	2,953
Laboratory and office equipment		1,319		664		655		759
Computer equipment		102		62		40		44
Leasehold improvements		3,100		783		2,317		2,590

	$	8,136	$	1,987	$	6,149	$	6,346

XML 36 R25.htm IDEA: XBRL DOCUMENT

Long-term debt (Tables)

6 Months Ended

Jun. 30, 2018

Term loan [Table Text Block]

	June 30, 2018	December 31, 2017
	$	$



Term loan facility	1,845	2,233
Secured loan	430	531
Total debt	2,275	2,764

Less: current portion	736	772

Total long-term debt	1,539	1,992

Term loan principal repayments [Table Text Block]

2018	377 (CAD496)
2019	717 (CAD945)
2020	717 (CAD945)
2021	464 (CAD610)

XML 37 R26.htm IDEA: XBRL DOCUMENT

Convertible Debentures (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Convertible Debt [Table Text Block]

		June 30,			December 31,
		2018			2017


Face value of the convertible debentures	$	5,771		$	6,058
Transaction costs		(939	)		(986	)
Accretion		262			127
Convertible debentures	$	5,094		$	5,199

XML 38 R27.htm IDEA: XBRL DOCUMENT

Private Placement (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Capital Units [Table Text Block]

		Gross proceeds		Transaction costs		Net proceeds

Common stock	$	1,627	$	167	$	1,460
Convertible notes		1,086		111		975
Warrants		487		50		437
	$	3,200	$	328	$	2,872

Schedule of Components of the Convertible Notes [Table Text Block]

		June 30,
		2018


Attributed value of net proceeds to convertible notes	$	975
Accretion		22
Convertible notes	$	997

XML 39 R28.htm IDEA: XBRL DOCUMENT

Capital Stock (Tables)

6 Months Ended

Jun. 30, 2018

Schedule of Stock by Class [Table Text Block]

		June 30,		December 31,
		2018		2017
Authorized -

200,000,000 common shares of $0.00001 par value 20,000,000 preferred shares of $0.00001 par value

Issued -

70,547,267 (December 31, 2017 - 67,031,467) common shares	$	1	$	1

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 480
-SubTopic 10
-Section S99
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=65877616&loc=d3e177068-122764

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(d))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(29))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=27012166&loc=d3e187085-122770

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21553-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(28))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=65888546&loc=d3e21300-112643

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(27))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21484-112644

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21488-112644

+ Details

XML 40 R29.htm IDEA: XBRL DOCUMENT

Revenues (Tables)

6 Months Ended

Jun. 30, 2018

Disaggregation of Revenue [Table Text Block]

		June 30, 2018		June 30, 2017


Research and development agreements	$	473	$	245
Licensing agreements		-		405
Deferred revenue (sale of future royalties)		-		1,829
	$	473	$	2,479

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block]

		June 30, 2018		June 30, 2017


Product and services transferred at point in time	$	-	$	405
Products and services transferred over time		473		2,074
	$	473	$	2,479

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

		June 30, 2018		June 30, 2017

Europe	$	410		245
Canada		63		375
U.S.		-		1,829
Other foreign countries		-		30
	$	473	$	2,479

XML 41 R30.htm IDEA: XBRL DOCUMENT

Going Concern (Narrative) (Details)	Jun. 30, 2018 USD ($) $ / shares shares
Cash and short-term investments \| $	$ 3,683
Class of Warrant or Right, Outstanding \| shares	3,120,902
Class of Warrant or Right, Exercise Price of Warrants or Rights \| $ / shares	$ 0.5646

XML 42 R31.htm IDEA: XBRL DOCUMENT

Leasehold Improvements and Equipment (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment, Net	$ 6,149	$ 6,346
Asset not yet in service [Member]
Property, Plant and Equipment, Net	$ 1,164	$ 822

XML 43 R32.htm IDEA: XBRL DOCUMENT

Bank indebtedness (Narrative) (Details) - 6 months ended Jun. 30, 2018 $ in Thousands, $ in Thousands	USD ($)	CAD ($)
Line of Credit Facility, Collateral	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 for an amount of CAD$4,250,000 ($3,227,000) plus 20%, and a 50% guarantee by Export Development Canada, a Canadian Crown corporation export credit agency.
Line of Credit [Member]
Long-term Line of Credit	$ 190	$ 250
Line of Credit Facility, Interest Rate During Period	2.00%
Corporate Credit Cards [Member]
Long-term Line of Credit		75
Corporate Credit Cards 2 [Member]
Long-term Line of Credit	$ 60
Foreign Exchange Contract [Member]
Long-term Line of Credit	$ 323	$ 425

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

XML 44 R33.htm IDEA: XBRL DOCUMENT

Long-term debt (Narrative) (Details) - 6 months ended Jun. 30, 2018 $ in Thousands	USD ($)	CAD ($)	CAD ($)
Debt Instrument, Interest Rate Terms	bearing interest at the Bank’s prime lending rate plus 2.50%	bearing interest at the Bank’s prime lending rate plus 2.50%
Term loan facility [Member]
Debt Instrument, Face Amount	$ 3,040,000		$ 4,000
Debt Instrument, Periodic Payment	$ 47,000	$ 62
Secured Loan [Member]
Debt Instrument, Interest Rate Terms	bearing interest at prime plus 7.3%	bearing interest at prime plus 7.3%
Debt Instrument, Periodic Payment	$ 13,000	$ 17
Secured Debt	$ 759,000,000		$ 1,000

XML 45 R34.htm IDEA: XBRL DOCUMENT

Convertible Debentures (Narrative) (Details)			1 Months Ended	6 Months Ended
Convertible Debentures (Narrative) (Details)	Aug. 08, 2017 CAD ($)	Jul. 12, 2017 CAD ($) $ / shares shares	Aug. 08, 2017 CAD ($)	Jun. 30, 2018 USD ($) $ / shares	Jun. 30, 2018 CAD ($)
Proceeds from Convertible Debt	$ 762,000	$ 6,838,000	$ 7,600,000
Proceeds from Convertible Debt, amount per instrument		$ 1,000	$ 1,000
Debt Instrument, Interest Rate		8.00%
Debt Instrument, Convertible, Conversion Price \| (per share)		$ 1.35		$ 0.80
Debt Instrument, Convertible, Number of shares per instrument \| shares		740
Payments of Debt Issuance Costs					$ 1,237,000
Accretion Expense				$ 145,000	185,000
Interest on Convertible Debt, Net of Tax				238,000	$ 304,000
Deposit Liabilities, Accrued Interest				$ 307,069

XML 46 R35.htm IDEA: XBRL DOCUMENT

Private Placement (Narrative) (Details)	3 Months Ended		6 Months Ended
Private Placement (Narrative) (Details)	Jun. 30, 2018 USD ($) $ / shares	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2017 USD ($)	Jul. 12, 2017 $ / shares
Stock Issued During Period, Shares, Conversion of Units \| shares			320
Subscription Price of Units			$ 10,000
Stock Issued During Period, Value, Conversion of Units			$ 3,200,000
Stock Issued During Period, Shares, Conversion of Convertible Securities \| shares			7,940
Stock Issued During Period, Value, Conversion of Convertible Securities			$ 5,000
Warrants Issued During Period, Warrants \| shares			7,690
Interest Rate on Convertible Note			6.00%
Debt Instrument, Convertible, Conversion Price \| (per share)	$ 0.80		$ 0.80		$ 1.35
Sale of Stock, Price Per Share \| $ / shares	$ 0.80		$ 0.80
Commission Paid to Agents	$ 157,800		$ 157,800
Stock Issued During Period, Shares, Issued for Services \| shares			243,275
Equity Issuance, Per Share Amount \| $ / shares			$ 0.80
Warrants Issued During Period, Value			$ 50,000
Accretion Expense	$ 94,000	$ 0	167,000	$ 0
Financing Interest Expense			14,000
Convertible debt [Member]
Transactions Costs of Convertible Notes			111,000
Accretion Expense			$ 22,000

XML 47 R36.htm IDEA: XBRL DOCUMENT

Additional Paid-In Capital (Narrative) (Details) - USD ($)	1 Months Ended			3 Months Ended		6 Months Ended
	Jun. 30, 2018	Apr. 30, 2018	Jan. 31, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	800,000	275,000	100,000				300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.76	$ 0.66	$ 0.79				$ 0.89
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years	2 years	2 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rate	25.00%	25.00%	25.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Contractual Term	10 years	10 years	10 years				10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 334,000	$ 99,000	$ 44,000				$ 114,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period						25,000	135,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value						$ 0	$ 0
Proceeds from Stock Options Exercised						13,000	62,000
Options exercised						13,000	62,000
Stock based compensation				$ 73,000	$ 53,000	$ 123,000	$ 223,000
Class of Warrant or Right, Exercises in Period						950,000	1,690,000
Class of Warrant or Right, Exercises in Period, Intrinsic Value						$ 0	$ 0
Proceeds from Warrant Exercises						536,000	954,000
Warrants exercised						$ 536,000	954,000
Deferred Share Units Grands in Period						287,355
Deferred Share Units [Member]
Salaries, Wages and Officers' Compensation						$ 232,000
Stock options granted to employees and directors [Member]
Stock based compensation						119,000	220,000
Stock options granted to a consultant [Member]
Stock based compensation						4,000	3,000
Unrecognized stock-based compensation [Member]
Stock based compensation						$ 550,000	$ 188,000

XML 48 R37.htm IDEA: XBRL DOCUMENT

Revenues (Narrative) (Details)	Jun. 30, 2018 USD ($)
Transaction price allocated to the remaining performance obligation	$ 329
Research and development milestone payments	4,051
Commercial sales milestone payments	$ 28,751

XML 49 R38.htm IDEA: XBRL DOCUMENT

Related Party Transactions (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Deferred Share Units [Member]
Salaries, Wages and Officers' Compensation	$ 232
Options granted to the Chief Executive Officer [Member]
Salaries, Wages and Officers' Compensation	17	$ 0
Options granted to the Chief Financial Officer [Member]
Salaries, Wages and Officers' Compensation	7	30
Options granted to the former Vice President, Operations [Member]
Salaries, Wages and Officers' Compensation	0	3
Options granted to the Vice-President, Research and Development [Member]
Salaries, Wages and Officers' Compensation	6	3
Options granted to Vice- President, Business and Corporate Development [Member]
Salaries, Wages and Officers' Compensation	23	17
Options granted to non-employee directors [Member]
Salaries, Wages and Officers' Compensation	6	124
Director fees [Member]
Salaries, Wages and Officers' Compensation	$ 124	$ 136

XML 50 R39.htm IDEA: XBRL DOCUMENT

Subsequent Event (Narrative) (Details) - $ / shares	1 Months Ended			6 Months Ended
Subsequent Event (Narrative) (Details) - $ / shares	Jun. 30, 2018	Apr. 30, 2018	Jan. 31, 2018	Jun. 30, 2018	Jun. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures	800,000	275,000	100,000		300,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.76	$ 0.66	$ 0.79		$ 0.89
Subsequent Event [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures				100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price				$ 0.78
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term				2 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Percentage				25.00%

XML 51 R40.htm IDEA: XBRL DOCUMENT

Schedule of Estimated Useful Lives of Leasehold Improvements and Equipment (Details)	6 Months Ended
	Jun. 30, 2018
Laboratory and office equipment [Member]
Property, Plant and Equipment, Depreciation Methods	20%
Computer equipment [Member]
Property, Plant and Equipment, Depreciation Methods	30%
Manufacturing equipment [Member] \| Minimum [Member]
Property, Plant and Equipment, Useful Life	5 years
Manufacturing equipment [Member] \| Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years

XML 52 R41.htm IDEA: XBRL DOCUMENT

Schedule of Leasehold Improvements and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Cost	$ 8,136
Accumulated Depreciation	1,987
Property, Plant and Equipment, Net	6,149	$ 6,346
Manufacturing equipment [Member]
Cost	3,615
Accumulated Depreciation	478
Property, Plant and Equipment, Net	3,137	2,953
Laboratory and office equipment [Member]
Cost	1,319
Accumulated Depreciation	664
Property, Plant and Equipment, Net	655	759
Computer equipment [Member]
Cost	102
Accumulated Depreciation	62
Property, Plant and Equipment, Net	40	44
Leasehold improvements [Member]
Cost	3,100
Accumulated Depreciation	783
Property, Plant and Equipment, Net	$ 2,317	$ 2,590

XML 53 R42.htm IDEA: XBRL DOCUMENT

Term loan (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Term loan facility	$ 1,845	$ 2,233
Secured loan	430	531
Total debt	2,275	2,764
Less: current portion	736	772
Total long-term debt	$ 1,539	$ 1,992

XML 54 R43.htm IDEA: XBRL DOCUMENT

Term loan principal repayments (Details) - Jun. 30, 2018 $ in Thousands, $ in Thousands	USD ($)	CAD ($)
2018	$ 377	$ 496
2019	717	945
2020	717	945
2021	$ 464	$ 610

XML 55 R44.htm IDEA: XBRL DOCUMENT

Schedule of Convertible Debt (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Convertible Debt	$ 5,771	$ 6,058
Transaction costs	(939)	(986)
Accretion	262	127
Convertible debentures	$ 5,094	$ 5,199

XML 56 R45.htm IDEA: XBRL DOCUMENT

Schedule of Capital Units (Details) $ in Thousands	6 Months Ended
Schedule of Capital Units (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Capital Stock [Member]
Gross Proceeds of Units	$ 1,627
Transaction Costs of Units	167
Net Proceeds of Units	1,460
Convertible debt [Member]
Gross Proceeds of Units	1,086
Transaction Costs of Units	111
Net Proceeds of Units	975
Warrants [Member]
Gross Proceeds of Units	487
Transaction Costs of Units	50
Net Proceeds of Units	437
Gross Proceeds of Units	3,200
Transaction Costs of Units	328
Net Proceeds of Units	$ 2,872

XML 57 R46.htm IDEA: XBRL DOCUMENT

Schedule of Components of the Convertible Notes (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Attributed value of net proceeds to convertible notes	$ 975
Accretion	22
Convertible notes	$ 997	$ 0

XML 58 R47.htm IDEA: XBRL DOCUMENT

Schedule of Stock by Class (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Par or Stated Value Per Share	$ 0.00001	$ 0.00001
Preferred Stock, Shares Authorized	20,000,000
Preferred Stock, Par or Stated Value Per Share	$ 0.00001
Common Stock, Shares, Issued	70,547,267	67,031,467
Common Stock, Value, Issued	$ 1	$ 1

XML 59 R48.htm IDEA: XBRL DOCUMENT

Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Total Revenues	$ 234	$ 1,126	$ 473	$ 2,479	$ 2,479
Research and development agreements [Member]
Total Revenues			473	245
Licensing Agreements [Member]
Total Revenues			0	405
Deferred revenue [Member]
Total Revenues			$ 0	$ 1,829

XML 60 R49.htm IDEA: XBRL DOCUMENT

Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Total Revenues	$ 234	$ 1,126	$ 473	$ 2,479	$ 2,479
Transferred at Point in Time [Member]
Total Revenues			0	405
Transferred over Time [Member]
Total Revenues			$ 473	$ 2,074

XML 61 R50.htm IDEA: XBRL DOCUMENT

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018
Total Revenues	$ 234	$ 1,126	$ 473	$ 2,479	$ 2,479
Europe [Member]
Total Revenues			410	245
Canada [Member]
Total Revenues			63	375
U.S. [Member]
Total Revenues			0	1,829
Other foreign countries [Member]
Total Revenues			$ 0	$ 30

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Delaware	87-0638336
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)