Exhibit
|
Description
|
|
99.1
|
Management
Discussion And Analysis Of Financial Condition And Results Of
Operations for the Three and Nine Months Ended August 31,
2021
|
|
99.2
|
Condensed
Unaudited Interim Consolidated Financial Statements and Notes to
Condensed Unaudited Interim Consolidated Financial Statements of
Intellipharmaceutics International Inc. for the Three and Nine
Months Ended August 31, 2021
|
|
99.3
|
News
Release dated October 15, 2020 - Intellipharmaceutics Announces
Third Quarter 2021 Results
|
|
99.4
|
Form
52-109F2 - Chief Executive Officer
|
|
99.5
|
Form
52-109F2 - Chief Financial Officer
|
|
|
|
|
Exhibit
Number
|
Description
|
|
101.INS
|
|
XBRL Instance
Document
|
101.SCH
|
|
XBRL Schema
Document
|
101.CAL
|
|
XBRL Calculation
Linkbase Document
|
101.DEF
|
|
XBRL Definition
Linkbase Document
|
101.LAB
|
|
XBRL Label Linkbase
Document
|
101.PRE
|
|
XBRL Presentation
Linkbase Document
|
|
|
Intellipharmaceutics
International Inc.
(Registrant)
/s/ Dr. Amina Odidi
|
Date:
October 15, 2021
|
|
Dr.
Amina Odidi
President/COO, Acting Chief Financial Officer
|
Generic name
|
Brand
|
Indication
|
Stage of
Development(1)
|
Regulatory Pathway
|
Rights(2)
|
Dexmethylphenidate hydrochloride extended-release
capsules
|
Focalin XR®
|
Attention deficit hyperactivity disorder
|
Received final approval for 5, 10, 15, 20, 25, 30, 35 and 40 mg
strengths from FDA(3)
|
ANDA
|
Intellipharmaceutics and Par (US)
Philippines rights subject to licensing and distribution
agreement
|
Levetiracetam extended-release tablets
|
Keppra XR®
|
Partial onset seizures for epilepsy
|
Received final approval for the 500 and 750 mg strengths from
FDA
|
ANDA
|
ANDA Repository(4)
|
Venlafaxine hydrochloride extended-release capsules
|
Effexor XR®
|
Depression
|
Received final approval for 37.5, 75 and 150 mg strengths from
FDA
|
ANDA
|
Intellipharmaceutics .
|
Pantoprazole sodium delayed- release tablets
|
Protonix®
|
Conditions associated with gastroesophageal reflux
disease
|
ANDA Application for commercialization approval for 2 strengths
under review by FDA
|
ANDA
|
Intellipharmaceutics
|
Metformin hydrochloride extended-release tablets
|
Glucophage® XR
|
Management of type 2 diabetes
|
Received final approval for 500 and 750 mg strengths from
FDA
|
ANDA
|
Intellipharmaceutics
Philippines and Vietnamese rights subject to licensing and
distribution agreements
|
Quetiapine fumarate extended-release tablets
|
Seroquel XR®
|
Schizophrenia, bipolar disorder & major depressive
disorder
|
Received final FDA approval for all 5 strengths. .
|
ANDA
ANDS
|
Intellipharmaceutics .
Philippines, Malaysian and Vietnamese rights subject to licensing
and distribution agreements
..
|
Generic name
|
Brand
|
Indication
|
Stage
of Development(1)
|
Regulatory Pathway
|
Rights(2)
|
Lamotrigine extended-release tablets
|
Lamictal® XR™
|
Anti-convulsant for epilepsy
|
ANDA application for commercialization approval for 6 strengths
under review by FDA
|
ANDA
|
Intellipharmaceutics
|
Desvenlafaxine extended-release tablets
|
Pristiq®
|
Depression
|
Received approval for the 50 and 100 mg strengths from
FDA
ANDS under review by Health Canada
|
ANDA
ANDS
|
Intellipharmaceutics .
|
Carvedilol phosphate extended-release capsules
|
Coreg CR®
|
Heart failure, hypertension
|
Late-stage development
|
ANDA
|
Intellipharmaceutics
|
Oxycodone hydrochloride controlled-release capsules
|
|
Pain
|
NDA application accepted February 2017 and under review by FDA.
Second FDA Advisory Committees meeting held January 2020. Awaiting
action from FDA
|
NDA 505(b)(2)
|
Intellipharmaceutics
|
Pregabalin extended-release capsules
|
|
Neuropathic pain
|
IND application submitted in August 2015
|
NDA 505(b)(2)
|
Intellipharmaceutics
|
Ranolazine extended-release tablets
|
Ranexa®
|
Chronic angina
|
ANDA application for commercialization approval for 2 strengths
under review by FDA
|
ANDA
|
Intellipharmaceutics
|
Oxycodone hydrochloride immediate release tablets
(IPCI006)
|
|
Pain
|
IND application submitted in November 2018
|
NDA 505(b)(2)
|
Intellipharmaceutics
|
|
For the three months ended
|
For the nine months ended
|
||
|
August 31,
|
August 31,
|
August 31,
|
August 31,
|
|
2021
|
2020
|
2021
|
2020
|
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|
$
|
$
|
$
|
$
|
Revenue:
|
-
|
328,781
|
-
|
1,102,075
|
Expenses:
|
1,083,822
|
1,458,221
|
2,775,587
|
4,317,977
|
Net
income (loss) from operations
|
(1,264,305)
|
1,026,941
|
(3,189,055)
|
(1,768,865)
|
Net
income (loss) per common share
|
|
|
|
|
Basic
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
Diluted
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
|
As at
|
|
|
|
|
August
31, 2021
|
November 30,
2020
|
|
|
|
(unaudited)
|
(audited)
|
|
|
|
$
|
$
|
|
|
Cash
|
1,107,698
|
202,046
|
|
|
Total
assets
|
3,456,856
|
3,387,055
|
|
|
|
|
|
|
|
Convertible
debentures
|
1,707,844
|
1,791,791
|
|
|
Total
liabilities
|
9,624,620
|
9,700,644
|
|
|
Shareholders'
deficiency
|
(6,167,764)
|
(6,313,589)
|
|
|
Total
liabilities and shareholders' equity
|
3,456,856
|
3,387,055
|
|
|
|
For the three months ended
|
For the nine months ended
|
||||||
|
August 31, 2021
|
August 31, 2020
|
|
August 31, 2021
|
August 31, 2020
|
|
||
|
(unaudited)
|
(unaudited)
|
Change
|
(unaudited)
|
(unaudited)
|
Change
|
||
|
$
|
$
|
|
%
|
$
|
$
|
$
|
%
|
Revenue:
|
|
|
|
|
|
|
|
|
Licensing
|
-
|
328,781
|
(328,781)
|
-100%
|
-
|
1,102,075
|
(1,102,075)
|
-100%
|
|
-
|
328,781
|
|
|
-
|
1,102,075
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
723,224
|
842,846
|
(119,622)
|
-14%
|
1,658,961
|
2,426,017
|
(767,056)
|
-32%
|
Selling, general and administrative
|
295,217
|
513,121
|
(217,904)
|
-42%
|
920,482
|
1,584,584
|
(664,102)
|
-42%
|
Depreciation
|
65,381
|
102,254
|
(36,873)
|
-36%
|
196,144
|
307,376
|
(111,232)
|
-36%
|
|
1,083,822
|
1,458,221
|
(374,399)
|
-26%
|
2,775,587
|
4,317,977
|
(1,542,390)
|
-36%
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
(1,083,822)
|
(1,129,440)
|
45,618
|
-4%
|
(2,775,587)
|
(3,215,902)
|
440,315
|
-14%
|
Net
foreign exchange (loss) gain
|
31,967
|
(189,538)
|
221,505
|
-117%
|
(45,982)
|
(144,684)
|
98,702
|
-68%
|
Interest
expense
|
(212,450)
|
(133,137)
|
(79,313)
|
60%
|
(367,486)
|
(887,335)
|
519,849
|
-59%
|
Other
income
|
-
|
2,500,000
|
(2,500,000)
|
100%
|
-
|
2,500,000
|
(2,500,000)
|
100%
|
Loss
on disposal of asset
|
-
|
(20,944)
|
20,944
|
-100%
|
-
|
(20,944)
|
20,944
|
-100%
|
|
|
|
|
|
|
|
|
|
Net
(loss) income for the period
|
(1,264,305)
|
1,026,941
|
(2,291,246)
|
-223%
|
(3,189,055)
|
(1,768,865)
|
(1,420,190)
|
80%
|
|
|
Net (loss)
|
(Loss)
income per share
|
|
|
Revenue
|
income
|
Basici
|
Dilutedi
|
Quarter
Ended
|
$
|
$
|
$
|
$
|
August
31, 2021
|
-
|
(1,264,305)
|
(0.04)
|
(0.04)
|
May
31, 2021
|
93,427
|
(1,000,184)
|
(0.04)
|
(0.04)
|
February
28, 2021
|
-
|
(924,566)
|
(0.04)
|
(0.04)
|
November
30, 2020
|
299,442
|
(1,622,100)
|
(0.07)
|
(0.07)
|
August
31, 2020
|
328,781
|
1,026,941
|
0.04
|
0.04
|
May
31, 2020
|
395,740
|
(1,048,433)
|
(0.04)
|
(0.04)
|
February
29, 2020
|
377,554
|
(1,747,373)
|
(0.08)
|
(0.08)
|
November
30, 2019
|
232,519
|
(1,333,074)
|
(0.04)
|
(0.04)
|
|
For the three months ended
|
For the nine months ended
|
|||||||
|
August 31,
|
August 31,
|
|
August 31,
|
August 31,
|
|
|||
|
2021
|
2020
|
|
2021
|
2020
|
|
|||
|
(unaudited)
|
(unaudited)
|
Change
|
(unaudited)
|
(unaudited)
|
Change
|
|||
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
Cash flows provided (used in) from operating
activities
|
(1,362,433)
|
721,527
|
(2,083,960)
|
-289%
|
(2,125,576)
|
729,003
|
(2,854,579)
|
-392%
|
|
Cash flows provided from (used in) financing
activities
|
-
|
-
|
-
|
0%
|
3,031,228
|
-
|
3,031,228
|
100%
|
|
Cash flows provided from investing activities
|
-
|
4,931
|
(4,931)
|
-100%
|
-
|
4,931
|
(4,931)
|
-100%
|
|
(Decrease) increase in cash
|
(1,362,433)
|
726,458
|
(2,088,891)
|
-288%
|
905,652
|
733,934
|
171,718
|
23%
|
|
Cash, beginning of period
|
2,470,131
|
72,098
|
2,398,033
|
3326%
|
202,046
|
64,622
|
137,424
|
213%
|
|
Cash, end of period
|
1,107,698
|
798,556
|
309,142
|
39%
|
1,107,698
|
798,556
|
309,142
|
39%
|
|
|
Less
than
|
3 to
6
|
6 to
9
|
9
months
|
Greater
than
|
|
|
3
months
|
months
|
months
|
to 1
year
|
1
year
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
$
|
Accounts
payable
|
3,772,774
|
-
|
-
|
-
|
-
|
3,772,774
|
Accrued
liabilities
|
1,863,969
|
-
|
-
|
-
|
-
|
1,863,969
|
Employee
costs payable
|
2,029,247
|
-
|
-
|
-
|
-
|
2,029,247
|
Operating
lease liability
|
42,106
|
-
|
-
|
-
|
-
|
42,106
|
Convertible
debentures
|
1,800,000
|
-
|
-
|
-
|
-
|
1,800,000
|
Promissory
notes payable
|
168,100
|
-
|
-
|
-
|
-
|
168,100
|
Total
contractual obligations
|
9,676,196
|
-
|
-
|
-
|
-
|
9,676,196
|
2
|
|
Condensed unaudited
interim consolidated statements of operations and comprehensive
loss
|
3
|
Condensed unaudited
interim consolidated statements of shareholders’ equity
(deficiency)
|
4
|
Condensed unaudited
interim consolidated statements of cash flows
|
5
|
Notes to the
condensed unaudited interim consolidated financial
statements
|
6-31
|
Intellipharmaceutics International Inc.
|
|
|
Condensed
unaudited interim consolidated balance sheets
|
|
|
As
at
|
|
|
(Stated
in U.S. dollars)
|
|
|
|
August
31
|
November
30,
|
|
2021
|
2020
|
|
$
|
$
|
|
|
|
Assets
|
|
|
Current
|
|
|
Cash
|
1,107,698
|
202,046
|
Trade
and other receivables, net
|
-
|
566,384
|
Investment
tax credits
|
482,135
|
482,135
|
Prepaid
expenses, sundry and other assets
|
150,852
|
115,750
|
Inventory
(Note 3)
|
103,983
|
112,672
|
|
1,844,668
|
1,478,987
|
|
|
|
Property
and equipment, net (Note 4)
|
1,573,993
|
1,770,137
|
Right-of-use
asset (Note 6)
|
38,195
|
137,931
|
|
3,456,856
|
3,387,055
|
|
|
|
Liabilities
|
|
|
Current
|
|
|
Accounts
payable
|
3,772,774
|
4,103,966
|
Accrued
liabilities
|
1,863,969
|
1,780,272
|
Employee
costs payable
|
2,029,247
|
1,665,236
|
Operating
lease liability (Note 6)
|
44,175
|
157,110
|
Income
tax payable
|
38,511
|
38,511
|
Promissory
notes payable (Note 5)
|
168,100
|
163,758
|
Convertible
debentures (Note 5)
|
1,707,844
|
1,791,791
|
|
9,624,620
|
9,700,644
|
|
|
|
|
9,624,620
|
9,700,644
|
|
|
|
Shareholders' deficiency
|
|
|
Capital
stock (Note 7)
|
|
|
Authorized
|
|
|
Unlimited
common shares without par value
|
|
|
Unlimited
preference shares
|
|
|
Issued
and outstanding
|
|
|
33,092,665
common shares
|
49,175,630
|
46,144,402
|
(November
30, 2020 - 23,678,105)
|
|
|
Additional
paid-in capital
|
44,657,790
|
44,354,138
|
Accumulated
other comprehensive income
|
284,421
|
284,421
|
Accumulated
deficit
|
(100,285,605)
|
(97,096,550)
|
|
(6,167,764)
|
(6,313,589)
|
Contingencies
(Note 12)
|
|
|
|
3,456,856
|
3,387,055
|
|
|
|
|
|
|
See
accompanying notes to the condensed unaudited interim consolidated
financial statements
|
|
|
Intellipharmaceutics International Inc.
|
|
|
|
|
Condensed
unaudited interim consolidated statements of operations and
comprehensive income (loss)
|
|
|||
For
the three and nine months ended August 31, 2021 and 2020
|
|
|||
(Stated
in U.S. dollars)
|
|
|
|
|
|
Three months ended
|
Nine months ended
|
||
|
August
31, 2021
|
August
31, 2020
|
August
31, 2021
|
August
31, 2020
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
|
|
Licensing
(Note 3)
|
-
|
328,781
|
-
|
1,102,075
|
Up-front
fees (Note 3)
|
-
|
-
|
-
|
-
|
|
-
|
328,781
|
-
|
1,102,075
|
|
|
|
|
|
Cost of good sold
|
|
|
|
|
Cost
of goods sold
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Gross Margin
|
-
|
328,781
|
-
|
1,102,075
|
|
|
|
|
|
Expenses
|
|
|
|
|
Research
and development
|
723,224
|
842,846
|
1,658,961
|
2,426,017
|
Selling,
general and administrative
|
295,217
|
513,121
|
920,482
|
1,584,584
|
Depreciation
(Note 4)
|
65,381
|
102,254
|
196,144
|
307,376
|
|
1,083,822
|
1,458,221
|
2,775,587
|
4,317,977
|
|
|
|
|
|
Loss
from operations
|
(1,083,822)
|
(1,129,440)
|
(2,775,587)
|
(3,215,902)
|
Net
foreign exchange gain (loss)
|
31,967
|
(189,538)
|
(45,982)
|
(144,684)
|
Interest
income
|
-
|
-
|
-
|
-
|
Interest
expense
|
(212,450)
|
(133,137)
|
(367,486)
|
(887,335)
|
Financing
cost
|
-
|
-
|
-
|
-
|
Other
income (Note 13)
|
-
|
2,500,000
|
-
|
2,500,000
|
Loss
on disposal of asset
|
-
|
(20,944)
|
-
|
(20,944)
|
Net
(loss) income and comprehensive (loss) income
|
(1,264,305)
|
1,026,941
|
(3,189,055)
|
(1,768,865)
|
|
|
|
|
|
Net
(loss) income per common share
|
|
|
|
|
Basic
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
Diluted
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
|
|
|
|
|
Weighted
average number of common shares outstanding
|
|
|
|
|
Basic
|
33,092,665
|
23,678,105
|
28,213,586
|
23,523,512
|
Diluted
|
33,092,665
|
25,761,438
|
28,213,586
|
23,523,512
|
|
|
|
|
|
See
accompanying notes to condensed unaudited interim consolidated
financial statements
|
|
|
|
|
Intellipharmaceutics International Inc.
|
|
|
|
|
|
|
Condensed
unaudited interim consolidated statements of shareholders' equity
(deficiency)
|
|
|||||
For
the nine months ended August 31, 2021 and 2020
|
|
|||||
(Stated
in U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
Total
|
|
|
Capital
|
Additional
|
other
|
|
shareholders'
|
|
|
stock
|
paid-in
|
comprehensive
|
Accumulated
|
equity
|
|
Number
|
amount
|
capital
|
income
|
deficit
|
(deficiency)
|
|
|
$
|
$
|
$
|
$
|
$
|
Balance, November 30, 2019
|
22,085,856
|
45,561,222
|
44,167,721
|
284,421
|
(93,705,585)
|
(3,692,221)
|
Stock
options to employees (Note 8)
|
-
|
-
|
78,865
|
-
|
-
|
78,865
|
Cashless
exercise of 2018 Pre-Funded Warrants (Note 10)
|
1,592,249
|
583,180
|
(583,180)
|
-
|
-
|
-
|
Beneficial
conversion feature related to Debentures (Note 5)
|
-
|
-
|
697,952
|
-
|
-
|
697,952
|
Net
loss
|
-
|
-
|
-
|
-
|
(1,768,865)
|
(1,768,865)
|
Balance, August 31, 2020
|
23,678,105
|
46,144,402
|
44,361,358
|
284,421
|
(95,474,450)
|
(4,684,269)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, November 30, 2020
|
23,678,105
|
46,144,402
|
44,354,138
|
284,421
|
(97,096,550)
|
(6,313,589)
|
Stock
options to employees (Note 8)
|
-
|
-
|
11,985
|
-
|
-
|
11,985
|
Proceeds
from private placement financing (Note 7)
|
9,414,560
|
3,069,448
|
-
|
-
|
-
|
3,069,448
|
Cost
of private placement financing (Note 7)
|
-
|
(38,220)
|
-
|
-
|
-
|
(38,220)
|
Beneficial
conversion feature related to Debentures (Note 5)
|
-
|
-
|
291,667
|
-
|
-
|
291,667
|
Net
loss
|
-
|
-
|
-
|
-
|
(3,189,055)
|
(3,189,055)
|
Balance, August 31, 2021
|
33,092,665
|
49,175,630
|
44,657,790
|
284,421
|
(100,285,605)
|
(6,167,764)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intellipharmaceutics International Inc.
|
|
|
|
|
Condensed
unaudited interim consolidated statements of cash flows
|
|
|||
For
the three and nine months ended August 31, 2021 and 2020
|
|
|||
(Stated
in U.S. dollars)
|
|
|
|
|
|
Three
months ended
|
Nine
months ended
|
||
|
August
31, 2021
|
August
31, 2020
|
August
31, 2021
|
August
31, 2020
|
|
$
|
$
|
$
|
$
|
Net income (loss )
|
(1,264,305)
|
1,026,941
|
(3,189,055)
|
(1,768,865)
|
Items
not affecting cash
|
|
|
|
|
Depreciation
(Note 4)
|
65,381
|
102,254
|
196,144
|
307,376
|
Stock-based
compensation (Note 8)
|
-
|
12,884
|
11,985
|
78,865
|
Accreted
interest on convertible debenture (Note 5)
|
157,844
|
80,490
|
207,726
|
722,330
|
Loss
on disposal of equipment (Note 4)
|
-
|
20,944
|
-
|
20,944
|
Non-cash
lease expense
|
37,738
|
-
|
100,391
|
-
|
Unrealized
foreign exchange loss
|
(10,002)
|
8,462
|
3,681
|
2,978
|
|
|
|
|
|
Change
in non-cash operating assets & liabilities
|
|
|
|
|
Trade
and other receivables
|
119,255
|
(283,204)
|
566,384
|
(346,681)
|
Investment
tax credits
|
-
|
140,101
|
-
|
140,101
|
Inventory
|
8,689
|
-
|
8,689
|
102,375
|
Prepaid
expenses, sundry and other assets
|
(69,040)
|
87,411
|
(35,102)
|
52,061
|
Accounts
payable, accrued liabilities and employee costs
payable
|
(367,005)
|
(474,756)
|
116,516
|
1,417,519
|
Operating
lease liability
|
(40,988)
|
-
|
(112,935)
|
-
|
Cash
flows (used in) provided from operating activities
|
(1,362,433)
|
721,527
|
(2,125,576)
|
729,003
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds
from private placement financing (Note 7)
|
-
|
-
|
3,069,448
|
-
|
Cost
related to private placement financing (Note 7)
|
-
|
-
|
(38,220)
|
-
|
Cash
flows provided from financing activities
|
-
|
-
|
3,031,228
|
-
|
|
|
|
|
|
Investing activity
|
|
|
|
|
Purchase
of property and equipment (Note 4)
|
-
|
(3,875)
|
-
|
(3,875)
|
Sale
of property and equipment (Note 4)
|
-
|
8,806
|
-
|
8,806
|
Cash
flows provided from investing activities
|
-
|
4,931
|
-
|
4,931
|
|
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash
|
(1,362,433)
|
726,458
|
905,652
|
733,934
|
Cash,
beginning of period
|
2,470,131
|
72,098
|
202,046
|
64,622
|
|
|
|
|
|
Cash, end of period
|
1,107,698
|
798,556
|
1,107,698
|
798,556
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
Interest
paid
|
-
|
-
|
-
|
-
|
Taxes
paid
|
-
|
-
|
-
|
-
|
|
|
|
|
|
See
accompanying notes to condensed unaudited interim consolidated
financial statements
|
|
|
|
|
|
Computer
equipment
|
Computer
software
|
Furniture
and fixtures
|
Laboratory
equipment
|
Leasehold
improvements
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
$
|
Cost
|
|
|
|
|
|
|
Balance
at November 30, 2019
|
631,334
|
156,059
|
172,498
|
5,664,253
|
1,441,452
|
8,065,596
|
Additions
|
-
|
-
|
-
|
3,875
|
-
|
3,875
|
Disposals
|
-
|
-
|
-
|
(91,769)
|
-
|
(91,769)
|
Balance
at November 30, 2020
|
631,334
|
156,059
|
172,498
|
5,576,359
|
1,441,452
|
7,977,702
|
Balance
at August 31, 2021
|
631,334
|
156,059
|
172,498
|
5,576,359
|
1,441,452
|
7,977,702
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
Balance
at November 30, 2019
|
496,138
|
149,826
|
138,893
|
3,648,717
|
1,358,616
|
5,792,190
|
Depreciation
|
40,559
|
3,116
|
6,721
|
282,143
|
82,836
|
415,375
|
Balance
at November 30, 2020
|
536,697
|
152,942
|
145,614
|
3,930,860
|
1,441,452
|
6,207,565
|
Depreciation
|
21,293
|
1,169
|
4,032
|
169,650
|
-
|
196,144
|
Balance
at August 31, 2021
|
557,990
|
154,111
|
149,646
|
4,100,510
|
1,441,452
|
6,403,709
|
|
|
|
|
|
|
|
Net book value at:
|
|
|
|
|
|
|
November
30, 2020
|
94,637
|
3,117
|
26,884
|
1,645,499
|
-
|
1,770,137
|
August
31, 2021
|
73,344
|
1,948
|
22,852
|
1,475,849
|
-
|
1,573,993
|
|
August
31,
|
November
30,
|
|
2021
|
2020
|
Convertible
debenture payable to two directors and officers of the
|
|
|
Company, unsecured, 10% annual interest rate,
|
|
|
payable monthly (“2018 Debenture”)
|
$500,000
|
$500,000
|
|
|
|
Convertible
debenture payable to two directors and officers of the
|
|
|
Company, unsecured, 12% annual interest rate,
|
|
|
payable monthly (“May 2019 Debenture”)
|
1,050,000
|
1,050,000
|
|
|
|
Convertible
debenture payable to two directors and officers of the
|
|
|
Company, unsecured, 12% annual interest rate,
|
|
|
payable monthly (“November 2019
Debenture”)
|
157,844
|
241,791
|
|
$1,707,844
|
$1,791,791
|
|
August
31,
|
November
30,
|
|
2021
|
2020
|
|
$
|
$
|
Promissory
notes payable to two directors and officers
|
|
|
of the Company, unsecured, no annual interest
|
|
|
rate on the outstanding loan balance
|
168,100
|
163,758
|
|
|
|
|
168,100
|
163,758
|
|
August
31, 2021
|
November
30, 2020
|
|
|
|
Assets:
|
|
|
Operating
lease right-of-use asset
|
$38,195
|
$137,931
|
|
|
|
Liabilities:
|
|
|
Current:
|
|
|
Operating
lease liability
|
$44,175
|
$157,110
|
|
|
|
Total
lease liability
|
$44,175
|
$157,110
|
|
August
31, 2021
|
|
|
Remaining
lease term (months)
|
3
|
Estimated
incremental borrowing rate
|
11.4%
|
|
August
31, 2021
|
Lease
payments for the remainder of the year ending November 30,
2021
|
$44,962
|
Less
imputed interest
|
787
|
Present
value of lease liabilities
|
$44,175
|
|
August
31, 2021
|
August
31, 2020
|
||||
|
|
Weighted
|
|
|
Weighted
|
|
|
|
average
|
Weighted
|
|
average
|
Weighted
|
|
|
exercise
|
average
|
|
exercise
|
average
|
|
Number
of
|
price
per
|
grant
date
|
Number
of
|
price
per
|
grant
date
|
|
options
|
share
|
fair
value
|
options
|
share
|
fair
value
|
|
#
|
$
|
$
|
#
|
$
|
$
|
Outstanding,
beginning of period
|
1,697,638
|
2.92
|
1.99
|
2,353,829
|
8.35
|
4.30
|
Expired
|
-
|
-
|
-
|
(28,800)
|
18.10
|
11.00
|
Cancelled
|
(142,737)
|
1.07
|
0.58
|
(78,881)
|
0.38
|
0.23
|
Forfeited
|
-
|
-
|
-
|
(156,652)
|
0.35
|
0.22
|
Balance
at
|
|
|
|
|
|
|
end
of period
|
1,554,901
|
3.09
|
2.12
|
2,089,496
|
8.42
|
3.78
|
|
|
|
|
|
|
|
Options
exercisable end of period
|
1,554,901
|
3.09
|
2.12
|
1,554,504
|
12.45
|
6.19
|
Stock-based
compensation
|
Three
months ended
|
Nine
months ended
|
||
related
to:
|
August
31, 2021
|
August
31, 2020
|
August
31, 2021
|
August
31, 2020
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Research
and development
|
-
|
10,525
|
9,719
|
63,930
|
Selling,
general and administrative
|
-
|
2,359
|
2,266
|
14,935
|
|
-
|
12,884
|
11,985
|
78,865
|
|
Exercise
|
Number
|
|
Shares
issuable
|
Warrant
|
price
($)
|
outstanding
|
Expiry
|
upon
exercise
|
|
|
|
|
|
2018
Firm Warrants
|
0.75
|
20,000,000
|
October
16, 2023
|
20,000,000
|
October
2018 Placement Agent Warrants
|
0.9375
|
1,160,314
|
October
16, 2023
|
1,160,314
|
|
|
21,160,314
|
|
21,160,314
|
|
Outstanding,
December
1, 2020
|
Issued
|
Expired
|
Exercised
|
Outstanding,
August
31, 2021
|
June
2016 Warrants
|
277,478
|
-
|
(277,478)
|
-
|
-
|
March
2018 Warrants
|
441,666
|
-
|
(441,666)
|
-
|
-
|
March
2018 Placement
|
|
|
|
|
|
Agent
Warrants
|
44,166
|
-
|
(44,166)
|
-
|
-
|
2018
Firm Warrants
|
20,000,000
|
-
|
-
|
-
|
20,000,000
|
October
2018 Placement
|
|
|
|
|
|
Agent
Warrants
|
1,160,314
|
-
|
-
|
-
|
1,160,314
|
|
21,923,624
|
-
|
(763,310)
|
-
|
21,160,314
|
|
Outstanding,
December
1, 2019
|
Issued
|
Expired
|
Exercised
|
Outstanding,
August
31, 2020
|
June
2016 Warrants
|
277,478
|
-
|
-
|
-
|
277,478
|
October
2017 Warrants
|
181,818
|
-
|
-
|
-
|
181,818
|
October
2017 Placement
|
|
|
|
|
|
Agent
Warrants
|
18,181
|
-
|
-
|
-
|
18,181
|
March
2018 Warrants
|
441,666
|
-
|
-
|
-
|
441,666
|
March
2018 Placement
|
|
|
|
|
|
Agent
Warrants
|
44,166
|
-
|
-
|
-
|
44,166
|
2018
Firm Warrants
|
20,000,000
|
-
|
-
|
-
|
20,000,000
|
2018
Pre-Funded Warrants
|
1,616,667
|
-
|
-
|
(1,616,667)
|
-
|
October
2018 Placement
|
|
|
|
|
|
Agent
Warrants
|
1,160,314
|
-
|
-
|
-
|
1,160,314
|
|
23,740,290
|
-
|
-
|
(1,616,667)
|
22,123,623
|
|
August
31, 2021
|
November
30, 2020
|
||
|
Carrying
|
Fair
|
Carrying
|
Fair
|
|
amount
|
value
|
amount
|
value
|
|
$
|
$
|
$
|
$
|
Financial
Liabilities
|
|
|
|
|
Convertible debentures(i)
|
1,707,844
|
1,798,842
|
1,789,188
|
1,784,646
|
Promissory notes payable(i)
|
168,100
|
168,100
|
163,758
|
163,758
|
|
August
31,
|
November
30,
|
|
2021
|
2020
|
|
$
|
$
|
|
|
|
Accounts
receivable
|
-
|
66,384
|
Other
receivable
|
-
|
500,000
|
Less
allowance for doubtful accounts
|
-
|
-
|
Total
trade and other receivables, net
|
-
|
566,384
|
|
|
|
Not
past due
|
-
|
566,384
|
Past
due for more than 31 days
|
|
|
but no
more than 120 days
|
-
|
-
|
Past
due for more than 120 days
|
-
|
-
|
Total
trade and other receivables, gross
|
-
|
566,384
|
|
Less
than
|
3
to 6
|
6
to 9
|
9
months
|
Greater
than
|
|
|
3
months
|
months
|
months
|
to
1 year
|
1
year
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
$
|
Accounts
payable
|
3,772,774
|
-
|
-
|
-
|
-
|
3,772,774
|
Accrued
liabilities
|
1,863,969
|
-
|
-
|
-
|
-
|
1,863,969
|
Employee
costs payable
|
2,029,247
|
-
|
-
|
-
|
-
|
2,029,247
|
Operating
lease liability (Note 6)
|
42,106
|
-
|
-
|
-
|
-
|
42,106
|
Convertible
debentures (Note 5)
|
1,800,000
|
-
|
-
|
-
|
-
|
1,800,000
|
Promissory
notes payable (Note 5)
|
168,100
|
-
|
-
|
-
|
-
|
168,100
|
Total
contractual obligations
|
9,676,196
|
-
|
-
|
-
|
-
|
9,676,196
|
|
Three
months ended
|
Nine
months ended
|
||
|
August
31,
|
August
31,
|
August
31,
|
August
31,
|
|
2021
|
2020
|
2021
|
2020
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
|
|
United
States
|
-
|
328,781
|
-
|
1,102,075
|
|
|
|
|
|
|
|
|
August
31,
|
November
30,
|
|
|
|
2021
|
2020
|
|
|
|
$
|
$
|
Total
assets
|
|
|
|
|
Canada
|
|
|
3,456,856
|
3,387,055
|
|
|
|
|
|
Total
property and equipment
|
|
|
|
|
Canada
|
|
|
1,573,993
|
1,770,137
|
Page
31
|
Intellipharmaceutics International Inc.
|
|
|
Condensed
unaudited interim consolidated balance sheets
|
|
|
As
at
|
|
|
(Stated
in U.S. dollars)
|
|
|
|
August
31,
|
November
30,
|
|
2021
|
2020
|
|
$
|
$
|
|
|
|
Assets
|
|
|
Current
|
|
|
Cash
|
1,107,698
|
202,046
|
Trade
and other receivables, net
|
-
|
566,384
|
Investment
tax credits
|
482,135
|
482,135
|
Prepaid
expenses, sundry and other assets
|
150,852
|
115,750
|
Inventory
|
103,983
|
112,672
|
|
1,844,668
|
1,478,987
|
|
|
|
Property
and equipment, net
|
1,573,993
|
1,770,137
|
Right-of-use
asset
|
38,195
|
137,931
|
|
3,456,856
|
3,387,055
|
|
|
|
Liabilities
|
|
|
Current
|
|
|
Accounts
payable
|
3,772,774
|
4,103,966
|
Accrued
liabilities
|
1,863,969
|
1,780,272
|
Employee
costs payable
|
2,029,247
|
1,665,236
|
Operating
lease liability
|
44,175
|
157,110
|
Income
tax payable
|
38,511
|
38,511
|
Promissory
notes payable
|
168,100
|
163,758
|
Convertible
debentures
|
1,707,844
|
1,791,791
|
|
9,624,620
|
9,700,644
|
|
|
|
|
9,624,620
|
9,700,644
|
|
|
|
Shareholders' deficiency
|
|
|
Capital
stock
|
|
|
Authorized
|
|
|
Unlimited
common shares without par value
|
|
|
Unlimited
preference shares
|
|
|
Issued
and outstanding
|
|
|
33,092,665
common shares
|
49,175,630
|
46,144,402
|
(November
30, 2020 - 23,678,105)
|
|
|
Additional
paid-in capital
|
44,657,790
|
44,354,138
|
Accumulated
other comprehensive income
|
284,421
|
284,421
|
Accumulated
deficit
|
(100,285,605)
|
(97,096,550)
|
|
(6,167,764)
|
(6,313,589)
|
Contingencies
|
|
|
|
3,456,856
|
3,387,055
|
Intellipharmaceutics International Inc.
|
|
|
|
|
Condensed
unaudited interim consolidated statements of operations and
comprehensive income (loss)
|
|
|||
For
the three and nine months ended August 31, 2021 and
2020
|
|
|||
(Stated
in U.S. dollars)
|
|
|
|
|
|
Three months ended
|
Nine months ended
|
||
|
August
31, 2021
|
August
31, 2020
|
August
31, 2021
|
August
31, 2020
|
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Revenue
|
|
|
|
|
Licensing
|
-
|
328,781
|
-
|
1,102,075
|
|
-
|
328,781
|
-
|
1,102,075
|
|
|
|
|
|
Expenses
|
|
|
|
|
Research
and development
|
723,224
|
842,846
|
1,658,961
|
2,426,017
|
Selling,
general and administrative
|
295,217
|
513,121
|
920,482
|
1,584,584
|
Depreciation
|
65,381
|
102,254
|
196,144
|
307,376
|
|
1,083,822
|
1,458,221
|
2,775,587
|
4,317,977
|
|
|
|
|
|
Loss
from operations
|
(1,083,822)
|
(1,129,440)
|
(2,775,587)
|
(3,215,902)
|
Net
foreign exchange gain (loss)
|
31,967
|
(189,538)
|
(45,982)
|
(144,684)
|
Interest
income
|
-
|
-
|
-
|
-
|
Interest
expense
|
(212,450)
|
(133,137)
|
(367,486)
|
(887,335)
|
Financing
cost
|
-
|
-
|
-
|
-
|
Other
income
|
-
|
2,500,000
|
-
|
2,500,000
|
Loss
on disposal of asset
|
-
|
(20,944)
|
-
|
(20,944)
|
Net
(loss) income and comprehensive (loss) income
|
(1,264,305)
|
1,026,941
|
(3,189,055)
|
(1,768,865)
|
|
|
|
|
|
Net
(loss) income per common share
|
|
|
|
|
Basic
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
Diluted
|
(0.04)
|
0.04
|
(0.11)
|
(0.08)
|
|
|
|
|
|
Weighted
average number of common shares outstanding
|
|
|
|
|
Basic
|
33,092,665
|
23,678,105
|
28,213,586
|
23,523,512
|
Diluted
|
33,092,665
|
25,761,438
|
28,213,586
|
23,523,512
|
Intellipharmaceutics International Inc.
|
|
|
|
|
Condensed
unaudited interim consolidated statements of cash
flows
|
|
|||
For
the three and nine months ended August 31, 2021 and
2020
|
|
|||
(Stated
in U.S. dollars)
|
|
|
|
|
|
Three
months ended
|
Nine
months ended
|
||
|
August
31, 2021
|
August
31, 2020
|
August
31, 2021
|
August
31, 2020
|
|
$
|
$
|
$
|
$
|
Net income (loss )
|
(1,264,305)
|
1,026,941
|
(3,189,055)
|
(1,768,865)
|
Items
not affecting cash
|
|
|
|
|
Depreciation
|
65,381
|
102,254
|
196,144
|
307,376
|
Stock-based
compensation
|
-
|
12,884
|
11,985
|
78,865
|
Accreted
interest on convertible debenture
|
157,844
|
80,490
|
207,726
|
722,330
|
Loss
on disposal of equipment
|
-
|
20,944
|
-
|
20,944
|
Non-cash
lease expense
|
37,738
|
-
|
100,391
|
-
|
Unrealized
foreign exchange loss
|
(10,002)
|
8,462
|
3,681
|
2,978
|
|
|
|
|
|
Change
in non-cash operating assets & liabilities
|
|
|
|
|
Trade
and other receivables
|
119,255
|
(283,204)
|
566,384
|
(346,681)
|
Investment
tax credits
|
-
|
140,101
|
-
|
140,101
|
Inventory
|
8,689
|
-
|
8,689
|
102,375
|
Prepaid
expenses, sundry and other assets
|
(69,040)
|
87,411
|
(35,102)
|
52,061
|
Accounts
payable, accrued liabilities and employee costs
payable
|
(367,005)
|
(474,756)
|
116,516
|
1,417,519
|
Operating
lease liability
|
(40,988)
|
-
|
(112,935)
|
-
|
Cash
flows (used in) provided from operating activities
|
(1,362,433)
|
721,527
|
(2,125,576)
|
729,003
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds
from private placement financing
|
-
|
-
|
3,069,448
|
-
|
Cost
related to private placement financing
|
-
|
-
|
(38,220)
|
-
|
Cash
flows provided from financing activities
|
-
|
-
|
3,031,228
|
-
|
|
|
|
|
|
Investing activity
|
|
|
|
|
Purchase
of property and equipment (Note 4)
|
-
|
(3,875)
|
-
|
(3,875)
|
Sale
of property and equipment (Note 4)
|
-
|
8,806
|
-
|
8,806
|
Cash
flows provided from investing activities
|
-
|
4,931
|
-
|
4,931
|
|
|
|
|
|
|
|
|
|
|
(Decrease)
increase in cash
|
(1,362,433)
|
726,458
|
905,652
|
733,934
|
Cash,
beginning of period
|
2,470,131
|
72,098
|
202,046
|
64,622
|
|
|
|
|
|
Cash, end of period
|
1,107,698
|
798,556
|
1,107,698
|
798,556
|
|
|
|
|
|
Supplemental cash flow information
|
|
|
|
|
Interest
paid
|
-
|
-
|
-
|
-
|
Taxes
paid
|
-
|
-
|
-
|
-
|
Document And Entity Information |
9 Months Ended |
---|---|
Aug. 31, 2021 | |
Cover [Abstract] | |
Entity Registrant Name | Intellipharmaceutics International Inc. |
Document Type | 6-K |
Current Fiscal Year End Date | --11-30 |
Amendment Flag | false |
Entity Central Index Key | 0001474835 |
Document Period End Date | Aug. 31, 2021 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets (Parenthetical) - shares |
9 Months Ended | 12 Months Ended |
---|---|---|
Aug. 31, 2021 |
Nov. 30, 2020 |
|
Statement of Financial Position [Abstract] | ||
Common shares, authorized | Unlimited | Unlimited |
Common shares, issued | 33,092,665 | 23,678,105 |
Common shares, outstanding | 33,092,665 | 23,678,105 |
Consolidated Statements of Operations and Comprehensive Loss - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
|
Revenues | ||||
Licensing (Note 3) | $ 0 | $ 328,781 | $ 0 | $ 1,102,075 |
Up-front fees (Note 3) | 0 | 0 | 0 | 0 |
Revenues | 0 | 328,781 | 0 | 1,102,075 |
Cost of goods sold | 0 | 0 | 0 | |
Gross margin | 0 | 328,781 | 0 | 1,102,075 |
Expenses | ||||
Research and development | 723,224 | 842,846 | 1,658,961 | 2,426,017 |
Selling, general and administrative | 295,217 | 513,121 | 920,482 | 1,584,584 |
Depreciation (Note 4) | 65,381 | 102,254 | 196,144 | 307,376 |
Expenses | 1,083,822 | 1,458,221 | 2,775,587 | 4,317,977 |
Loss from operations | (1,083,822) | (1,129,440) | (2,775,587) | (3,215,902) |
Net foreign exchange gain (loss) | 31,967 | (189,538) | (45,982) | (144,684) |
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 212,450 | 133,137 | 367,486 | 887,335 |
Financing cost | 0 | 0 | 0 | 0 |
Other income | 0 | 2,500,000 | 0 | 2,500,000 |
Loss on disposal of asset | 0 | (20,944) | 0 | (20,944) |
Net (loss) income and comprehensive (loss) income | $ (1,264,305) | $ (1,026,941) | $ (3,189,055) | $ (1,768,865) |
(Loss) income per common share, basic | $ (0.04) | $ 0.04 | $ (0.11) | $ (0.08) |
(Loss) income per common share, diluted | $ (0.04) | $ 0.04 | $ (0.11) | $ (0.08) |
Weighted average number of common shares outstanding, basic | 33,092,665 | 23,678,105 | 28,213,586 | 23,523,512 |
Weighted average number of common shares outstanding, diluted | 33,092,665 | 25,761,438 | 28,213,586 | 23,523,512 |
Nature of Operations |
9 Months Ended |
---|---|
Aug. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Intellipharmaceutics International Inc. (the “Company”) is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. On October 22, 2009, IntelliPharmaCeutics Ltd. (“IPC Ltd. “) and Vasogen Inc. completed a court approved plan of arrangement and merger (the “IPC Arrangement Agreement”), resulting in the formation of the Company, which is incorporated under the laws of Canada. The Company’s common shares are traded on the Toronto Stock Exchange (“TSX”) and the OTCQB Venture Market. The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing and cost-plus payments on sales of resulting products. In November 2013, the U.S. Food and Drug Administration (“FDA”) granted the Company final approval to market the Company’s first product, the 15 mg and 30 mg strengths of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules. In 2017, the FDA granted final approval for the remaining 6 (six) strengths, all of which have been launched. In May 2017, the FDA granted the Company final approval for its second commercialized product, the 50, 150, 200, 300 and 400 mg strengths of generic Seroquel XR® (quetiapine fumarate extended release) tablets. In November 2018, the FDA granted the Company final approval for its venlafaxine hydrochloride extended-release capsules in the 37.5, 75, and 150 mg strengths. In May 2019, the Company received marketing approval from the FDA for its desvenlafaxine extended-release tablets in the 50 and 100 mg strengths, a generic of Pristiq®. In February 2016, the Company received final approval from the FDA for its generic of Keppra XR® (levetiracetam extended release) tablets for the 500 and 750 mg strengths. In February 2017, the Company received final approval from the FDA for metformin hydrochloride extended-release tablets in the 500 and 750 mg strengths, a generic equivalent of Glucophage® XR. Going concern The condensed unaudited interim consolidated financial statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. The Company has incurred losses from operations since inception and has reported losses of $1,264,305 and $3,189,055 for the three and nine months ended August 31, 2021 (three and nine months ended August 31, 2020 - $1,026,941 and $1,768,865) and has an accumulated deficit of $100,285,605 as at August 31, 2021 (November 30, 2020 - $97,096,550). The Company has a working capital deficiency of $7,779,952 as at August 31, 2021 (November 30, 2020 – $8,221,657). The Company has funded its research and development (“R&D”) activities principally through the issuance of securities, loans from related parties, funds from the IPC Arrangement Agreement, and funds received under development agreements. There is no certainty that such funding will be available going forward. These conditions raise substantial doubt about its ability to continue as a going concern and realize its assets and pay its liabilities as they become due. In order for the Company to continue as a going concern and fund any significant expansion of its operation or R&D activities, the Company may require significant additional capital. Although there can be no assurances, such funding may come from revenues from the sales of the Company’s generic Focalin XR® (dexmethylphenidate hydrochloride extended-release) capsules, and from potential partnering opportunities. Other potential sources of capital may include payments from licensing agreements, cost savings associated with managing operating expense levels, other equity and/or debt financings, and/or new strategic partnership agreements which fund some or all costs of product development. The Company’s ultimate success will depend on whether its product candidates receive the approval of the FDA, Health Canada, and the regulatory authorities of the other countries in which its products are proposed to be sold and whether it is able to successfully market approved products. The Company cannot be certain that it will receive FDA, Health Canada, or such other regulatory approval for any of its current or future product candidates, or that it will reach the level of sales and revenues necessary to achieve and sustain profitability, or that the Company can secure other capital sources on terms or in amounts sufficient to meet its needs, or at all.
The availability of equity or debt financing will be affected by, among other things, the results of the Company’s R&D, its ability to obtain regulatory approvals, its success in commercializing approved products with its commercial partners and the market acceptance of its products, the state of the capital markets generally, the delisting from Nasdaq, strategic alliance agreements, and other relevant commercial considerations. In addition, if the Company raises additional funds by issuing equity securities, its then existing security holders will likely experience dilution, and the incurring of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict its operations. In the event that the Company does not obtain sufficient additional capital, it will raise substantial doubt about the Company’s ability to continue as a going concern, realize its assets and pay its liabilities as they become due. The Company’s cash outflows are expected to consist primarily of internal and external R&D, legal and consulting expenditures to advance its product pipeline and selling, general and administrative expenses to support its commercialization efforts. Depending upon the results of the Company’s R&D programs, the impact of the litigation against the Company and the availability of financial resources, the Company could decide to accelerate, terminate, or reduce certain projects, or commence new ones. Any failure on its part to successfully commercialize approved products or raise additional funds on terms favorable to the Company or at all, may require the Company to significantly change or curtail its current or planned operations in order to conserve cash until such time, if ever, that sufficient proceeds from operations are generated, and could result in the Company not taking advantage of business opportunities, in the termination or delay of clinical trials or the Company not taking any necessary actions required by the FDA or Health Canada for one or more of the Company’s product candidates, in curtailment of the Company’s product development programs designed to identify new product candidates, in the sale or assignment of rights to its technologies, products or product candidates, and/or its inability to file Abbreviated New Drug Applications (“ANDAs”), Abbreviated New Drug Submissions (“ANDSs”) or New Drug Applications (“NDAs”) at all or in time to competitively market its products or product candidates. The condensed unaudited interim consolidated financial statements do not include any adjustments that might result from the outcome of uncertainties described above. If the going concern assumption no longer becomes appropriate for these condensed unaudited interim consolidated financial statements, then adjustments would be necessary to the carrying values of assets and liabilities, the reported expenses and the balance sheet classifications used. Such adjustments could be material. |
Basis of Presentation |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Aug. 31, 2021 | |||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Basis of Presentation |
These condensed unaudited interim consolidated financial statements include the accounts of the Company and its wholly owned operating subsidiaries, IPC Ltd., Intellipharmaceutics Corp., and Vasogen Corp. References in these condensed unaudited interim consolidated financial statements to share amounts, per share data, share prices, exercise prices and conversion rates have been adjusted to reflect the effect of the 1-for-10 reverse stock split (known as a share consolidation under Canadian law) (the “reverse split”) which became effective on each of The Nasdaq Stock Market LLC (“Nasdaq”) and TSX at the opening of the market on September 14, 2018. The term “share consolidation” is intended to refer to such reverse split and the terms “pre-consolidation” and “post-consolidation” are intended to refer to “pre-reverse split” and “post-reverse split”, respectively. In September 2018, the Company announced the reverse split. At a special meeting of the Company’s shareholders held on August 15, 2018, the Company’s shareholders granted the Company’s Board of Directors discretionary authority to implement a share consolidation of the issued and outstanding common shares of the Company on the basis of a share consolidation ratio within a range from five (5) pre-consolidation common shares for one (1) post-consolidation common share to fifteen (15) pre-consolidation common shares for one (1) post-consolidation common share. The Board of Directors selected a share consolidation ratio of ten (10) pre-consolidation shares for one (1) post-consolidation common share. On September 12, 2018, the Company filed an amendment to the Company’s articles ("Articles of Amendment") to implement the 1-for-10 reverse split. The Company’s common shares began trading on each of Nasdaq and TSX on a post-split basis under the Company’s existing trade symbol “IPCI” at the opening of the market on September 14, 2018. In accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), the change has been applied retroactively. The condensed unaudited interim consolidated financial statements do not conform in all respects to the annual requirements of U.S. GAAP. Accordingly, these condensed unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended November 30, 2020. These condensed unaudited interim consolidated financial statements have been prepared using the same accounting policies and methods as those used by the Company in the annual audited consolidated financial statements for the year ended November 30, 2020. The condensed unaudited interim consolidated financial statements reflect all adjustments necessary for the fair presentation of the Company’s financial position and results of operation for the interim periods presented. All such adjustments are normal and recurring in nature. All inter-company accounts and transactions have been eliminated on consolidation.
The preparation of the condensed unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. Areas where significant judgment is involved in making estimates are: the determination of the functional currency; the fair values of financial assets and liabilities; the determination of units of accounting for revenue recognition; the accrual of licensing and milestone revenue; and forecasting future cash flows for assessing the going concern assumption. The ongoing COVID-19 outbreak and pandemic present complex challenges and uncertainties to organizations across the world. Businesses face unprecedented times and with the situation being dynamic, the ultimate duration and magnitude of COVID-19’s impact on the economy and the Company’s business are not known at this time. Travel bans, self-quarantines and social distancing have caused material disruptions to businesses globally, resulting in economic slowdown, with global equity markets experiencing volatility and weakness. The Company has adjusted its R&D and business development/marketing activities according to the pandemic effects as it continues to work to try to ensure that operations continue while remaining committed to keeping its employees safe. The Company has also made arrangements for its employees to work under a government workshare program for eligible current employees whereby the Company is paying personnel only for a certain number of days a week and the government of Canada provides income support in the form of employment insurance. From late 2019, the Company has had to reduce development activities and staffing levels significantly due to ongoing financial problems which have continued, coupled with the effect of the COVID-19 pandemic. It is not possible to reliably estimate the length and severity of the developments and impact on the future financial results and condition of the Company. The challenges and uncertainties could impair the Company’s ability to raise capital, postpone research activities, impact the Company’s ability to maintain operations and launch new products; it could also impair the value of the Company’s shares, its long-lived assets, and materially adversely impact its ability to generate potential future revenue. |
Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 31, 2021 | ||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||
Significant Accounting Policies |
The Company accounts for revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (ASC 606). Under ASC 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify 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 revenues when (or as) the Company satisfies the performance obligation(s). The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing payments on sales of resulting products. The relevant revenue recognition accounting policy is applied to each separate unit of accounting. Licensing The Company recognizes revenue from the licensing of the Company's drug delivery technologies, products and product candidates. Under the terms of the licensing arrangements, the Company provides the customer with a right to access the Company’s intellectual property with regards to the license which is granted. Revenue arising from the license of intellectual property rights is recognized over the period the Company transfers control of the intellectual property. The Company has a license and commercialization agreement with Par Pharmaceutical Inc. (“Par”). Under the exclusive territorial license rights granted to Par, the agreement requires that Par manufacture, promote, market, sell and distribute the product. Licensing revenue amounts receivable by the Company under this agreement are calculated and reported to the Company by Par, with such amounts generally based upon net product sales and net profit which include estimates for chargebacks, rebates, product returns, and other adjustments. Licensing revenue payments received by the Company from Par under this agreement are not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this arrangement and the guidance per ASC 606, the Company records licensing revenue over the period the Company transfers control of the intellectual property in the condensed unaudited interim consolidated statements of operations and comprehensive loss. The Company also had a license and commercial supply agreement (the “Mallinckrodt agreement”) with Mallinckrodt LLC (“Mallinckrodt”) which provided Mallinckrodt an exclusive license to market, sell and distribute in the U.S. three drug product candidates for which the Company has ANDAs filed with the FDA, one of which (the Company’s generic Seroquel XR®) received final approval from the FDA in 2017. Under the terms of this agreement, the Company was responsible for the manufacture of approved products for subsequent sale by Mallinckrodt in the U.S. market. Following receipt of final FDA approval for its generic Seroquel XR®, the Company began shipment of manufactured product to Mallinckrodt. The Company recorded revenue once Mallinckrodt obtained control of the product and the performance obligation was satisfied. On April 12, 2019, Mallinckrodt and the Company mutually agreed to terminate the Mallinckrodt agreement, effective no later than August 31, 2019. Under the terms of the mutual agreement, Mallinckrodt was released from certain obligations under the agreement as of April 12, 2019. Effective August 12, 2019, the Mallinckrodt agreement was terminated. Licensing revenue in respect of manufactured product were reported as revenue in accordance with ASC 606. Once product was sold by Mallinckrodt, the Company received downstream licensing revenue amounts calculated and reported by Mallinckrodt, with such amounts generally based upon net product sales and net profit which included estimates for chargebacks, rebates, product returns, and other adjustments. Such downstream licensing revenue payments received by the Company under this Mallinckrodt agreement were not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this Mallinckrodt agreement and the guidance per ASC 606, the Company recorded licensing revenue as earned on a monthly basis. Milestones For milestone payments that are not contingent on sales-based thresholds, the Company applies a most-likely amount approach on a contract-by-contract basis. Management makes an assessment of the amount of revenue expected to be received based on the probability of the milestone outcome. Variable consideration is included in revenue only to the extent that it is probable that the amount will not be subject to a significant reversal when the uncertainty is resolved (generally when the milestone outcome is satisfied). Research and development Under arrangements where the license fees and research and development activities can be accounted for as a separate unit of accounting, non-refundable upfront license fees are deferred and recognized as revenue on a straight-line basis over the expected term of the Company's continued involvement in the research and development process. Deferred revenue Deferred revenue represents the funds received from clients, for which the revenues have not yet been earned, as the milestones have not been achieved, or in the case of upfront fees for drug development, where the work remains to be completed.
Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC Topic 730, Research and Development (ASC 730). However, materials and equipment are capitalized and amortized over their useful lives if they have alternative future uses.
Inventories comprise raw materials, work in process, and finished goods, which are valued at the lower of cost or market, on a first-in, first-out basis. Cost for work in process and finished goods inventories includes materials, direct labor, and an allocation of manufacturing overhead. Market for raw materials is replacement cost, and for work in process and finished goods is net realizable value. The Company evaluates the carrying value of inventories on a regular basis, taking into account such factors as historical and anticipated future sales compared with quantities on hand, the price the Company expects to obtain for products in their respective markets compared with historical cost and the remaining shelf life of goods on hand. As of August 31, 2021, the Company had raw materials inventories of $103,983 (November 30, 2020 - $112,672), work in process of $Nil (November 30, 2020 - $Nil) and finished goods inventory of $Nil (November 30, 2020 - $Nil) relating to the Company’s generic Seroquel XR® product. The recoverability of the cost of any pre-launch inventories with a limited shelf life is evaluated based on the specific facts and circumstances surrounding the timing of the anticipated product launch.
Transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the condensed unaudited interim consolidated statements of operations and comprehensive loss. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar.
On September 10, 2018, the Company completed a private placement financing (the “2018 Debenture Financing”) of an unsecured convertible debenture in the principal amount of $500,000 (the “2018 Debenture”). At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the 2018 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by a new debenture (the “May 2019 Debenture”). On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000, that was originally scheduled to mature on November 1, 2019, bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. At issuance, the conversion option was not characterized as an embedded derivative as it did not meet the criteria of ASC topic 815, Derivatives and Hedging. Also, at issuance, as the conversion price was higher than the market share price, conversion option was not bifurcated from its host contract and the total value of the convertible debenture was recognized as a liability. On August 26, 2019, the Company issued an unsecured convertible debenture in the principal amount of $140,800 (the “August 2019 Debenture”). At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the August 2019 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). In November 2019, the August 2019 Debenture was paid in full. On November 15, 2019, the Company issued an unsecured convertible debenture in the principal amount of $250,000 (the “November 2019 Debenture”) that was originally scheduled to mature on December 31, 2019, bears interest at a rate of 12% per annum and is convertible into common shares of the Company at a conversion price of $0.12 per share. At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the November 2019 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency).
The investment tax credits (“ITC") receivable are amounts considered recoverable from the Canadian federal and provincial governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The amounts claimed under the program represent the amounts based on management estimates of eligible research and development costs incurred during the year. Realization is subject to government approval. Any adjustment to the amounts claimed will be recognized in the year in which the adjustment occurs. Refundable ITCs claimed relating to capital expenditures are credited to property and equipment. Refundable ITCs claimed relating to current expenditures are netted against research and development expenditures.
Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive. The dilutive effect of stock options is determined using the treasury stock method. |
Property and Equipment |
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Property and Equipment |
As at August 31, 2021, there was $514,502 (November 30, 2020 - $514,502) of laboratory equipment that was not available for use and therefore, no depreciation has been recorded for such laboratory equipment. During the nine months ended August 31, 2020, the Company returned equipment in the amount of $32,269, which was unpaid previously. |
Convertible Debentures |
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Convertible Debentures |
Amounts due to the related parties are payable to two shareholders who are also officers and directors of the Company.
On January 10, 2013, the Company completed a private placement financing of the unsecured convertible 2013 Debenture in the original principal amount of $1.5 million, which was originally scheduled to mature on January 1, 2015. The 2013 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares at a conversion price of $30.00 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, shareholders, directors and executive officers of the Company purchased the 2013 Debenture and provided the Company with the original $1.5 million of the proceeds for the 2013 Debenture.
Effective October 1, 2014, the maturity date for the 2013 Debenture was extended to July 1, 2015. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $126,414, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 15% effective rate of interest.
Effective June 29, 2015, the July 1, 2015 maturity date for the 2013 Debenture was further extended to January 1, 2016. Under ASC 470-50, the change in the maturity date for the debt instrument resulted in an extinguishment of the original 2013 Debenture as the change in the fair value of the embedded conversion option was greater than 10% of the carrying amount of the 2013 Debenture. In accordance with ASC 470-50-40, the 2013 Debenture was recorded at fair value. The difference between the fair value of the convertible 2013 Debenture after the extension and the net carrying value of the 2013 Debenture prior to the extension of $114,023 was recognized as a loss on the statement of operations and comprehensive loss. The carrying amount of the debt instrument was accreted to the face amount of the 2013 Debenture over the remaining life of the 2013 Debenture using a 14.6% effective rate of interest. Effective December 8, 2015, the January 1, 2016 maturity date for the 2013 Debenture was further extended to July 1, 2016. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $83,101, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 6.6% effective rate of interest. Effective May 26, 2016, the July 1, 2016 maturity date for the 2013 Debenture was further extended to December 1, 2016. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $19,808, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 4.2% effective rate of interest. Effective December 1, 2016, the maturity date for the 2013 Debenture was further extended to April 1, 2017 and a principal repayment of $150,000 was made at the time of the extension. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $106,962, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 26.3% effective rate of interest. Effective March 28, 2017, the maturity date for the 2013 Debenture was further extended to October 1, 2017. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $113,607, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 15.2% effective rate of interest. Effective September 28, 2017, the maturity date for the 2013 Debenture was further extended to October 1, 2018. Under ASC 470-50, the change in the debt instrument was accounted for as a modification of debt. The increase in the fair value of the conversion option at the date of the modification, in the amount of $53,227, was recorded as a reduction in the carrying value of the debt instrument with a corresponding increase to Additional paid-in capital. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a 4.9% effective rate of interest. Effective October 1, 2018, the maturity date for the 2013 Debenture was further extended to April 1, 2019. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,350,000 and recorded the new convertible debt at the fair value of $1,350,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a nominal effective rate of interest. In December 2018, a principal repayment of $300,000 was made on the 2013 Debenture to Drs. Isa and Amina Odidi. Effective April 1, 2019, the maturity date for the 2013 Debenture was further extended to May 1, 2019. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the 2013 Debenture using a nominal effective rate of interest. On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by the May 2019 Debenture. On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000, that was originally scheduled to mature on November 1, 2019, bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors, and executive officers of the Company, are the holders of the May 2019 Debenture. Effective November 1, 2019, the maturity date for the May 2019 Debenture was extended to December 31, 2019. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective December 31, 2019, the December 31, 2019 maturity date for the May 2019 Debenture was further extended to February 1, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at December 31, 2019 of $427,119 was allocated to Additional paid-in capital. Subsequently, the fair value of the May 2019 Debenture was accreted over the remaining life of the May 2019 Debenture using an effective rate of interest of 782.7%. Effective January 31, 2020, the February 1, 2020 maturity date was further extended to March 31, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective March 31, 2020, the maturity date for the May 2019 Debenture was further extended to May 15, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective May 15, 2020, the maturity date for the May 2019 Debenture was further extended to June 12, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective June 12, 2020, the maturity date for the May 2019 Debenture was further extended to July 15, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument was accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective July 15, 2020, the maturity date for the May 2019 Debenture was further extended to December 31, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective December 31, 2020, the maturity date for the May 2019 Debenture was further extended to May 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective May 31, 2021, the maturity date for the May 2019 Debenture was further extended to July 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. Effective July 31, 2021, the maturity date for the May 2019 Debenture was further extended to October 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $1,050,000 and recorded the new convertible debt at the fair value of $1,050,000, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the May 2019 Debenture using a nominal effective rate of interest. On September 10, 2018, the Company completed a private placement financing of the unsecured convertible 2018 Debenture in the principal amount of $0.5 million. The 2018 Debenture matured on September 1, 2020. The 2018 Debenture bore interest at a rate of 10% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares of the Company at a conversion price of $3.00 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company provided the Company with the $0.5 million of the proceeds for the 2018 Debenture. At issuance, as the conversion price was lower than the market share price, the beneficial conversion feature valued at September 10, 2018 of $66,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the 2018 Debenture was accreted over the remaining life of the 2018 Debenture using an effective rate of interest of 7.3%. Effective September 1, 2020, the maturity date for the 2018 Debenture was further extended to November 30, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. Effective November 30, 2020, the maturity date for the 2018 Debenture was further extended to May 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. Effective May 31, 2021, the maturity date for the 2018 Debenture was further extended to July 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. Effective July 31, 2021, the maturity date for the 2018 Debenture was further extended to October 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment of debt. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $0.5 million and recorded the new convertible debt at the fair value of $0.5 million, resulting in no gain or loss. The carrying amount of the debt instrument is accreted over the remaining life of the 2018 Debenture using a nominal effective rate of interest. On August 26, 2019, the Company completed a private placement financing of the unsecured August 2019 Debenture in the principal amount of $140,800. The August 2019 Debenture was originally scheduled to mature on August 26, 2020, bore interest at a rate of 8% per annum, was pre-payable at any time at the option of the Company up to 180 days from date of issuance with pre-payment penalties ranging from 5% - 30% and was convertible at the option of the holder into common shares after 180 days at a conversion price which was equal to 75% of the market price (defined as the average of the lowest three (3) trading prices for the common shares during the twenty (20) trading day period prior to the conversion date). The Company incurred $15,800 in debt issuance costs of which $7,031 was debited to Additional paid-in capital and $8,769 was offset against the convertible debenture. At issuance, as the conversion price was lower than the market share price, the beneficial conversion feature valued at August 26, 2019 of $62,655 was allocated to Additional paid-in capital. Subsequently, the fair value of the August 2019 Debenture was accreted over the remaining life of the August 2019 Debenture using an effective rate of interest of 77.1%. In November 2019, the August 2019 Debenture was fully paid, and the value of the beneficial conversion feature was recalculated at settlement in the amount of $88,652, which was offset to Additional paid-in capital and $4,419 gain on settlement was recognized in the condensed unaudited interim consolidated statements of operations and comprehensive loss. On November 15, 2019, the Company completed a private placement financing of the unsecured convertible November 2019 Debenture in the principal amount of $0.25 million. The November 2019 Debenture was originally scheduled to mature on December 31, 2019. The November 2019 Debenture bore interest at a rate of 12% per annum, payable monthly, was pre-payable at any time at the option of the Company and was convertible at any time into common shares of the Company at a conversion price of $0.12 per common share at the option of the holder. Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company provided the Company with the $0.25 million of the proceeds for the November 2019 Debenture. At issuance, as the conversion price was lower than the market share price, the beneficial conversion feature valued at November 15, 2019 of $41,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 152.4%. Effective January 31, 2020, the December 31, 2019 maturity date for the November 2019 Debenture was further extended to March 31, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at January 31, 2020 of $125,000 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 504.4%. Effective March 31, 2020, the maturity date for the November 2019 Debenture was further extended to May 15, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at March 31, 2020 of $20,833 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 72.4%. Effective May 15, 2020, the maturity date for the November 2019 Debenture was further extended to June 12, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at May 15, 2020 of $41,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 260.9%. Effective June 12, 2020, the maturity date for the November 2019 Debenture was further extended to July 15, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at June 12, 2020 of $41,666 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 211.4%. Effective July 15, 2020, the maturity date for the November 2019 Debenture was further extended to December 31, 2020. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at July 15, 2020 of $41,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture was accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 40.0%. Effective December 31, 2020, the maturity date for the November 2019 Debenture was further extended to May 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at December 31, 2020 of $41,667 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture is accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 44.9%. Effective May 31, 2021, the maturity date for the November 2019 Debenture was further extended to July 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at May 31, 2021 of $125,000 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture is accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 496.1%. Effective July 31, 2021, the maturity date for the November 2019 Debenture was further extended to October 31, 2021. Under ASC 470-50, the change in the debt instrument was accounted for as an extinguishment. In accordance with ASC 470-50-40-2, extinguishment transactions between related entities are treated as capital transactions. At the date of extinguishment, the Company derecognized the carrying amount of convertible debt of $250,000 and recorded the new convertible debt at the fair value of $250,000, resulting in no gain or loss. As the conversion price was lower than the market share price, the beneficial conversion feature valued at July 31, 2021 of $125,000 was allocated to Additional paid-in capital. Subsequently, the fair value of the November 2019 Debenture is accreted over the remaining life of the November 2019 Debenture using an effective rate of interest of 309.6%. Accreted interest expense during the three and nine months ended August 31, 2021 is $157,844 and $207,726 respectively (three and nine months ended August 31, 2020 is $80,490 and $722,330) and has been included in interest expense in the condensed unaudited interim consolidated statements of operations and comprehensive loss. In addition, the coupon interest on the 2018 Debenture, May 2019 Debenture and November 2019 Debenture (collectively, the “Debentures”) for the three and nine months ended August 31, 2021 is $51,887 and $154,535 respectively (three and nine months ended August 31, 2020 – $50,628 and $151,334) and has also been included in interest expense in the condensed unaudited interim consolidated statements of operations and comprehensive loss.
In September 2019, the Company issued two unsecured, non-interest bearing promissory notes, with no fixed repayment terms, in the amounts of US$6,500 and CDN$203,886, to Dr. Isa Odidi and Dr. Amina Odidi, who are shareholders, directors and executive officers of the Company. |
Lease |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease | On December 1, 2015, the Company entered into a new lease agreement for the premises that it currently operates from, as well the adjoining property, which is owned by the same landlord, for a 5-year term with a 5-year renewal option. On June 21, 2020, the Company entered into a lease surrender agreement and vacated one of its premises on June 30, 2020. On August 20, 2020, The Company extended its lease for the premises that it currently operates from, for one year, commencing December 1, 2020, with an option to continue on a month-to-month basis after November 30, 2021. This operating lease was capitalized under ASC 842 effective on the August 20, 2020 date of extension. The gross amounts of assets and liabilities related to operating leases were as follows:
Operating lease costs, net of Canada Emergency Rent Subsidy (CERS) received, amounted to $39,401 and $79,952 for the three and nine months ended August 31, 2021 respectively and have been recorded in selling, general and administrative expenses in the condensed unaudited interim consolidated statements of operations and comprehensive loss. For the nine months ended August 31, 2021, lease payments of $127,205 were paid in relation to the operating lease liability. These payments have been offset by $34,709 received as part of the CERS COVID-19 relief program for net cash lease payments of $92,496. Lease terms and discount rates are as follows:
The approximate future minimum lease payments for the operating lease as at August 31, 2021 were as follows:
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Capital Stock |
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Aug. 31, 2021 | ||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||
Capital Stock | Authorized, issued and outstanding
for the warrants issued in connection with the exercise of the overallotment option was $0.01 per warrant, less in each case the underwriting discount. In addition, the Company issued 16,563,335 pre-funded units (“2018 Pre-Funded Units’), each 2018 Pre-Funded Unit consisting of one pre- funded warrant (a “2018 Pre-Funded Warrant”) to purchase one common share and one warrant (a “2018 Warrant”, and together with the 2018 Unit Warrants and the 2018 Option Warrants, the “2018 Firm Warrants”) to purchase one common share. The 2018 Pre-Funded Units were offered to the public at $0.74 each and a 2018 Pre-Funded Warrant is exercisable at $0.01 per share. Each 2018 Firm Warrant is exercisable immediately and has a term of five years and each 2018 Pre-Funded Warrant is exercisable immediately and until all 2018 Pre-Funded Warrants are exercised. The Company also issued warrants to the placement agents to purchase 1,160,314 common shares at an exercise price of $0.9375 per share (the “October 2018 Placement Agent Warrants”), which were exercisable immediately upon issuance. In aggregate, the Company issued 2,775,231 common shares, 16,563,335 2018 Pre-Funded Warrants and 20,000,000 2018 Firm Warrants in addition to 1,160,314 October 2018 Placement Agent Warrants.
The Company raised $14,344,906 in gross proceeds as part of October 2018 underwritten public offering. The Company recorded $1,808,952 as the value of common shares under Capital stock and $279,086 as the value of the 2018 Firm Warrants and $12,256,868 as the value of the 2018 Pre-Funded Warrants under Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). The direct costs related to the issuance of the common shares and warrants issued in October 2018 were $2,738,710 including the cost of October 2018 Placement Agent Warrants in the amount of $461,697. These direct costs were recorded as an offset against the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency) with $345,363 being recorded under Capital stock and $2,393,347 being recorded under Additional paid-in capital. During the three and nine months ended August 31, 2021, Nil (three and nine months ended August 31, 2020 – Nil and 1,592,249) common shares were issued upon the exercise of 2018 Pre-Funded Warrants. The Company has disclosed the terms used to value these warrants in Note 10.
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Options |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options | All grants of options to employees after October 22, 2009 are made from the Employee Stock Option Plan (the “Employee Stock Option Plan”). The maximum number of common shares issuable under the Employee Stock Option Plan is limited to 10% of the issued and outstanding common shares of the Company from time to time, or 3,309,267 based on the number of issued and outstanding common shares as at August 31, 2021. As at August 31, 2021, 1,554,901 options are outstanding and there were 1,754,366 options available for grant under the Employee Stock Option Plan. Each option granted allows the holder to purchase one common share at an exercise price not less than the closing price of the Company's common shares on the TSX on the last trading day prior to the grant of the option. Options granted under these plans typically have a term of 5 years with a maximum term of 10 years and generally vest over a period of up to three years. In August 2004, the Board of Directors of IPC Ltd. approved a grant of 276,394 performance-based stock options, to two executives who were also the principal shareholders of IPC Ltd. The vesting of these options is contingent upon the achievement of certain performance milestones. A total of 276,394 performance-based stock options have vested as of August 31, 2020. Under the terms of the original agreement these options were to expire in September 2014. Effective March 27, 2014, the Company’s shareholders approved the two-year extension of the performance-based stock option expiry date to September 2016. Effective April 19, 2016, the Company’s shareholders approved a further two-year extension of the performance-based stock option expiry date to September 2018. Effective May 15, 2018, the Company’s shareholders approved a further two-year extension of the performance-based stock option expiry date to September 2020. As of November 30, 2020, these options have expired.
In the three and nine months ended August 31, 2021, Nil (three and nine months ended August 31, 2020 –- Nil) stock options were granted.
The fair value of each option grant is estimated on the date of grant using the Black-Scholes Option-Pricing Model, consistent with the provisions of ASC topic 718. Option pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The Company calculates expected volatility based on historical volatility of the Company’s own volatility for options that have an expected life of less than ten years. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on the historical average of the term and historical exercises of the options. The risk-free rate assumed in valuing the options is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the option. The expected dividend yield percentage at the date of grant is Nil as the Company is not expected to pay dividends in the foreseeable future.
Details of stock option transactions in Canadian dollars (“C$”) are as follows:
Total unrecognized compensation cost relating to the unvested performance-based stock options at August 31, 2021 is $Nil (August 31, 2020 - $Nil). For the three and nine months ended August 31, 2021 and 2020, no options were exercised. The following table summarizes the components of stock-based compensation expense.
The Company has estimated its stock option forfeitures to be approximately 4% for the three and nine months ended August 31, 2021 (three and nine months ended August 31, 2020 – 4%). |
Deferred Share Units |
9 Months Ended |
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Aug. 31, 2021 | |
Deferred Share Units [Abstract] | |
Deferred Share Units | Effective May 28, 2010, the Company’s shareholders approved a Deferred Share Unit (“DSU”) Plan to grant DSUs to its non-management directors and reserved a maximum of 11,000 common shares for issuance under the plan. The DSU Plan permits certain non-management directors to defer receipt of all or a portion of their board fees until termination of the board service and to receive such fees in the form of common shares at that time. A DSU is a unit equivalent in value to one common share of the Company based on the trading price of the Company's common shares on the TSX. Upon termination of board service, the director will be able to redeem DSUs based upon the then market price of the Company's common shares on the date of redemption in exchange for any combination of cash or common shares as the Company may determine. During the three and nine months ended August 31, 2021, no non-management board members elected to receive director fees in the form of DSUs under the Company’s DSU Plans. As at August 31, 2021, Nil (August 31, 2020 Nil) DSUs were outstanding and 11,000 (August 31, 2020 – 11,000) DSUs were available for grant under the DSU Plan.
During the three and nine months ended August 31, 2021 and 2020, no DSUs were exercised. |
Warrants |
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Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants | All of the Company’s outstanding warrants are considered to be indexed to the Company’s own stock and are therefore classified as equity under ASC 480. The warrants, in specified situations, provide for certain compensation remedies to a holder if the Company fails to timely deliver the shares underlying the warrants in accordance with the warrant terms.
In the underwritten public offering completed in June 2016, gross proceeds of $5,200,000 were received through the sale of the Company’s units comprised of common shares and warrants. The Company issued at the initial closing of the offering an aggregate of 322,981 common shares and warrants to purchase an additional 161,490 common shares, at a price of $16.10 per unit. The warrants are currently exercisable, have a term of five years and an exercise price of $19.30 per common share. The underwriter also purchased at such closing additional warrants (collectively with the warrants issued at the initial closing, the “June 2016 Warrants”) at a purchase price of $0.01 per warrant to acquire 24,223 common shares pursuant to the overallotment option exercised in part by the underwriter. The Company subsequently sold an aggregate of 45,946 additional common shares at the public offering price of $16.10 per share in connection with subsequent partial exercises of the underwriter’s overallotment option. The fair value of the June 2016 Warrants of $1,175,190 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 64.1%, risk free interest rate of 0.92%, expected life of 5 years, and dividend yield of Nil. The June 2016 Warrants currently outstanding are detailed below.
In the registered direct offering completed in October 2017, gross proceeds of $4,000,000 were received through the sale of the Company’s common shares and warrants. The Company issued at the closing of the offering an aggregate of 363,636 common shares at a price of $11.00 per share and warrants to purchase an additional 181,818 common shares (the “October 2017 Warrants”). The October 2017 Warrants became exercisable six months following the closing date, will expire 30 months after the date they became exercisable, and have an exercise price of $12.50 per common share. The Company also issued the October 2017 Placement Agents Warrants to purchase 18,181 common shares at an exercise price of $13.75 per share. The holders of October 2017 Warrants and October 2017 Placement Agent Warrants are entitled to a cashless exercise under which the number of shares to be issued will be based on the number of shares for which warrants are exercised times the difference between the market price of the common share and the exercise price divided by the market price. The fair value of the October 2017 Warrants of $742,555 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 73.67%, risk free interest rate of 1.64%, expected life of 3 years, and dividend yield of Nil. The fair value of the October 2017 Placement Agents Warrants was estimated at $86,196 using the Black-Scholes Option Pricing Model, using volatility of 73.67%, a risk-free interest rate of 1.64%, an expected life of 3 years, and a dividend yield of Nil. The October 2017 Warrants and the October 2017 Placement Agent Warrants currently outstanding are detailed below. In the two registered direct offerings completed in March 2018, gross proceeds of $5,300,000 were received through the sale of the Company’s common shares and warrants. The Company issued at the closing of the offering an aggregate of 883,333 common shares at a price of $6.00 per share and the March 2018 Warrants to purchase an additional 441,666 common shares. The March 2018 Warrants became exercisable six months following the closing date, will expire 30 months after the date they became exercisable and have an exercise price of $6.00 per common share. The Company also issued the March 2018 Placement Agent Warrants to purchase 44,166 common shares at an exercise price of $7.50 per share. The holders of March 2018 Warrants and March 2018 Placement Agent Warrants are entitled to a cashless exercise under which the number of shares to be issued will be based on the number of shares for which warrants are exercised times the difference between the market price of the common share and the exercise price divided by the market price. The fair value of the March 2018 Warrants of $1,115,480 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 70%, risk free interest rates of 2.44% and 2.46%, expected life of 3 years, and dividend yield of Nil. The fair value of the March 2018 Placement Agent Warrants was estimated at $141,284 using the Black-Scholes Option Pricing Model, using volatility of 70%, risk free interest rates of 2.44% and 2.46%, an expected life of 3 years, and a dividend yield of Nil. The March 2018 Warrants and the March 2018 Placement Agent Warrants currently outstanding are detailed below. In October 2018, the Company completed an underwritten public offering in the United States, resulting in the sale to the public of 827,970 Units at $0.75 per Unit, which are comprised of one common share and one 2018 Unit Warrant (as defined above) exercisable at $0.75 per share. The Company concurrently sold an additional 1,947,261 common shares and 2018 Option Warrants to purchase 2,608,695 common shares exercisable at $0.75 per share pursuant to the overallotment option exercised in part by the underwriter. The price of the common shares issued in connection with exercise of the overallotment option was $0.74 per share and the price for the warrants issued in connection with the exercise of the overallotment option was $0.01 per warrant, less in each case the underwriting discount. In addition, the Company issued 16,563,335 2018 Pre-Funded Units (as defined above), each 2018 Pre-Funded Unit consisting of one 2018 Pre-Funded Warrant (as defined above) to purchase one common share and one 2018 Warrant (as defined above) to purchase one common share. The 2018 Pre-Funded Units were offered to the public at $0.74 each and a 2018 Pre-Funded Warrant is exercisable at $0.01 per share. Each 2018 Firm Warrant is exercisable immediately and has a term of five years and each 2018 Pre-Funded Warrant is exercisable immediately and until all 2018 Pre-Funded Warrants are exercised. The Company also issued the October 2018 Placement Agent Warrants to the placement agents to purchase 1,160,314 common shares at an exercise price of $0.9375 per share, which were exercisable immediately upon issuance. In aggregate, in October 2018, the Company issued 2,775,231 common shares, 16,563,335 2018 Pre-Funded Warrants and 20,000,000 2018 Firm Warrants in addition to 1,160,314 October 2018 Placement Agent Warrants. The fair value of the 2018 Firm Warrants of $279,086 was initially estimated at closing using the Black-Scholes Option Pricing Model, using volatility of 92%, risk free interest rate of 3.02%, expected life of 5 years, and dividend yield of Nil. The fair value of the October 2018 Placement Agents Warrants was estimated at $461,697 using the Black-Scholes Option Pricing Model, using volatility of 92%, risk free interest rate of 3.02%, an expected life of 5 years, and a dividend yield of Nil. The fair value of the 2018 Pre-Funded Warrant of $12,256,868 and the fair value of the 2018 Firm Warrants of $279,086, respectively, were recorded under Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). During the three and nine months ended August 31, 2021, Nil and Nil (three and nine months ended August 31, 2020, Nil and 1,616,667) 2018 Pre-Funded Warrants were exercised for proceeds of $Nil and $Nil (three and nine months ended August 31, 2020 - $Nil and $Nil), and the Company recorded a charge of $Nil and $Nil (three and nine months ended August 31, 2020 - $Nil and $583,180) from Additional paid-in-capital to common shares under Capital stock. The following table provides information on the 21,160,314 warrants including 2018 Firm Warrants outstanding and exercisable as of August 31, 2021:
During the three and nine months ended August 31, 2021, there were no cash exercises in respect of warrants (three and nine months ended August 31, 2020 – Nil). Details of warrant transactions for the nine months ended August 31, 2021 and 2020 are as follows:
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Income Taxes |
9 Months Ended |
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Aug. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company has had no taxable income under the Federal and Provincial tax laws of Canada for the three and nine months ended August 31, 2021 and August 31, 2020. The Company has non-capital loss carry-forwards at August 31, 2021, totaling $58,413,464 in Canada that must be offset against future taxable income. If not utilized, the loss carry-forwards will expire between 2028 and 2041.
For the three and nine months ended August 31, 2021, the Company had a cumulative carry-forward pool of Canadian Federal Scientific Research & Experimental Development expenditures in the amount of approximately $18,830,851, which can be carried forward indefinitely. For the three and nine months ended August 31, 2021, the Company had approximately $3,508,087 of unclaimed Investment Tax Credits which expire from 2025 to 2039. These credits are subject to a full valuation allowance as they are not more likely than not to be realized. |
Contingencies |
9 Months Ended |
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Aug. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | From time to time, the Company may be exposed to claims and legal actions in the normal course of business. As at August 31, 2021, and continuing as at October 15, 2021, the Company is not aware of any pending or threatened material litigation claims against the Company, other than as described below. In November 2016, the Company filed an NDA for its abuse-deterrent oxycodone hydrochloride extended release tablets (formerly referred to as RexistaTM) (“Oxycodone ER”) product candidate, relying on the 505(b)(2) regulatory pathway, which allowed the Company to reference data from Purdue Pharma L.P's (“Purdue”) file for its OxyContin® extended release oxycodone hydrochloride. The Oxycodone ER application was accepted by the FDA for further review in February 2017. The Company certified to the FDA that it believed that its Oxycodone ER product candidate would not infringe any of the OxyContin® patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the “Orange Book”, or that such patents are invalid, and so notified Purdue and the other owners of the subject patents listed in the Orange Book of such certification.
On April 7, 2017, the Company received notice that Purdue Pharma L.P., Purdue Pharmaceuticals L.P., The P.F. Laboratories, Inc., or collectively the Purdue parties, Rhodes Technologies, and Grünenthal GmbH, or collectively the Purdue litigation plaintiffs, had commenced patent infringement proceedings against the Company in the U.S. District Court for the District of Delaware (docket number 17-392) in respect of its NDA filing for Oxycodone ER, alleging that its proposed Oxycodone ER infringes 6 out of the 16 patents associated with the branded product OxyContin®, or the OxyContin® patents, listed in the Orange Book. Subsequent to the above-noted filing of lawsuit, 4 further such patents were listed and published in the Orange Book. On March 16, 2018, the Company received notice that the Purdue litigation plaintiffs had commenced further such patent infringement proceedings adding the 4 further patents. On April 15, 2020, Purdue filed a new patent infringement suit against the Company relating to additional Paragraph IV certifications lodged against two more listed Purdue patents. As a result of the commencement of the first of these legal proceedings, the FDA was stayed for 30 months from granting final approval to the Company’s Oxycodone ER product candidate. That time period commenced on February 24, 2017, when the Purdue litigation plaintiffs received notice of the Company’s certification concerning the patents, and would expire on August 24, 2019, unless the stay is earlier terminated by a final declaration of the courts that the patents are invalid, or are not infringed, or the matter is otherwise settled among the parties. On April 24, 2019, an order was issued, setting a trial date of November 12, 2019 for case number 17-392 in the District of Delaware, and also extending the 30-month stay date for regulatory approval to March 2, 2020.
On or about June 26, 2018, the court issued an order to sever 6 “overlapping” patents from the second Purdue case, but ordered litigation to proceed on the 4 new (2017-issued) patents. An answer and counterclaim was filed on July 9, 2018. On July 6, 2018, the court issued a so-called “Markman” claim construction ruling on the first case. On July 24, 2018, the parties to the case mutually agreed to and did have dismissed without prejudice the infringement claims related to the Grünenthal ‘060 patent, which is one of the six patents included in the original litigation case. On October 4, 2018, the parties mutually agreed to postpone the scheduled court date pending a case status conference scheduled for December 17, 2018. At that time, further trial scheduling and other administrative matters were postponed pending the Company’s resubmission of the Oxycodone ER NDA to the FDA, which was made on February 28, 2019. On January 17, 2019, the court issued a scheduling order in which the remaining major portions are scheduled. The trial was scheduled for June 2020. On April 4, 2019, the U.S. Federal Circuit Court of Appeals affirmed the invalidity of one Purdue OxyContin® formulation patent, subject to further appeal to the U.S. Supreme Court. Following the filing of a bankruptcy stay by Purdue Pharma L.P., the Company’s ongoing litigation case numbers 1:17-cv-00392-RGA and 1:18-cv-00404-RGA-SRF between Purdue Pharma L.P. et al and Intellipharmaceutics were stayed and the existing trial dates in both cases vacated by orders issued in each case by the judge in the District of Delaware on October 3, 2019. With the litigation stay order, the previous 30-month stay date of March 2, 2020 was unchanged.
On or about July 2, 2020 the parties in the cases, numbers 17-cv-392-RGA, 18-cv-404-RGA and 20-cv-515-RGA (the “Litigations”) between Purdue Pharma L.P. et al (“Purdue’) and Intellipharmaceutics entered into a stipulated dismissal of the Litigations. The stipulated dismissal, which was subject to approval by the bankruptcy court presiding over Purdue Pharma’s pending chapter 11 cases, provides for the termination of the patent infringement proceedings. The stipulated dismissal also provides that (i) for a thirty (30) day period following a final approval of the Company’s Aximris XRTM NDA the parties will attempt to resolve any potential asserted patent infringement claims relating to the NDA and (ii) if the parties fail to resolve all such claims during such period Purdue Pharma will have fifteen (15) days to pursue an infringement action against the Company. The terms of the stipulated dismissal agreement are confidential. On July 28, 2020 the United States District Court for the District of Delaware signed the stipulations of dismissal into order thereby dismissing the claims in the three cases without prejudice. In consideration of the confidential stipulated dismissal agreement and for future saved litigation expenses, Purdue paid an amount to the Company. In July 2017, three complaints were filed in the U.S. District Court for the Southern District of New York that were later consolidated under the caption Shanawaz v. Intellipharmaceutics Int’l Inc., et al., No. 1:17-cv-05761 (S.D.N.Y.). The lead plaintiffs filed a consolidated amended complaint on January 29, 2018. In the amended complaint, the lead plaintiffs assert claims on behalf of a putative class consisting of purchasers of the Company’s securities between May 21, 2015 and July 26, 2017. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the U.S. Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder by making allegedly false and misleading statements or failing to disclose certain information regarding the Company’s NDA for Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The complaint seeks, among other remedies, unspecified damages, attorneys’ fees and other costs, equitable and/or injunctive relief, and such other relief as the court may find just and proper. In an order entered at the parties’ request on May 9, 2019, the Court stayed proceedings in the action to permit the parties time to conduct a mediation. As a result of subsequent extensions, the stay was extended through October 10, 2019. The parties participated in a mediation on August 1, 2019, during which the parties tentatively agreed to the terms of a settlement of the action subject to the satisfaction of certain financial conditions by the Company. On November 7, 2019, the Company announced that the parties reached a settlement that is subject to the approval of the court following notice to class members. The stipulation of settlement provides for a settlement payment of US$1.6 million by the Company, which has been paid from available insurance coverage. As part of the settlement, the Company also agreed to contribute to the settlement fund specific anticipated Canadian tax refunds of up to US$400,000 to the extent received within 18 months after the entry of final judgment. The stipulation of settlement acknowledges that the Company and the other defendants continue to deny that they committed any violation of the U.S. securities laws or engaged in any other wrongdoing and that they are entering into the settlement at this time based on the burden, expense, and inherent uncertainty of continuing the litigation. On December 7, 2020 the court approved the settlement and entered an order and final judgement to that effect, thereby concluding the case.
On February 21, 2019, the Company and its CEO, Dr. Isa Odidi (“Defendants”), were served with a Statement of Claim filed in the Superior Court of Justice of Ontario (“Court”) for a proposed class action under the Ontario Class Proceedings Act (“Action”). The Action was brought by Victor Romita, the proposed representative plaintiff (“Plaintiff”), on behalf of a class of Canadian persons (“Class”) who traded shares of the Company during the period from February 29, 2016 to July 26, 2017 (“Period”). The Statement of Claim, under the caption Victor Romita v. Intellipharmaceutics International Inc. and Isa Odidi, asserted that the defendants knowingly or negligently made certain public statements during the relevant period that contained or omitted material facts concerning Oxycodone ER abuse-deterrent oxycodone hydrochloride extended release tablets. The plaintiff alleges that he and the class suffered loss and damages as a result of their trading in the Company’s shares during the relevant period. The plaintiff seeks, among other remedies, unspecified damages, legal fees and court and other costs as the Court may permit. On February 26, 2019, the plaintiff delivered a Notice of Motion seeking the required approval from the Court, in accordance with procedure under the Ontario Securities Act, to allow the statutory claims under the Ontario Securities Act to proceed with respect to the claims based upon the acquisition or disposition of the Company’s shares on the TSX during the Period (“Motion”). On June 28, 2019, the Court endorsed a timetable for the exchange of material leading to the hearing of the Motion scheduled for January 27-28, 2020. On October 28, 2019, plaintiff’s counsel advised the court that the Plaintiff intended to amend his claim and could not proceed with the Leave Motion scheduled for January 27-28, 2020. As such, the Court released those dates. On January 28, 2020 the plaintiff served a Notice of Motion for leave to amend the Statement of Claim. On April 2, 2020 the plaintiff delivered an Amended Motion Record and Amended Notice of Motion seeking an order for leave to issue a fresh as Amended Statement of Claim including the addition of Christopher Pearce as a Plaintiff (“Amendment Motion”). On May 1, 2020, the court granted the plaintiff’s Amendment Motion. An order for leave to proceed for settlement purposes was granted on 25 June 2021. A tentative settlement has been reached in this proceeding and an order for leave to proceed for settlement purposes was granted on 25 June 2021. At a hearing on 12 October 2021, the Court approved the settlement. The stipulation of settlement provides for a settlement payment of CAD$266,000 by the Company, it is expected that CAD$226,000 will be paid from insurance coverage while the Company will pay CAD$40,000. On October 7, 2019, a complaint was filed in the U.S. District Court for the Southern District of New York by Alpha Capital Anstalt (“Alpha”) against the Company, two of its existing officers and directors and its former Chief Financial Officer. In the complaint, Alpha alleges that the Company and the executive officers/directors named in the complaint violated Sections 11, 12(a)(2) and 15 of the U.S. Securities Act of 1933, as amended, by allegedly making false and misleading statements in the Company’s Registration Statement on Form F-1 filed with the U.S. Securities and Exchange Commission on September 20, 2018, as amended (the “Registration Statement”) by failing to disclose certain information regarding the resignation of the Company’s then Chief Financial Officer, which was announced several weeks after such registration statement was declared effective. In the complaint, Alpha seeks unspecified damages, rescission of its purchase of the Company’s securities in the relevant offering, attorneys’ fees and other costs and further relief as the court may find just and proper. On December 12, 2019, the Company and the other defendants in the action filed a motion to dismiss for failure to state a claim. The plaintiff filed an opposition to that motion on February 4, 2020 and a reply brief in further support of the motion to dismiss the action was filed March 6, 2020. In addition, the Court scheduled a mandatory settlement conference with the Magistrate Judge for April 23, 2020 which the Company and its counsel attended. On June 18, 2020, the court largely denied the Company’s motion to dismiss the action. Briefing on these motions was completed on February 19, 2021. In a court order filed July 9, 2021, the District Court issued an opinion and order granting summary judgment in the Company’s favor and ordered the case closed. The judgment was entered on July 12, 2021. On August 10, 2021, the Plaintiff filed a notice of appeal. On October 1, 2021, the Plaintiff filed a notice of voluntary dismissal of the appeal with prejudice, stipulated to by the Company. The Court of Appeals “so ordered” the voluntary dismissal stipulation and the appeal was dismissed. As a result, the matter has been fully resolved in favor of the Company and the named individual Defendants. On or about August 5, 2020 a former employee filed a claim against the Company for wrongful dismissal of employment plus loss of benefits, unpaid vacation pay, interest and costs. The parties have agreed to settlement terms in the matter. |
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Financial Instruments | Fair values The Company follows ASC topic 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC topic 820 apply to other accounting pronouncements that require or permit fair value measurements. ASC topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date; and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. To increase consistency and comparability in fair value measurements and related disclosures, the fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of the hierarchy are defined as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs for asset or liabilities. The categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
An increase/decrease in the volatility and/or a decrease/increase in the discount rate would have resulted in an increase/decrease in the fair value of the conversion option and warrants. Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis are as follows:
The carrying values of cash, accounts receivable, accounts payable, accrued liabilities and employee cost payable approximates their fair values because of the short-term nature of these instruments.
Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in interest rates. The Company does not believe that the results of operations or cash flows would be affected to any significant degree by a sudden change in market interest rates, relative to interest rates on cash and the convertible debenture due to the short-term nature of these obligations. Trade accounts receivable potentially subjects the Company to credit risk. The Company provides an allowance for doubtful accounts equal to the estimated losses expected to be incurred in the collection of accounts receivable. The following table sets forth details of the aged accounts receivable that are not overdue as well as an analysis of overdue amounts and the related allowance for doubtful accounts:
Financial instruments that potentially subject the Company to concentration of credit risk consist principally of uncollateralized accounts receivable. The Company’s maximum exposure to credit risk is equal to the potential amount of financial assets.
On July 2, 2020, the Company reached a stipulated dismissal agreement with regards to all three cases in the litigation between Purdue and the Company. In consideration of the confidential dismissal agreement and for future saved litigation expenses, Purdue paid $2,000,000 to the Company and paid an additional $500,000 in December 2020. During the year ended November 30, 2020, the Company received the initial payment of $2,000,000 and the remaining $500,000 was recognized as other receivable within trade and other receivables in the Company’s consolidated balance sheet as at November 30, 2020.
The Company is also exposed to credit risk at period end from the carrying value of its cash. The Company manages this risk by maintaining bank accounts with a Canadian Chartered Bank. The Company’s cash is not subject to any external restrictions.
The Company has balances in Canadian dollars that give rise to exposure to foreign exchange risk relating to the impact of translating certain non-U.S. dollar balance sheet accounts as these statements are presented in U.S. dollars. A strengthening U.S. dollar will lead to a foreign exchange loss while a weakening U.S. dollar will lead to a foreign exchange gain. For each Canadian dollar balance of $1.0 million, a +/- 10% movement in the Canadian currency held by the Company versus the U.S. dollar would affect the Company’s loss and other comprehensive loss by $0.1 million.
Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet its commitments as they fall due. In meeting its liquidity requirements, the Company closely monitors its forecasted cash requirements with expected cash drawdown. The following are the contractual maturities of the undiscounted cash flows of financial liabilities as at August 31, 2021:
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Segmented Information | The Company's operations comprise a single reportable segment engaged in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. As the operations comprise a single reportable segment, amounts disclosed in the financial statements for revenue, loss for the period, depreciation and total assets also represent segmented amounts. In addition, all of the Company's long-lived assets are in Canada. The Company’s license and commercialization agreement with Par accounts for substantially all of the revenue of the Company.
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Revenue recognition | The Company accounts for revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (ASC 606). Under ASC 606, the Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC 606: (i) identify 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 revenues when (or as) the Company satisfies the performance obligation(s). The Company earns revenue from non-refundable upfront fees, milestone payments upon achievement of specified research or development, exclusivity milestone payments and licensing payments on sales of resulting products. The relevant revenue recognition accounting policy is applied to each separate unit of accounting. Licensing The Company recognizes revenue from the licensing of the Company's drug delivery technologies, products and product candidates. Under the terms of the licensing arrangements, the Company provides the customer with a right to access the Company’s intellectual property with regards to the license which is granted. Revenue arising from the license of intellectual property rights is recognized over the period the Company transfers control of the intellectual property. The Company has a license and commercialization agreement with Par Pharmaceutical Inc. (“Par”). Under the exclusive territorial license rights granted to Par, the agreement requires that Par manufacture, promote, market, sell and distribute the product. Licensing revenue amounts receivable by the Company under this agreement are calculated and reported to the Company by Par, with such amounts generally based upon net product sales and net profit which include estimates for chargebacks, rebates, product returns, and other adjustments. Licensing revenue payments received by the Company from Par under this agreement are not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this arrangement and the guidance per ASC 606, the Company records licensing revenue over the period the Company transfers control of the intellectual property in the condensed unaudited interim consolidated statements of operations and comprehensive loss. The Company also had a license and commercial supply agreement (the “Mallinckrodt agreement”) with Mallinckrodt LLC (“Mallinckrodt”) which provided Mallinckrodt an exclusive license to market, sell and distribute in the U.S. three drug product candidates for which the Company has ANDAs filed with the FDA, one of which (the Company’s generic Seroquel XR®) received final approval from the FDA in 2017. Under the terms of this agreement, the Company was responsible for the manufacture of approved products for subsequent sale by Mallinckrodt in the U.S. market. Following receipt of final FDA approval for its generic Seroquel XR®, the Company began shipment of manufactured product to Mallinckrodt. The Company recorded revenue once Mallinckrodt obtained control of the product and the performance obligation was satisfied. On April 12, 2019, Mallinckrodt and the Company mutually agreed to terminate the Mallinckrodt agreement, effective no later than August 31, 2019. Under the terms of the mutual agreement, Mallinckrodt was released from certain obligations under the agreement as of April 12, 2019. Effective August 12, 2019, the Mallinckrodt agreement was terminated. Licensing revenue in respect of manufactured product were reported as revenue in accordance with ASC 606. Once product was sold by Mallinckrodt, the Company received downstream licensing revenue amounts calculated and reported by Mallinckrodt, with such amounts generally based upon net product sales and net profit which included estimates for chargebacks, rebates, product returns, and other adjustments. Such downstream licensing revenue payments received by the Company under this Mallinckrodt agreement were not subject to further deductions for chargebacks, rebates, product returns, and other pricing adjustments. Based on this Mallinckrodt agreement and the guidance per ASC 606, the Company recorded licensing revenue as earned on a monthly basis. Milestones For milestone payments that are not contingent on sales-based thresholds, the Company applies a most-likely amount approach on a contract-by-contract basis. Management makes an assessment of the amount of revenue expected to be received based on the probability of the milestone outcome. Variable consideration is included in revenue only to the extent that it is probable that the amount will not be subject to a significant reversal when the uncertainty is resolved (generally when the milestone outcome is satisfied). Research and development Under arrangements where the license fees and research and development activities can be accounted for as a separate unit of accounting, non-refundable upfront license fees are deferred and recognized as revenue on a straight-line basis over the expected term of the Company's continued involvement in the research and development process. Deferred revenue Deferred revenue represents the funds received from clients, for which the revenues have not yet been earned, as the milestones have not been achieved, or in the case of upfront fees for drug development, where the work remains to be completed. |
Research and development costs | Research and development costs related to continued research and development programs are expensed as incurred in accordance with ASC Topic 730, Research and Development (ASC 730). However, materials and equipment are capitalized and amortized over their useful lives if they have alternative future uses. |
Inventory | Inventories comprise raw materials, work in process, and finished goods, which are valued at the lower of cost or market, on a first-in, first-out basis. Cost for work in process and finished goods inventories includes materials, direct labor, and an allocation of manufacturing overhead. Market for raw materials is replacement cost, and for work in process and finished goods is net realizable value. The Company evaluates the carrying value of inventories on a regular basis, taking into account such factors as historical and anticipated future sales compared with quantities on hand, the price the Company expects to obtain for products in their respective markets compared with historical cost and the remaining shelf life of goods on hand. As of August 31, 2021, the Company had raw materials inventories of $103,983 (November 30, 2020 - $112,672), work in process of $Nil (November 30, 2020 - $Nil) and finished goods inventory of $Nil (November 30, 2020 - $Nil) relating to the Company’s generic Seroquel XR® product. The recoverability of the cost of any pre-launch inventories with a limited shelf life is evaluated based on the specific facts and circumstances surrounding the timing of the anticipated product launch. |
Translation of foreign currencies | Transactions denominated in currencies other than the Company and its wholly owned operating subsidiaries’ functional currencies, monetary assets and liabilities are translated at the period end rates. Revenue and expenses are translated at rates of exchange prevailing on the transaction dates. All of the exchange gains or losses resulting from these other transactions are recognized in the condensed unaudited interim consolidated statements of operations and comprehensive loss. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. |
Convertible debentures | On September 10, 2018, the Company completed a private placement financing (the “2018 Debenture Financing”) of an unsecured convertible debenture in the principal amount of $500,000 (the “2018 Debenture”). At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the 2018 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). On April 4, 2019, a tentative approval from TSX was received for a proposed refinancing of the 2013 Debenture subject to certain conditions being met. As a result of the refinancing, the principal amount owing under the 2013 Debenture was refinanced by a new debenture (the “May 2019 Debenture”). On May 1, 2019, the May 2019 Debenture was issued in the principal amount of $1,050,000, that was originally scheduled to mature on November 1, 2019, bears interest at a rate of 12% per annum and is convertible into 1,779,661 common shares of the Company at a conversion price of $0.59 per common share. At issuance, the conversion option was not characterized as an embedded derivative as it did not meet the criteria of ASC topic 815, Derivatives and Hedging. Also, at issuance, as the conversion price was higher than the market share price, conversion option was not bifurcated from its host contract and the total value of the convertible debenture was recognized as a liability. On August 26, 2019, the Company issued an unsecured convertible debenture in the principal amount of $140,800 (the “August 2019 Debenture”). At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the August 2019 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). In November 2019, the August 2019 Debenture was paid in full. On November 15, 2019, the Company issued an unsecured convertible debenture in the principal amount of $250,000 (the “November 2019 Debenture”) that was originally scheduled to mature on December 31, 2019, bears interest at a rate of 12% per annum and is convertible into common shares of the Company at a conversion price of $0.12 per share. At issuance, the conversion price was lower than the market share price, and the value of the beneficial conversion feature related to the November 2019 Debenture was allocated to Additional paid-in capital in the condensed unaudited interim consolidated statements of shareholders’ equity (deficiency). |
Investment tax credits | The investment tax credits (“ITC") receivable are amounts considered recoverable from the Canadian federal and provincial governments under the Scientific Research & Experimental Development (“SR&ED”) incentive program. The amounts claimed under the program represent the amounts based on management estimates of eligible research and development costs incurred during the year. Realization is subject to government approval. Any adjustment to the amounts claimed will be recognized in the year in which the adjustment occurs. Refundable ITCs claimed relating to capital expenditures are credited to property and equipment. Refundable ITCs claimed relating to current expenditures are netted against research and development expenditures. |
Loss per share | Basic loss per share (“EPS”) is computed by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding. Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive. The dilutive effect of stock options is determined using the treasury stock method. |
Property and Equipment (Tables) |
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Convertible Debentures (Tables) |
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Related party transactions |
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Promissory notes |
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Lease (Tables) |
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Assets and liabilities |
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Lease term and discount rates |
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Future minimum lease payments |
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Options (Tables) |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation, stock options, activity |
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Employee service share-based compensation, allocation of recognized period costs |
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Warrants (Tables) |
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Warrants [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity note, warrants or rights |
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Warrant transactions |
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Financial Instruments (Tables) |
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Aug. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements, nonrecurring |
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Past due financing receivables |
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Contractual obligation, fiscal year maturity schedule |
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Segmented Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from external customers and long-lived assets, by geographical areas |
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Nature of Operations (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
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Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
Nov. 30, 2020 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Net loss | $ (1,264,305) | $ (1,026,941) | $ (3,189,055) | $ (1,768,865) | |
Accumulated deficit | 100,285,605 | 100,285,605 | $ 97,096,550 | ||
Working capital deficiency | $ (7,779,952) | $ (7,779,952) | $ (8,221,657) |
Significant Accounting Policies (Details Narrative) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
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Accounting Policies [Abstract] | ||
Raw materials | $ 103,983 | $ 112,672 |
Work in process | 0 | 0 |
Finished goods | $ 0 | $ 0 |
Property and Equipment (Details Narrative) - USD ($) |
9 Months Ended | ||
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Aug. 31, 2021 |
Aug. 31, 2020 |
May 31, 2020 |
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Property, Plant and Equipment [Abstract] | |||
Equipment not in use | $ 514,502 | $ 514,502 | |
Return of equipment | $ 0 | $ 32,269 |
Convertible Debentures (Details) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
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Convertible debenture payable | $ 1,707,844 | $ 1,791,791 |
Convertible Debenture Payable 1 | ||
Convertible debenture payable | 500,000 | 500,000 |
Convertible Debenture Payable 2 | ||
Convertible debenture payable | 1,050,000 | 1,050,000 |
Convertible Debenture Payable 3 | ||
Convertible debenture payable | $ 157,844 | $ 241,791 |
Convertible Debentures (Details 1) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
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Promissory notes payable | $ 168,100 | $ 163,758 |
Promissory Notes Payable 1 | ||
Promissory notes payable | $ 168,100 | $ 163,758 |
Convertible Debentures (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
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Related Party Transactions [Abstract] | ||||
Accrued interest expense | $ 157,844 | $ 80,490 | $ 207,726 | $ 722,330 |
Coupon interest on the debenture | $ 51,887 | $ 50,628 | $ 154,535 | $ 151,334 |
Lease (Details) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
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Leases [Abstract] | ||
Operating lease right-of-use asset | $ 38,195 | $ 137,931 |
Current operating lease liability | 44,175 | 157,110 |
Total lease liability | $ 44,175 | $ 157,110 |
Lease (Details 1) |
Aug. 31, 2021 |
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Leases [Abstract] | |
Remaining lease term (months) | 3 months |
Estimated incremental borrowing rate | 11.40% |
Lease (Details 2) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
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Leases [Abstract] | ||
Lease payments for the year ending November 30, 2021 | $ 44,962 | |
Less imputed interest | 787 | |
Present value of lease liabilities | $ 44,175 | $ 157,110 |
Lease (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended |
---|---|---|
Aug. 31, 2021 |
Aug. 31, 2021 |
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Leases [Abstract] | ||
Operating lease cost | $ 39,401 | $ 79,952 |
Lease payments | $ 0 | $ 127,205 |
Capital Stock (Details Narrative) - shares |
9 Months Ended | 12 Months Ended |
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Aug. 31, 2021 |
Nov. 30, 2020 |
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Common shares, authorized | Unlimited | Unlimited |
Common shares, issued | 33,092,665 | 23,678,105 |
Common shares, outstanding | 33,092,665 | 23,678,105 |
Officers and Directors | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 1.70% | 2.40% |
Options (Details) - $ / shares |
9 Months Ended | |
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Aug. 31, 2021 |
Aug. 31, 2020 |
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Share-based Payment Arrangement [Abstract] | ||
Options outstanding, beginning | 1,697,638 | 2,353,829 |
Expired | 0 | (28,800) |
Cancelled | (142,737) | (78,881) |
Forfeited | 0 | (156,652) |
Options outstanding, ending | 1,554,901 | 2,089,496 |
Options exercisable | 1,554,901 | 1,554,504 |
Weighted average exercise price outstanding, beginning | $ 2.92 | $ 8.35 |
Expired | .00 | 18.10 |
Cancelled | 1.07 | .38 |
Forfeited | .00 | .35 |
Weighted average exercise price outstanding, ending | 3.09 | 8.42 |
Weighted average exercise price exercisable | 3.09 | 12.45 |
Weighted average grant date fair value, beginning | 1.99 | 4.30 |
Expired | .00 | 11.00 |
Cancelled | .58 | .23 |
Forfeited | .00 | .22 |
Weighted average grant date fair value, ending | 2.12 | 3.78 |
Weighted average grant date fair value exercisable | $ 2.12 | $ 6.19 |
Options (Details 1) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
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Stock based compensation expense components | $ 0 | $ 12,884 | $ 11,985 | $ 78,865 |
Research and Development Expense | ||||
Stock based compensation expense components | 0 | 10,525 | 9,719 | 63,930 |
Selling, General and Administrative Expenses | ||||
Stock based compensation expense components | $ 0 | $ 2,359 | $ 2,266 | $ 14,935 |
Options (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
May 31, 2020 |
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Share-based Payment Arrangement [Abstract] | |||||
Share-based compensation arrangement by share-based payment award, options, grants in period | 0 | 0 | 0 | 0 | |
Unrecognized compensation cost | $ 0 | $ 0 | $ 0 | ||
Stock option share-based compensation forfeiture rate | 4.00% | 4.00% | 4.00% | 4.00% |
Deferred Share Units (Details Narrative) - Deferred Share Units - shares |
Aug. 31, 2021 |
May 31, 2020 |
---|---|---|
Share-based compensation arrangement by share-based payment award, number of shares authorized | 0 | 0 |
Share-based compensation arrangement by share-based payment award, number of shares available for grant | 11,000 | 11,000 |
Warrants (Details) - $ / shares |
9 Months Ended | |||
---|---|---|---|---|
Aug. 31, 2021 |
Nov. 30, 2020 |
Aug. 31, 2020 |
Nov. 30, 2019 |
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Number outstanding | 21,160,314 | 21,923,624 | 22,123,623 | 23,740,290 |
Shares issuable upon exercise | 21,160,314 | |||
2018 Firm Warrants | ||||
Exercise price | $ .7500 | |||
Number outstanding | 20,000,000 | 20,000,000 | 20,000,000 | 20,000,000 |
Expiry | Oct. 16, 2023 | |||
Shares issuable upon exercise | 20,000,000 | |||
October 2018 Placement Agent Warrants | ||||
Exercise price | $ .9375 | |||
Number outstanding | 1,160,314 | |||
Expiry | Oct. 16, 2023 | |||
Shares issuable upon exercise | 1,160,314 |
Income Taxes (Details Narrative) |
3 Months Ended | 9 Months Ended |
---|---|---|
Aug. 31, 2021
USD ($)
|
Aug. 31, 2021
USD ($)
|
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Unclaimed investment tax credits | $ 18,830,851 | $ 18,830,851 |
Unclaimed investment tax credits expiring between 2025 and 2039 | 3,508,087 | 3,508,087 |
Canada | ||
Non-capital loss carryforward | $ 58,413,464 | $ 58,413,464 |
Financial Instruments (Details) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
---|---|---|
Financial Liabilities | ||
Convertible debentures, carrying amount | $ 1,707,844 | $ 1,789,188 |
Convertible debentures, fair value | 1,798,842 | 1,784,646 |
Promissory notes payable, carrying amount | 168,100 | 163,758 |
Promissory notes payable, fair value | $ 168,100 | $ 163,758 |
Financial Instruments (Details 1) - USD ($) |
Aug. 31, 2021 |
Nov. 30, 2020 |
---|---|---|
Total accounts receivable | $ 0 | $ 66,384 |
Other receivable | 0 | 500,000 |
Less allowance for doubtful accounts | 0 | 0 |
Total accounts receivable, net | 0 | 566,384 |
Not past due | 0 | 566,384 |
Total accounts receivable, gross | 0 | 566,384 |
Past due for more than 31 days but no more than 120 days | ||
Past due | 0 | 0 |
Past due for more than 120 days | ||
Past due | $ 0 | $ 0 |
Financial Instruments (Details Narrative) |
9 Months Ended |
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Aug. 31, 2021
USD ($)
| |
Fair Value Disclosures [Abstract] | |
Foreign exchange risk threshold balance | $ 1,000,000 |
Foreign exchange risk movement in currency percentage | 10.00% |
Foreign exchange risk loss and other comprehensive loss amount affected | $ 100,000 |
Segmented Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2021 |
Aug. 31, 2020 |
Aug. 31, 2021 |
Aug. 31, 2020 |
Nov. 30, 2020 |
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Revenues | $ 0 | $ 328,781 | $ 0 | $ 1,102,075 | |
Assets | 3,456,856 | 3,456,856 | $ 3,387,055 | ||
Total property and equipment | 1,573,993 | 1,573,993 | 1,770,137 | ||
United States | |||||
Revenues | 0 | $ 328,781 | 0 | $ 328,781 | |
Canada | |||||
Assets | 3,456,856 | 3,456,856 | 3,387,055 | ||
Total property and equipment | $ 1,573,993 | $ 1,573,993 | $ 1,770,137 |
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