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TAXATION (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Effective Income Tax Reconciliation

The reasons for the differences and the related tax effects are as follows (in thousands):

	YEAR ENDED DECEMBER 31,

	2012			2011
Statutory federal and provincial taxes	$	(5,446	)	$	(2,777	)
Increase (decrease) in taxes recoverable resulting from:
Effect of change in valuation allowance		5,145			2,829
Non-deductible stock-based compensation		539			267
Non-deductible expenses for tax purposes		3			2
Tax credits not taxable in Quebec		(70	)		(106	)
Share issue costs		(183	)		(112	)
Tax benefits on capitalized expenses		(1	)		(24	)
Effect of foreign jurisdiction tax expense		39			—
Other differences		13			(79	)

Income tax expense	$	39		$	—

Schedule of components of income tax expense

The provision for the income tax expense, which relates to the United States, are as follows and relate to the wholly-owned subsidiary MethylGene US Inc. (in thousands):

	YEAR ENDED DECEMBER 31,

	2012		2011
Current income tax expense
Current period	$	39	$	—

Income tax expense	$	39	$	—

Schedule of deferred tax

Deferred tax relates to the following (in thousands):

	DECEMBER 31,

Deferred tax asset	2012			2011
Assets
Tangible and intangible depreciable assets	$	853		$	833
Inventory		757			474
Provisions		30			8
Financing fees		628			414
Net operating loss carry forwards		6,883			3,490
Scientific research and experimental development expenditures		4,245			2,406

Deferred tax assets		13,396			7,625
Valuation allowance		(13,396	)		(7,625	)

Net deferred tax assets	$	—		$	—

Schedule of expiration of NOLs

The NOLs expire as follows (in thousands):

	Federal		Provincial

Expires in:
2030	$	5,907	$	5,984
2031		7,059		7,066
2032		12,547		12,632

	$	25,513	$	25,682

Schedule of reconciliation of the beginning and ending gross amounts of unrecognized tax positions

A reconciliation of the beginning and ending gross amounts of unrecognized tax positions adopted by the Company are as follows (in thousands):

	FEDERAL				PROVINCIAL

	DECEMBER 31,				DECEMBER 31,
	2012		2011		2012		2011
Unrecognized tax positions, beginning of year	$	157	$	155	$	3	$	1
Gross decrease — current period tax positions		—		—		—		—
Gross increase — current period tax positions		2		2		2		2

Unrecognized tax positions, end of year	$	159	$	157	$	5	$	3

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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