Note
|
June 30, 2020
|
December 31, 2019
|
|||||||||||
Assets
|
|||||||||||||
Current Assets:
|
|||||||||||||
Cash and cash equivalents
|
$
|
28,689,757
|
$
|
814,492
|
|||||||||
Amounts receivable
|
142,819
|
84,097
|
|||||||||||
Deposits
|
9
|
481,400
|
481,400
|
||||||||||
Prepaid expense
|
904,145
|
369,453
|
|||||||||||
Total Current Assets
|
$
|
30,218,121
|
$
|
1,749,442
|
|||||||||
Right of use assets - Leases
|
3
|
440,328
|
30,394
|
||||||||||
Patent rights
|
4
|
1,688,485
|
1,601,745
|
||||||||||
Total Assets
|
$
|
32,346,934
|
$
|
3,381,581
|
|||||||||
Liabilities
|
|||||||||||||
Current Liabilities:
|
|||||||||||||
Accounts payable and accrued liabilities
|
5
|
$
|
8,376,796
|
$
|
11,412,896
|
||||||||
Current portion of lease liability
|
3
|
94,474
|
21,071
|
||||||||||
Warrant liability
|
6
|
19,770,834
|
3,621,444
|
||||||||||
Total Current Liabilities
|
$
|
28,242,104
|
$
|
15,055,411
|
|||||||||
Note payable
|
7
|
$
|
1,653,822
|
$
|
-
|
||||||||
Long-term lease liability
|
3
|
367,038
|
8,001
|
||||||||||
Total Liabilities
|
$
|
30,262,964
|
$
|
15,063,412
|
|||||||||
Shareholders' Equity (Deficiency)
|
|||||||||||||
Share Capital
|
8
|
$
|
210,101,795
|
$
|
194,859,415
|
||||||||
Contributed Surplus
|
8,738,190
|
8,303,527
|
|||||||||||
Deficit
|
(216,756,015
|
)
|
(214,844,773
|
)
|
|||||||||
Shareholders' Equity (Deficiency)
|
$
|
2,083,970
|
$
|
(11,681,831
|
)
|
||||||||
Total Liabilities and Deficiency
|
$
|
32,346,934
|
$
|
3,381,581
|
|||||||||
Commitments (Note 9)
|
|||||||||
Subsequent events (Note 13)
|
|||||||||
See notes to financial statements
|
|||||||||
Approved on behalf of the Board:
|
|||||||||
"signed"
|
"signed"
|
||||||||
John E. Barker
|
David McNally
|
||||||||
Director
|
Chairman and CEO
|
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
Note
|
June 30, 2020
|
June 30, 2020
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||||
Revenue
|
$
|
10,000,000
|
$
|
10,000,000
|
$
|
-
|
$
|
-
|
||||||||||||
Expenses
|
||||||||||||||||||||
Amortization
|
$
|
35,475
|
$
|
49,570
|
$
|
7,291
|
$
|
13,466
|
||||||||||||
Consulting fees
|
83,744
|
195,869
|
451,068
|
720,497
|
||||||||||||||||
Stock based compensation
|
8b
|
|
206,087
|
434,663
|
740,051
|
991,408
|
||||||||||||||
Insurance
|
122,415
|
245,577
|
116,123
|
234,612
|
||||||||||||||||
Management salaries and fees
|
605,277
|
1,146,872
|
749,880
|
1,398,466
|
||||||||||||||||
Marketing and investor relations
|
8,843
|
17,487
|
102,487
|
208,676
|
||||||||||||||||
Office and general
|
45,955
|
185,842
|
77,136
|
194,407
|
||||||||||||||||
Professional fees
|
1,031,457
|
1,389,943
|
303,460
|
406,845
|
||||||||||||||||
Rent
|
5,960
|
13,201
|
16,515
|
28,751
|
||||||||||||||||
Research and development
|
121,463
|
167,582
|
18,360,674
|
32,769,286
|
||||||||||||||||
Travel
|
1,622
|
12,760
|
80,631
|
147,995
|
||||||||||||||||
Interest charges
|
252,542
|
465,239
|
-
|
-
|
||||||||||||||||
Foreign exchange (gain)
|
24,580
|
(48,923
|
)
|
148,689
|
41,047
|
|||||||||||||||
$
|
2,545,420
|
$
|
4,275,682
|
$
|
21,154,005
|
$
|
37,155,456
|
|||||||||||||
Net Earnings (Loss) from Operations
|
7,454,580
|
5,724,318
|
(21,154,005
|
)
|
(37,155,456
|
)
|
||||||||||||||
Finance Income (Cost)
|
||||||||||||||||||||
Interest
|
$
|
4,831
|
$
|
6,574
|
$
|
71,187
|
94,218
|
|||||||||||||
Gain on settlement
|
5
|
1,839,626
|
1,839,626
|
-
|
-
|
|||||||||||||||
Gain (loss) on change in fair value of warrants
|
6
|
(8,782,920
|
)
|
(7,665,444
|
)
|
6,609,952
|
(3,866,673
|
)
|
||||||||||||
Warrant liability issue cost
|
(1,659,316
|
)
|
(1,816,316
|
)
|
-
|
(1,827,835
|
)
|
|||||||||||||
$
|
(8,597,779
|
)
|
$
|
(7,635,560
|
)
|
$
|
6,681,139
|
$
|
(5,600,290
|
)
|
||||||||||
Net and Comprehensive Loss for the Period
|
$
|
(1,143,199
|
)
|
$
|
(1,911,242
|
)
|
$
|
(14,472,866
|
)
|
$
|
(42,755,746
|
)
|
||||||||
Basic and Diluted Loss per Share
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
$
|
(0.46
|
)
|
$
|
(1.57
|
)
|
||||||||
Weighted Average Number of Common Shares
|
||||||||||||||||||||
Basic and Diluted
|
60,764,929
|
52,518,608
|
31,150,237
|
27,190,063
|
||||||||||||||||
See notes to financial statements
|
Note
|
Share Capital Number
|
Share Capital Amount
|
Contributed
Surplus
|
Net Income (Deficit)
|
Total Equity (Deficiency)
|
|||||||||||||||||||
Balance - December 31, 2018
|
21,675,849
|
$
|
170,502,394
|
$
|
6,652,409
|
$
|
(172,937,694
|
)
|
$
|
4,217,109
|
||||||||||||||
Issued pursuant to agency agreement
|
8a
|
|
8,455,882
|
13,717,131
|
-
|
-
|
13,717,131
|
|||||||||||||||||
Share issue expense
|
-
|
(1,498,498
|
)
|
-
|
-
|
(1,498,498
|
)
|
|||||||||||||||||
Warrants exercised during the period
|
8a
|
|
1,018,506
|
7,002,043
|
-
|
-
|
7,002,043
|
|||||||||||||||||
Stock based compensation
|
8b
|
|
-
|
-
|
991,408
|
-
|
991,408
|
|||||||||||||||||
Net and comprehensive loss
|
-
|
-
|
-
|
(42,755,746
|
)
|
(42,755,746
|
)
|
|||||||||||||||||
Balance - June 30, 2019
|
31,150,237
|
$
|
189,723,070
|
$
|
7,643,817
|
$
|
(215,693,440
|
)
|
$
|
(18,326,553
|
)
|
|||||||||||||
Balance - December 31, 2019
|
39,907,681
|
$
|
194,859,415
|
$
|
8,303,527
|
$
|
(214,844,773
|
)
|
$
|
(11,681,831
|
)
|
|||||||||||||
Issued pursuant to agency agreement1
|
8a
|
|
23,923,700
|
12,818,657
|
-
|
-
|
12,818,657
|
|||||||||||||||||
Share issue expense
|
-
|
(487,788
|
)
|
-
|
-
|
(487,788
|
)
|
|||||||||||||||||
Common stock equivalents converted
|
8a
|
|
8,000,000
|
800
|
-
|
-
|
800
|
|||||||||||||||||
Warrants exercised during the period
|
8a
|
|
3,750,000
|
2,910,711
|
-
|
-
|
2,910,711
|
|||||||||||||||||
Stock based compensation
|
8b
|
|
-
|
-
|
434,663
|
-
|
434,663
|
|||||||||||||||||
Net and comprehensive loss
|
-
|
-
|
-
|
(1,911,242
|
)
|
(1,911,242
|
)
|
|||||||||||||||||
Balance - June 30, 2020
|
75,581,381
|
$
|
210,101,795
|
$
|
8,738,190
|
$
|
(216,756,015
|
)
|
$
|
2,083,970
|
||||||||||||||
1. Includes net proceeds from the issuance of common share equivalents (see note 8a)
|
||||||||||||||||||||||||
See notes to financial statements
|
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
June 30, 2020
|
June 30, 2020
|
June 30, 2019
|
June 30, 2019
|
||||||||||||||
Cash provided by (used in):
|
|||||||||||||||||
Operating activities:
|
|||||||||||||||||
Net loss for the period
|
$
|
(1,143,199
|
)
|
$
|
(1,911,242
|
)
|
$
|
(14,472,866
|
)
|
$
|
(42,755,746
|
)
|
|||||
Items not involving cash:
|
|||||||||||||||||
Amortization
|
35,475
|
49,570
|
7,291
|
13,466
|
|||||||||||||
Stock based compensation
|
206,087
|
434,663
|
740,051
|
991,408
|
|||||||||||||
Warrant liability-fair value adjustment
|
8,782,920
|
7,665,444
|
(6,609,952
|
)
|
3,866,673
|
||||||||||||
Warrant liability-foreign exchange adjustment
|
12,997
|
(38,094
|
)
|
142,682
|
36,625
|
||||||||||||
Non-cash issue costs
|
737,894
|
764,134
|
-
|
-
|
|||||||||||||
Non-cash settlement included in payables
|
1,839,626
|
2,090,200
|
-
|
-
|
|||||||||||||
Non-cash note payable expenses and accrued interest
|
153,822
|
153,822
|
-
|
-
|
|||||||||||||
Changes in non-cash working capital items:
|
|||||||||||||||||
Amounts receivable, prepaid expenses and deposits
|
(766,837
|
)
|
(593,417
|
)
|
1,294,599
|
(283,330
|
)
|
||||||||||
Accounts payable and accrued liabilities
|
(3,647,795
|
)
|
(4,875,714
|
)
|
5,736,133
|
5,783,889
|
|||||||||||
Cash from (used) in operating activities
|
$
|
6,210,990
|
$
|
3,739,366
|
$
|
(13,162,062
|
)
|
$
|
(32,347,015
|
)
|
|||||||
Financing activities:
|
|||||||||||||||||
Net proceeds from issuance of common shares and warrants1
|
19,272,277
|
22,749,702
|
(2,997
|
)
|
31,374,911
|
||||||||||||
Proceeds from note payable
|
1,500,000
|
1,500,000
|
-
|
-
|
|||||||||||||
Repayment of lease liabilities
|
(6,299
|
)
|
(10,243
|
)
|
-
|
-
|
|||||||||||
Cash provided by financing activities
|
$
|
20,765,978
|
$
|
24,239,459
|
$
|
(2,997
|
)
|
$
|
31,374,911
|
||||||||
Investing Activities:
|
|||||||||||||||||
Additions to patents
|
(47,430
|
)
|
(103,560
|
)
|
(125,198
|
)
|
(178,956
|
)
|
|||||||||
Cash used in investing activities
|
$
|
(47,430
|
)
|
$
|
(103,560
|
)
|
$
|
(125,198
|
)
|
$
|
(178,956
|
)
|
|||||
Increase (Decrease) in cash and cash equivalents
|
26,929,538
|
27,875,265
|
(13,290,257
|
)
|
(1,151,060
|
)
|
|||||||||||
Cash and cash equivalents, beginning of the period
|
1,760,219
|
814,492
|
23,610,440
|
11,471,243
|
|||||||||||||
Cash and cash equivalents, end of the period
|
$
|
28,689,757
|
$
|
28,689,757
|
$
|
10,320,183
|
$
|
10,320,183
|
|||||||||
Cash and cash equivalents comprise:
|
|||||||||||||||||
Cash
|
|
$
|
970,690
|
$
|
970,690
|
$
|
1,392,741
|
$
|
1,392,741
|
||||||||
Cash Equivalents
|
|
27,719,067
|
27,719,067
|
8,927,442
|
8,927,442
|
||||||||||||
$
|
28,689,757
|
$
|
28,689,757
|
$
|
10,320,183
|
$
|
10,320,183
|
||||||||||
1. Includes net proceeds from the issuance of common share equivalents (see note 8a)
|
|||||||||||||||||
See notes to financial statements
|
●
|
Revenue from the License Agreement for intellectual property rights and know-how (“Royalty Payment”) is recognized when rights are granted and customer acceptance is
established. Compensation received for the performance of technology transfer services relating to the License Agreement is accounted for separately from the Royalty Payment and will be recognized at the time the service is performed.
|
●
|
Revenue from the Development Agreement (see note 7) and the allocation of ownership ad license rights developed under each milestone is recognized when the rights are
granted and customer acceptance is established.
|
For the six months ended June 30, 2020
|
Cost
|
Accumulated Amortization
|
Net Book
Value
|
|||||||||
Balance at December 31, 2019
|
$
|
34,172
|
$
|
(3,778
|
)
|
$
|
30,394
|
|||||
Additions during the period
|
442,684
|
-
|
442,684
|
|||||||||
Amortization in the period
|
-
|
(32,750
|
)
|
(32,750
|
)
|
|||||||
Balance at June 30, 2020
|
$
|
476,856
|
$
|
(36,528
|
)
|
$
|
440,328
|
For the six months ended June 30, 2020
|
Cost
|
Accumulated
Amortization & Impairment Losses
|
Net Book
Value
|
|||||||||
Balance at December 31, 2019
|
$
|
1,856,750
|
$
|
(255,005
|
)
|
$
|
1,601,745
|
|||||
Additions during the period
|
103,560
|
-
|
103,560
|
|||||||||
Amortization in the period
|
-
|
(16,820
|
)
|
(16,820
|
)
|
|||||||
Balance at June 30, 2020
|
$
|
1,960,310
|
$
|
(271,825
|
)
|
$
|
1,688,485
|
For the six months ended June 30, 2019
|
Cost
|
Accumulated
Amortization & Impairment Losses
|
Net Book
Value
|
|||||||||
Balance at December 31, 2018
|
$
|
1,398,713
|
$
|
(226,228
|
)
|
$
|
1,172,485
|
|||||
Additions during the period
|
178,956
|
-
|
178,956
|
|||||||||
Amortization in the period
|
-
|
(13,466
|
)
|
(13,466
|
)
|
|||||||
Balance at June 30, 2019
|
$
|
1,577,669
|
$
|
(239,694
|
)
|
$
|
1,337,975
|
Six Months Ended
|
Year Ended
|
|||||||||||||||
June 30, 2020
|
December 31, 2019
|
|||||||||||||||
Number of Warrants
|
Amount
|
Number of Warrants
|
Amount
|
|||||||||||||
Opening Balance
|
21,203,411
|
$
|
3,621,444
|
13,901,859
|
$
|
11,250,167
|
||||||||||
Issue of warrants expiring March 21, 2024
|
-
|
-
|
8,455,882
|
15,897,059
|
||||||||||||
Issue of warrants expiring March 27, 2025
|
3,500,000
|
475,300
|
-
|
-
|
||||||||||||
Issue of warrants expiring November 6, 2025t
|
2,757,252
|
508,200
|
-
|
-
|
||||||||||||
Issue of warrants expiring June 10, 2024
|
9,000,000
|
9,709,200
|
-
|
-
|
||||||||||||
Warrants exercised during the period
|
(3,750,000
|
)
|
(2,170,660
|
)
|
(1,018,506
|
)
|
(3,742,824
|
)
|
||||||||
Warrants expired during the period
|
-
|
-
|
(135,824
|
)
|
-
|
|||||||||||
Foreign exchange adjustment during the period
|
-
|
(38,094
|
)
|
-
|
17,687
|
|||||||||||
Fair value adjustment during the period
|
-
|
7,665,444
|
-
|
(19,800,645
|
)
|
|||||||||||
Ending Balance
|
32,710,663
|
$
|
19,770,834
|
21,203,411
|
$
|
3,621,444
|
Grant Date
|
Common shares issued
|
Value
|
||||||
January 3, 2020
|
500,000
|
$
|
219,600
|
|||||
January 6, 2020
|
500,000
|
229,300
|
||||||
January 8, 2020
|
400,000
|
195,160
|
||||||
January 10, 2020
|
500,000
|
247,550
|
||||||
January 17, 2020
|
600,000
|
303,000
|
||||||
January 23, 2020
|
600,000
|
295,320
|
||||||
February 6, 2020
|
600,000
|
282,000
|
||||||
February 13, 2020
|
708,048
|
300,000
|
||||||
4,408,048
|
$
|
2,071,930
|
Grant Date
|
Common shares issued
|
Value
|
||||||
August 30, 2019
|
2,417,162
|
$
|
3,000,000
|
|||||
November 8, 2019
|
100,000
|
42,560
|
||||||
November 8, 2019
|
100,000
|
42,560
|
||||||
November 12, 2019
|
100,000
|
42,970
|
||||||
November 12, 2019
|
100,000
|
42,000
|
||||||
November 13, 2019
|
100,000
|
42,970
|
||||||
November 14, 2019
|
300,000
|
128,910
|
||||||
November 15, 2019
|
2,500,000
|
1,074,250
|
||||||
November 19, 2019
|
2,067,282
|
888,311
|
||||||
|
7,784,444
|
$
|
5,304,531
|
Six Months Ended June 30, 2020
|
Year Ended December 31, 2019
|
|||||||||||||||
Stock Options - CDN $ denominated
|
Number of
Stock
Options |
Weighted average Exercise Price (CDN)
|
Number of
Stock
Options
|
Weighted average Exercise Price
(CDN)
|
||||||||||||
|
||||||||||||||||
Balance beginning
|
860,379
|
$
|
5.89
|
875,433
|
$
|
18.20
|
||||||||||
Granted
|
25,765
|
0.66
|
35,719
|
4.54
|
||||||||||||
Expired / forfeited
|
(17,980
|
)
|
24.55
|
(50,773
|
)
|
31.79
|
||||||||||
Balance ending
|
868,164
|
$
|
5.46
|
860,379
|
$
|
5.89
|
||||||||||
|
||||||||||||||||
Stock Options - USD $ denominated
|
Number of Stock Options
|
Weighted average Exercise Price (USD)
|
Number of Stock Options
|
Weighted average Exercise Price (USD)
|
||||||||||||
|
||||||||||||||||
Balance beginning
|
854,042
|
$
|
2.65
|
50,349
|
$
|
1.55
|
||||||||||
Granted
|
-
|
-
|
843,693
|
2.72
|
||||||||||||
Expired / forfeited
|
(467,255
|
)
|
2.20
|
(40,000
|
)
|
3.72
|
||||||||||
Balance ending
|
386,787
|
$
|
3.19
|
854,042
|
$
|
2.65
|
||||||||||
|
||||||||||||||||
Total number of stock options
|
1,254,951
|
1,714,421
|
Canadian Dollar Denominated Options
|
|||||||||||||||
Exercise Price (CDN)
|
Number Outstanding
|
Weighted-
average remaining contractual life (years)
|
Options Exercisable
|
||||||||||||
$
|
0.66
|
25,765
|
6.58
|
25,765
|
|||||||||||
$
|
3.28
|
31,498
|
5.17
|
31,498
|
|||||||||||
$
|
4.50
|
18,936
|
2.78
|
18,936
|
|||||||||||
$
|
4.54
|
735,998
|
3.77
|
379,030
|
|||||||||||
$
|
4.80
|
3,040
|
0.21
|
3,040
|
|||||||||||
$
|
9.00
|
11,481
|
5.02
|
11,481
|
|||||||||||
$
|
9.60
|
1,105
|
0.27
|
1,105
|
|||||||||||
$
|
11.70
|
6,667
|
0.44
|
6,667
|
|||||||||||
$
|
12.00
|
1,948
|
0.43
|
1,948
|
|||||||||||
$
|
30.00
|
28,260
|
1.15
|
28,260
|
|||||||||||
$
|
30.60
|
2,096
|
0.48
|
2,096
|
|||||||||||
$
|
32.40
|
810
|
0.58
|
810
|
|||||||||||
$
|
45.30
|
560
|
0.12
|
560
|
|||||||||||
868,164
|
3.75
|
511,196
|
|||||||||||||
US Dollar Denominated Options
|
|||||||||||||||
Exercise Price (USD)
|
Number Outstanding
|
Weighted-average remaining contractual life (years)
|
Options Exercisable
|
||||||||||||
$
|
1.55
|
50,349
|
1.47
|
50,349
|
|||||||||||
$
|
2.20
|
2,165
|
2.05
|
2,165
|
|||||||||||
$
|
3.40
|
294,273
|
5.87
|
197,273
|
|||||||||||
$
|
3.72
|
40,000
|
2.19
|
-
|
|||||||||||
386,787
|
5.14
|
249,787
|
|||||||||||||
Total
|
1,254,951
|
4.11
|
760,983
|
2020 - CDN
|
2019 – US
|
|||||||
Fair value calculated
|
CDN $0.43
|
US $1.76
|
||||||
Share price at grant
|
CDN $0.62
|
US $2.84
|
||||||
Exercise price
|
CDN $0.66
|
US $3.40
|
||||||
Expected option life
|
3.5 years
|
3.5 years
|
||||||
Risk free interest rate (based on government bonds)
|
1.41
|
%
|
1.61
|
%
|
||||
Expected volatility
|
109.00
|
%
|
98.43
|
%
|
||||
Expected dividends
|
Nil
|
Nil
|
June 30, 2020
|
December 31, 2019
|
|||||||||||||||
Number of
Shares
|
%
|
Number of
Shares
|
%
|
|||||||||||||
John Barker
|
42,714
|
0.06
|
32,714
|
0.08
|
||||||||||||
Stephen Randall
|
22,993
|
0.03
|
22,993
|
0.06
|
||||||||||||
David McNally
|
4,167
|
0.01
|
4,167
|
0.01
|
||||||||||||
John Schellhorn
|
294
|
0.00
|
294
|
0.00
|
||||||||||||
Total
|
70,168
|
0.09
|
60,168
|
0.15
|
||||||||||||
Common Shares Outstanding
|
75,581,381
|
100.00
|
%
|
39,907,681
|
100.00
|
%
|