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<title>IntelGenx Technologies Corp. - Form S-1 - Prepared By TNT Filings Inc.</title>
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<p align="center" style="margin-top: 0; margin-bottom: 0">As filed with the Securities and Exchange Commission on April
28, 2008</font><font FACE="Times New Roman">
</font></p>
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<p align="right" style="margin-top: 0; margin-bottom: 0"><font FACE="Times New Roman" SIZE="2">Registration No. 333- </font>
<font FACE="Times New Roman"></p>
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</font><font FACE="Times New Roman" SIZE="5"><b>
<p align="center">UNITED STATES</b> <b><br>
SECURITIES AND EXCHANGE COMMISSION</b>
</font><font FACE="Times New Roman" SIZE="4"> <br>
</font><font FACE="Times New Roman" SIZE="2">WASHINGTON, D.C. 20549</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="5"><b>
<p align="center">FORM S-1</b> <br>
</font><font FACE="Times New Roman" SIZE="2"><b>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</b></font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="6"><b>
<p align="center"><u>IntelGenx Technologies Corp.</u></b><u> <br>
</u></font><font FACE="Times New Roman" SIZE="2">(Exact name of registrant as
specified in its charter)</font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="center"><b><u>Delaware</u></b></font><b><u><font FACE="Times New Roman"> </font>
</u></b><font FACE="Times New Roman" SIZE="2"><b><u><br>
</u></b>(State or other jurisdiction of incorporation or organization)</font><font FACE="Times New Roman">
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman" SIZE="2"><b>2834</b></font></td>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman" SIZE="2"><b>
    870299034</b></font></td>
  </tr>
  <tr>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman" SIZE="2">
    (Primary Standard Industrial</font></td>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman" SIZE="2">(I.R.S.
    Employer Identification Number)</font></td>
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  <tr>
    <td WIDTH="50%" align="center"><font FACE="Times New Roman" SIZE="2">
    Classification Code Number)</font></td>
    <td WIDTH="50%" align="center">&nbsp;</td>
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<font SIZE="2">
<p align="center"><b>6425 Abrams, Ville St- Laurent, Quebec, H4S 1X9 <br>
(514) 331-7440</b><br>
________________________________________________<br>
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices) </p>
<p align="center"><b>Horst Zerbe <br>
Chief Executive Officer <br>
IntelGenx Technologies Corp, 6425 Abrams, Quebec, H4S 1X9 <br>
(514) 331-7440 </b> <br>
________________________________________________<br>
(Name, address, including zip code, and telephone number, including area code,
of agent for service) </p>
<p ALIGN="CENTER">Copies to: <br>
<b>Richard Raymer <br>
Hodgson Russ LLP <br>
150 King Street West, Suite 2309, Toronto, Ontario M5H 1J9 <br>
Canada <br>
Tel: (416) 595-5100 </b> </p>
<p ALIGN="CENTER"><b><u>As soon as practicable after the effective date of this
Registration Statement <br>
</u></b>(Approximate date of commencement of proposed sale to the public) </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: </font><font FACE="Wingdings">&#253;</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: &#9633;</font></p>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. &#9633;</font></p>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. &#9633;</font></p>
<font FACE="Times New Roman" SIZE="2">
<p>Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a small reporting company: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 25">Large accelerated filer &#9633;</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 25">Accelerated filer &#9633;</font></td>
  </tr>
  <tr>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 25">Non-accelerated filer &#9633;</font></td>
    <td WIDTH="50%"><font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 25">Smaller reporting company </font>
    <font FACE="Wingdings 2" SIZE="2">
    Q</font></td>
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</table>
<p align="center"><font size="2">1</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="21%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>Proposed</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="21%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>maximum</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    Proposed</b></font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="21%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>offering</b></font></td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    maximum</b></font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
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    <td WIDTH="35%">&nbsp;</td>
    <td WIDTH="14%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    Amount to be</b></font></td>
    <td WIDTH="21%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>price per</b></font></td>
    <td WIDTH="20%" COLSPAN="2" align="right">
    <font FACE="Times New Roman" SIZE="2"><b>aggregate offering</b></font></td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2"><b>
    Amount of</b></font></td>
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    <td WIDTH="35%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Title of each class of securities
    to be registered</b></font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>registered</b></font></td>
    <td WIDTH="21%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>share (5)</b></font></td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>price</b></font></td>
    <td WIDTH="18%" COLSPAN="2" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>registration fee</b></font></td>
  </tr>
  <tr>
    <td WIDTH="35%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Common stock, par value $.00001 per
    share (1)</font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">4,001,000 shares</font></td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">0.90</font></td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">3,600,900</font></td>
    <td WIDTH="3%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">141.51</font></td>
  </tr>
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    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">Common stock
    underlying warrants, par value</font></td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">$.00001 per share (2)</font></td>
    <td WIDTH="14%" align="right"><font FACE="Times New Roman" SIZE="2">
    4,001,000 shares</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right"><font FACE="Times New Roman" SIZE="2">0.90</font></td>
    <td WIDTH="2%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">
    3,600,900</font></td>
    <td WIDTH="3%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">141.51</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Common Stock Purchase
    Warrants (3)</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    4,001,000 warrants</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">--</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">--</font></td>
    <td WIDTH="3%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">Common stock
    underlying options to purchase units</font></td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">consisting of one
    share of common stock and one</font></td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">warrant to purchase
    one share of common stock, par</font></td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right">&nbsp;</td>
    <td WIDTH="2%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="3%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%"><font FACE="Times New Roman" SIZE="2">value $.00001 per
    share (4)</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">640,160 shares</font></td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">0.90</font></td>
    <td WIDTH="2%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">576,144</font></td>
    <td WIDTH="3%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">22.64</font></td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="2%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="3%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    8,642,160 shares</font></td>
    <td WIDTH="2%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="14%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="2%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="3%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="35%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Total</font></td>
    <td WIDTH="14%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">4,001,000 warrants</font></td>
    <td WIDTH="2%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">0.90</font></td>
    <td WIDTH="2%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">7,777,944</font></td>
    <td WIDTH="3%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="15%" align="right" style="border-bottom: 3px double #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">305.67</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>(1) Represents shares of common stock, par value $.00001. </p>
<p>(2) Represents shares of common stock underlying warrants to purchase shares
of common stock, par value $.00001. </p>
<p>(3) Represents common stock purchase warrants exercisable at $1.02 per share,
subject to adjustment, expiring March 27, 2010. </p>
<p>(4) Represents shares of common stock underlying options to purchase units
consisting of one share of common stock and one warrant to purchase one share of
common stock, par value $.00001. </p>
<p>(5) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(g) under the Securities Act of 1933,
using the closing price as reported on the OTC Bulletin Board on April 10, 2008.
</p>
<p ALIGN="JUSTIFY">THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE. </p>
<p ALIGN="center">2</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b>
<p align="center">SUBJECT TO COMPLETION, dated April 28, 2008</b> </font></p>
<font SIZE="2"><b>
<p align="center">PROSPECTUS</b> </p>
</font><b><font SIZE="2">
<p align="center">IntelGenx Technologies Corp. </p>
</font><font SIZE="2" FACE="Times New Roman">
<p align="center">8,642,160</font></b><font SIZE="2" FACE="Times New Roman"> <b>
Shares of Common Stock and 4,001,000 Warrants</b> <b>Offered by Selling Security
Holders</b> </p>
<p ALIGN="JUSTIFY">This Prospectus relates to the sale by the selling security
holders listed herein of up to 8,642,160 shares of the common stock and
4,001,000 common stock purchase warrants of IntelGenx Technologies Corp. (&quot;IntelGenx&quot;
or the &quot;Company&quot;). The securities being registered were purchased by the selling
security holders in a private placement completed on March 27, 2008 (the &quot;March
2008 Private Placement&quot;). For a complete description of this private placement
please see the section entitled &quot;Description of the March 2008 Private Placement
of Common Stock and Warrants&quot;, below). </p>
<p ALIGN="JUSTIFY">The securities being registered include shares of outstanding
common stock (the &quot;Common Stock&quot;), common stock purchase warrants exercisable at
$1.02 per share, subject to adjustment (the &quot;Warrants&quot;), and shares of common
stock underlying the Warrants (the &quot;Warrant Shares&quot;). The securities being
registered also include shares of common stock and shares of common stock
underlying warrants issuable upon the exercise of options issued to the
placement agent in connection with the March 2008 Private Placement (the
&quot;Placement Agent Options&quot;). The Placement Agent Options permit the placement
agent to purchase units, at a price of $0.70 per unit, consisting of one share
of common stock and one warrant, also exercisable at $1.02 per share, subject to
adjustment (The shares of common stock issuable upon exercise of the Placement
Agent Options shall be referred to as the Placement Agent Common Stock, the
warrants issuable upon exercise of the Placement Agent Options shall be referred
to as the &quot;Placement Agent Warrants&quot;, and the shares of common stock issuable
upon exercise of the Placement Agent Warrants shall be referred to as the
&quot;Placement Agent Warrant Shares&quot;). </p>
<p ALIGN="JUSTIFY">Accordingly, the shares being registered include (i)
4,001,000 shares of Common Stock, (ii) 4,001,000 Warrants (iii) 4,001,000
Warrant Shares (iv) 320,080 shares of Placement Agent Common Stock, and (v)
320,080 shares of common stock issuable upon the exercise of the Placement Agent
Warrants. </p>
<p ALIGN="JUSTIFY">The shares of common stock will be offered by the selling
security holders at fixed prices, at the then-prevailing market prices at the
time of sale, at varying prices, or in negotiated transactions (See &quot;Plan of
Distribution&quot;). Our common stock is traded on the Over-The-Counter Bulletin
Board under the symbol &quot;IGXT&quot;. The closing price of our common stock on April
24, 2008 was $0.95. </p>
<p ALIGN="JUSTIFY">IntelGenx will not receive any proceeds from the sale of the
shares of common stock offered by the selling security holders to the public.
However, IntelGenx will receive proceeds from the exercise of the Warrants, as
well as from the exercise of the Placement Agent Options and of the Placement
Agent Warrants. IntelGenx has agreed to pay all of the costs of this offering,
excluding commissions and discounts regarding the sale of the common stock by
the selling security holders. </p>
<p align="justify">Brokers or dealers effecting transactions in the shares
should confirm the registration of these securities under the securities laws of
the states in which such transactions occur or the existence of an exemption
from such registration. </p>
<p ALIGN="JUSTIFY">Certain selling security holders and any participating
broker-dealers may be deemed to be &quot;underwriters&quot; within the meaning of the
Securities Act of 1933, as amended (the &quot;Securities Act&quot;), and any commissions
or discounts given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the Securities Act. See &quot;Selling Security
holders&quot; and &quot;Plan of Distribution&quot;. </p>
<b>
<p align="justify">Investing in the common stock of IntelGenx</b> <b>involves a
high degree of risk. You should invest in the common stock only if you can
afford to lose your entire investment. See &quot;Risk Factors&quot; beginning on page
6.</b>
</p>
<b>
<p ALIGN="JUSTIFY">The information in this prospectus is incomplete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.</b> </p>
<b>
<p align="justify">Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.</b> </p>
<p>The date of this Prospectus is ______________, 2008</p>
<p align="center">3</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="center">TABLE OF CONTENTS </b></font><font FACE="Times New Roman"></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Prospectus Summary</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">5</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">The Offering</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">5</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Risk Factors</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">6</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Forward Looking
    Statements</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">11</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Business</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">
    11</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Management's
    Discussion and Analysis of Financial Condition or Plan of Operations</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">17</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Market for
    Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">21</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Dividend Policy</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">21</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Selling Security
    holders</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">
    22</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Management</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">26</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Certain Relationships
    and Related Transactions</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">31</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Plan of Distribution</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">32</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Description of Capital
    Stock</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">
    33</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Legal Matters</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">33</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Experts</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" size="2">33</font></td>
  </tr>
  <tr>
    <td WIDTH="796"><font FACE="Times New Roman" SIZE="2">Where You Can Find
    Additional Information</font></td>
    <td WIDTH="194" align="center"><font FACE="Times New Roman" size="2">33</font></td>
  </tr>
  <tr>
    <td WIDTH="796" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Consolidated Financial
    Statements</font></td>
    <td WIDTH="194" align="center" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">F-1</font></td>
  </tr>
</table>
<p align="center"><font size="2">4</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2"><b>
<p align="center">PROSPECTUS SUMMARY</b> </p>
<p ALIGN="JUSTIFY">The following summary is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus. In this
prospectus, the words &quot;Company,&quot; &quot;IntelGenx&quot; &quot;we,&quot; &quot;us,&quot; and &quot;our,&quot; refer
collectively to IntelGenx Technologies Corp. and IntelGenx Corp., our
wholly-owned Canadian subsidiary. </p>
<b>
<p>Our Business</b> </p>
<p align="justify">We are a drug delivery company  headquartered in Montreal
(Quebec) which focuses on the development of novel oral immediate release and
controlled-release products for the generic pharmaceutical market. </p>
<p ALIGN="JUSTIFY">Our product development efforts are based upon three delivery
platform technologies: (1) a Tri-Layer Tablet technology (2) a Quick Release
wafer technology, and (3) a Mucoadhesive Tablet technology. Our Tri-layer
platform technology allows for the development of oral controlled release
products. It is versatile and is aimed at significantly reducing manufacturing
costs as compared to competing delivery technologies. The Quick Release Wafer
technology allows for the instant delivery of pharmaceuticals to the oral
cavity. The Mucoadhesive Tablet allows for the controlled release of active
substances to the oral mucosa. </p>
<p align="justify">Our executive offices are located at 6425 Abrams, Ville
Saint-Laurent, Quebec, H4S 1X9, Canada. Our web site address is http://www.IntelGenx.com.
Information contained on our web site is not a part of this prospectus. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 5">The Offering</b></font></td>
    <td WIDTH="474" style="border-style: solid; border-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Shares of common stock offered by the selling
    security holders</font></td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Up to 8,642,160 shares of common stock and
    4,001,000 Warrants,</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">including (i) 4,001,000 shares of Common Stock
    (ii) 4,001,000</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Warrant Shares (iii) 320,080 shares of Placement
    Agent Common</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Stock, and (iv) 320,080 Placement Agent Warrants
    Shares. Assuming</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">the full exercise of all of the Warrants, the
    Placement Agent Options,</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">and the Placement Agent Warrants, the shares being
    registered would</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">represent approximately 34% of our outstanding
    common stock. (1)</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Common stock to be outstanding after the offering</font></td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Up to 24,940,205 shares, assuming the exercise
    ofall of the Warrants,</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">the Placement Agent Options, and the Placement
    Agent Warrants.</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Use of proceeds</font></td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">IntelGenx will not receive any proceeds from the
    sale of the shares of</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">common stock offered by the selling security
    holders to the public.</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">However, IntelGenx will receive proceeds from any
    cash exercise of</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">the Warrants, as well as from the exercise of the
    Placement Agent</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Options and of the Placement Agent Warrants. Any
    such proceeds</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">will be used to support the Company's strategic
    development projects</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="474" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">and for working capital.</font></td>
  </tr>
  <tr>
    <td WIDTH="489" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">OTCBB Ticker Symbol</font></td>
    <td WIDTH="474" style="border-style: solid; border-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">IGXT</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">(1) The above information regarding common stock to be
outstanding after the offering is based on 20,299,045 shares of common stock
outstanding as of April 18, 2008 and assumes the subsequent exercise of all of
the warrants by our selling security holders and the options by our placement
agent. </p>
<b>
<p>Description of March 2008 Private Placement of Common Stock and Warrants </p>
</b>
<p ALIGN="JUSTIFY">On March 27, 2008, IntelGenx Technologies Corp. completed an
offering of 4,001,000 units of its securities at $0.70 per unit for gross
proceeds of approximately $2.8 million (the &quot;Gross Proceeds&quot;) and net proceeds
of approximately $2,538,651 (&quot;the &quot;Offering&quot;). Each unit consists of one share
of the Company's common stock (the &quot;Common Stock&quot;) and one two-year warrant to
purchase one share of common stock (the &quot;Warrant Shares&quot;) at an initial exercise
price of $1.02 per share, subject to adjustment (the &quot;Warrants&quot;). </p>
<p ALIGN="JUSTIFY">Paradigm Capital Inc. (&quot;Paradigm&quot;) acted as placement agent
for the Offering on a best efforts basis. Paradigm's compensation consists of a
cash commission equal to 7% of the Gross Proceeds and an option to acquire
320,080 units at $0.70 per unit within 24 months of the closing date (the
&quot;Placement Agent Options&quot;) (The shares of common stock issuable upon exercise of
the Placement Agent Options shall be referred to as the Placement Agent Common
Stock, the warrants issuable upon exercise of the Placement Agent Options shall
be referred to as the &quot;Placement Agent Warrants&quot;, and the shares of common stock
issuable upon exercise of the Placement Agent Warrants shall be referred to as
the &quot;Placement Agent Warrant Shares&quot;). </p>
<p ALIGN="center">5</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<p align="justify">In connection with the Offering, the Company entered into a
registration rights agreement (the &quot;Registration Rights Agreement&quot;) providing
for the filing of a registration statement (the &quot;Registration Statement&quot;) with
the U.S. Securities and Exchange Commission registering the Common Stock,
Warrant Shares, Warrants, the Placement Agent Common Stock and the Placement
Agent Warrant Shares . The Company is obligated to file the Registration
Statement no later than 30 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 120 days after the date of closing. </p>
<p align="justify">The exercise price of the Warrants is subject to adjustment
to $0.93 per share if, within four months from the closing date (i) the Common
Stock and shares issuable upon exercise of the Warrants have not been listed and
commenced trading on either the Toronto Stock Exchange or the TSX Venture
Exchange and (ii) the Registration Statement has not been declared effective.
The exercise price of the Warrants is also subject to adjustment for certain
events, including dividends, distributions or split of the Company's common
stock, subsequent equity sales or rights offerings by the Company, or in the
event of the Company's consolidation, merger or reorganization. </p>
<p align="justify">In addition, the Company is obligated to pay a penalty in an
aggregate amount equal to five percent of the Gross Proceeds if the Common
Stock, Warrant Shares, Placement Agent Common Stock and Placement Agent Warrant
Shares are not listed on the Toronto Stock Exchange or the TSX Venture Exchange
within 60 days from the closing date of the Offering (the &quot;Listing Condition&quot;),
and an additional penalty in an aggregate amount equal to one percent of the
Gross Proceeds for each subsequent calendar month during which the Listing
Condition is not satisfied, subject to a maximum of three months. </p>
<p align="justify">In connection with the Offering, each of the Company's
officers and directors have entered into lock-up agreements in favor of Paradigm
pursuant to which they have agreed not to sell or transfer their shares for a
period ending four months and one day after the closing date. The foregoing
issuances were exempt from registration under Section 4(2) of the Act and/or
Regulation S, promulgated pursuant to the Act. None of the purchasers are U.S.
persons, no sales efforts were conducted in the U.S., and the Common Stock and
Warrants contain a legend restricting the sale of such securities in accordance
with Regulation S and pursuant to applicable Canadian securities laws. </p>
<b>
<p align="center">RISK FACTORS </p>
</b><i>
<p align="justify">An investment in our common stock involves significant risks.
You should carefully consider the following risks and all other information set
forth in this prospectus before deciding to invest in shares of our common
stock. If any of the events or developments described below occurs, our
business, financial condition and results of operations may suffer. In that
case, the value of our common stock may decline and you could lose all or part
of your investment.</i> </p>
<b>
<p align="justify">Risks Related to Our Business </p>
<p align="justify">We continue to sustain losses and our revenues are minimal.</b>
</p>
<p align="justify">Even though we completed the development stage of our
operations in April 2006 when we commenced consistently generating revenues from
our operations, we are still subject to all of the risks inherent in both the
creation of a new business and the development of new products. Our cash flows
may be insufficient to meet expenses relating to our operations and the
development of our business, and may be insufficient to allow us to develop new
products. We currently conduct research and development using our proprietary
platform technologies to develop oral controlled released and other delivery
products. We do not know if we will always be successful in the development of
such products. We have an accumulated deficit of approximately $1,918,658 since
our inception in 2003 to December 2007. To date, these losses have been financed
principally through sales of equity securities, long-term debt and debt from
related parties. Our revenues for the years ended December 31, 2007, December
31, 2006, December 31, 2005 and December 31, 2004 were $862,731, $265,901,
$19,990 and $257,374 respectively. Our revenues consisted primarily of
development fee revenues from four clients and have not been sufficient to
sustain our operations. In order to achieve profitability, our revenue streams
will have to increase and there is no assurance that revenues will increase to
such a level. Additional capital and/or borrowings will be necessary in order
for us to continue in existence until we are able to attain and sustain
profitable operations. </p>
<b>
<p align="justify">We are subject to currency fluctuations, which may affect our
results. </p>
</b>
<p align="justify">The majority of our expenses are in Canadian dollars, while
our revenues are primarily in U.S. dollars. The fluctuation of the Canadian
dollar and the U.S. dollar could materially impact our operating results and
financial position. </p>
<b>
<p align="justify">We may need additional capital to fulfill our business
strategies. We may also incur unforeseen costs. Failure to obtain such capital
would adversely affect our business. </p>
<p align="justify"></b>We will need to expend significant capital in order to
continue with our research and development by hiring additional research staff
and acquiring additional equipment. If our cash flows from operations are
insufficient to fund our expected capital needs, or our needs are greater than
anticipated, we will be required to raise additional funds in the future through
private or public sales of equity securities or the incurrence of additional
indebtedness. Additional funding may not be available on favorable terms, or at
all. If we borrow additional funds, we likely will be obligated to make periodic
interest or other debt service payments and may be subject to additional
restrictive covenants. If we fail to obtain sufficient additional capital in the
future, we could be forced to curtail our growth strategy by reducing or
delaying capital expenditures, selling assets or downsizing or restructuring our operations. If we
raise additional funds through public or private sales of equity securities, the
sales may be at prices below the market price of our stock and our shareholders
may suffer significant dilution.</p>
<p align="center">6 <font FACE="Times New Roman"> </p>
</font>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>&nbsp;<font FACE="Times New Roman" SIZE="2"><b><p>The loss of the services of key personnel would adversely affect our
business. </b></font><font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">Our future success depends to a significant degree on the
skills, experience and efforts of our executive officers and senior management
staff. The loss of the services of existing personnel, particularly Horst Zerbe,
our Chairman of the Board and Chief Executive Officer, would be detrimental to
our research and development programs and to our overall business. </font>
<font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>We are dependent on collaborators to conduct clinical trials of, obtain
regulatory approvals for, and manufacture, market, and sell our controlled
release products. </p>
</b>
<p ALIGN="JUSTIFY">We depend heavily on our pharmaceutical partners to pay for
part or all of the research and development expenses associated with developing
a new product and to obtain approval from regulatory bodies such as the FDA to
commercialize these products. We also depend on our partners to successfully
distribute these products after receiving regulatory approval. Our revenues from
research and development fees, milestone payments and royalty fees are provided
by our partners. Our inability to successfully find pharmaceutical partners who
are willing to pay us these fees in order to develop new products would
negatively impact our business and our cash flows. </p>
<p ALIGN="JUSTIFY">We have limited experience in manufacturing, marketing and
selling pharmaceutical products. Accordingly, if we cannot maintain our existing
collaborations or establish new collaborations with respect to our other
products in development, we will have to establish our own capabilities or
discontinue the commercialization of the affected product. Developing our own
capabilities would be expensive and time consuming and could delay the
commercialization of the affected product. There can be no assurance that we
would be successful in developing these capabilities. </p>
<p ALIGN="JUSTIFY">Our existing collaborations are subject to termination on
short notice under certain circumstances including, for example, if the
collaborator determines that the product in development is not likely to be
successfully developed or not likely to receive regulatory approval, if we
breach the agreement or upon a bankruptcy event. If any of our collaborations
are terminated, we may be required to devote additional resources to the
product, seek a new collaborator on short notice or abandon the product. The
terms of any additional collaboration or other arrangements that we establish
may not be favorable to us. </p>
<p align="justify">We are also at risk that these collaborations or other
arrangements may not be successful. Factors that may affect the success of our
collaborations include the following: </p>
<ul>
  <li>
  <p style="margin-top: 0; margin-bottom: 0" align="justify">Our collaborators
  may be pursuing alternative technologies or developing alternative products
  that are competitive to our product, either on their own or in collaboration
  with others. <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0" align="justify">Our collaborators
  may reduce marketing or sales efforts, or discontinue marketing or sales of
  our products. This would reduce our revenues received on the products. <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0" align="justify">Our collaborators
  may terminate their collaborations with us. This could make it difficult for
  us to attract new collaborators or adversely affect perception of us in the
  business and financial communities. <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0" align="justify">Our collaborators
  may pursue higher priority programs or change the focus of their development
  programs, which could affect the collaborator's commitment to us.
  Pharmaceutical and biotechnology companies historically have re-evaluated
  their priorities from time to time, including following mergers and
  consolidations, a common occurrence in recent years. </li>
</ul>
<b>
<p align="justify">We face competition in our industry, and many of our
competitors have substantially greater experience and resources than we do. </p>
<p align="justify"></b>We compete with other companies within the drug delivery
industry, many of which have more capital, more extensive research and
development capabilities and greater human resources than we do. Some of these
drug delivery competitors include Biovail Corporation, Labopharm Inc., and
Flamel Technologies S.A. Our competitors may develop new or enhanced products or
processes that may be more effective, less expensive, safer or more readily
available than any products or processes that we develop, or they may develop
proprietary positions that prevent us from being able to successfully
commercialize new products or processes that we develop. As a result, our
products or processes may not compete successfully, and research and development
by others may render our products or processes obsolete or uneconomical.
Competition may increase as technological advances are made and commercial
applications broaden. </font><font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>We are dependent upon sales outside the United States, which are subject to a
number of risks. </b></font><font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2">
<p>Our future results of operation could be harmed by risks inherent in doing
business in international markets, including: </font>
<font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2">
<ul>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Unforeseen changes in regulatory
  requirements; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Weaker intellectual property rights
  protection in some countries; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">New export license requirements,
  changes in tariffs or trade restrictions; and <br>
&nbsp;</li>
  <li>Political and economic instability in our target markets.<font FACE="Times New Roman">
  </li>
</ul>
</font>
<p align="center">7</p>
<b><hr color="#000000" size="5"><p Style='page-break-before:always'>
<p>We rely upon a third-party manufacturer, which puts us at risk for supplier
business interruptions. </b><font FACE="Times New Roman"></p>
</font>
<p align="justify">We have entered into an agreement with a third party
manufacturer which will manufacture certain of our products once we complete
development and after we receive regulatory approval. If our third-party
manufacturer fails to perform, our ability to market products and to generate
revenue would be adversely affected. Our failure to deliver products in a timely
manner could lead to the dissatisfaction of our distribution partners and damage
our reputation, causing our distribution partners to cancel existing agreements
with us and to stop doing business with us. </p>
<p align="justify">The third-party manufacturer that we depend on to manufacture
our products is required to adhere to FDA regulations regarding current Good
Manufacturing Practices (cGMP), which include testing, control and documentation
requirements. Ongoing compliance with cGMP and other regulatory requirements is
monitored by periodic inspection by the FDA and comparable agencies in other
countries. Failure by our third-party manufacturer to comply with cGMP and other
regulatory requirements could result in actions against them by regulatory
agencies and jeopardize our ability to obtain products on a timely basis. </p>
<b>
<p>We are subject to extensive government regulation including the requirement
of approval before our products may be marketed. Even if we obtain marketing
approval, our products will be subject to ongoing regulatory review.</b> </p>
<p align="justify">We, our collaborators, our products, and our product
candidates are subject to extensive regulation by governmental authorities in
the United States and other countries. Failure to comply with applicable
requirements could result in warning letters, fines and other civil penalties,
delays in approving or refusal to approve a product candidate, product recall or
seizure, withdrawal of product approvals, interruption of manufacturing or
clinical trials, operating restrictions, injunctions, and criminal prosecution.
</p>
<p align="justify">Our products cannot be marketed in the United States without
FDA approval. Obtaining FDA approval requires substantial time, effort, and
financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all. We rely on our partners for the
preparation of applications and for obtaining regulatory approvals. If the FDA
does not approve our product candidates in a timely fashion, or does not approve
them at all, our business and financial condition may be adversely affected.
Further, the terms of approval of any marketing application, including the
labeling content, may be more restrictive than we desire and could affect the
marketability of our or our collaborator's products. Subsequent discovery of
problems with an approved product may result in restrictions on the product or
its withdrawal from the market. In addition, both before and after regulatory
approval, we, our collaborators, our products, and our product candidates are
subject to numerous FDA requirements covering testing, manufacturing, quality
control, (cGMP), adverse event reporting, labeling, advertising, promotion,
distribution, and export. Our collaborators and we are subject to surveillance
and periodic inspections to ascertain compliance with these regulations.
Further, the relevant law and regulations may change in ways that could affect
us, our collaborators, our products, and our product candidates. Failure to
comply with regulatory requirements could have a material adverse impact on our
business.<font FACE="Times New Roman"> </font></p>
<p align="justify">Regulations regarding the manufacture and sale of our future
products are subject to change. We cannot predict what impact, if any, such
changes may have on our business, financial condition or results of operations.
Failure to comply with applicable regulatory requirements could have a material
adverse effect on our business, financial condition and results of operations.
</p>
<p align="justify">Additionally, the time required for obtaining regulatory
approval is uncertain. We may encounter delays or product rejections based upon
changes in FDA policies, including cGMP, during periods of product development.
We may encounter similar delays in countries outside of the United States. We
may not be able to obtain these regulatory acceptances on a timely basis, or at
all. </p>
<p align="justify">The failure to obtain timely regulatory acceptance of our
products, any product marketing limitations, or any product withdrawal would
have a material adverse effect on our business, financial condition and results
of operations. In addition, before it grants approvals, the FDA or any foreign
regulatory authority may impose numerous other requirements with which we must
comply. Regulatory acceptance, if granted, may include significant limitations
on the indicated uses for which the product may be marketed. FDA enforcement
policy strictly prohibits the marketing of accepted products for unapproved
uses. Product acceptance could be withdrawn or civil or criminal sanctions could
be imposed for our failure to comply with regulatory standards or the occurrence
of unforeseen problems following initial marketing. </p>
<p align="justify">The third party manufacturers that we depend on to
manufacture our products are required to adhere to FDA regulations regarding
cGMP and similar regulations in other countries, which include testing, control
and documentation requirements. Ongoing compliance with cGMP and other
regulatory requirements is monitored by periodic inspection by the FDA and
comparable agencies in other countries. </p>
<b>
<p>We may not be able to expand or enhance our existing product lines with new
products limiting our ability to grow. </b><font FACE="Times New Roman"></p>
</font>
<p ALIGN="JUSTIFY">If we are not successful in the development and introduction
of new products, our ability to grow will be impeded. We may not be able to
identify products to enhance or expand our product lines. Even if we can
identify potential products, our investment in research and development might be
significant before we could bring the products to market. Moreover, even if we
identify a potential product and expend significant dollars on development, we
may never be able to successfully bring the product to market or achieve market
acceptance for such product. As a result, we may never recover our expenses. </p>
<p ALIGN="center">8</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'></font><font SIZE="2"><b>
<p>The market may not be receptive to products incorporating our drug delivery
technologies.</b> </p>
<p ALIGN="JUSTIFY">The commercial success of any of our products that are
approved for marketing by the FDA and other regulatory authorities will depend
upon their acceptance by the medical community and third party payors as
clinically useful, cost-effective and safe. No product based on our technologies
is marketed in the United States, so there can be no assurance as to market
acceptance. </p>
<p>Factors that we believe could materially affect market acceptance of these
products include: </p>
<ul>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">the timing of the receipt of
  marketing approvals and the countries in which such approvals are obtained;
  <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">the safety and efficacy of the
  product as compared to competitive products; <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">the relative convenience and ease
  of administration as compared to competitive products; <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">the strength of marketing
  distribution support; and <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">the cost-effectiveness of the
  product and the ability to receive third party reimbursement. </li>
</ul>
<b>
<p>We are subject to environmental regulations and any failure to comply may
result in substantial fines and sanctions. </b></font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2">
<p ALIGN="JUSTIFY">Our operations are subject to Canadian and international
environmental laws and regulations governing, among other things, emissions to
air, discharges to waters and the generation, handling, storage, transportation,
treatment and disposal of raw materials, waste and other materials. Many of
these laws and regulations provide for substantial fines and criminal sanctions
for violations. We believe that we are and have been operating our business and
facility in a manner that complies in all material respects with environmental,
health and safety laws and regulations; however, we may incur material costs or
liabilities if we fail to operate in full compliance. We do not maintain
environmental damage insurance coverage with respect to the products which we
manufacture. </p>
<p ALIGN="JUSTIFY">We may have to make significant expenditures in the future to
comply with evolving environmental, health and safety requirements, including
new requirements that may be adopted or imposed in the future. To meet changing
licensing and regulatory standards, we may have to make significant additional
site or operational modifications that could involve substantial expenditures or
reduction or suspension of some of our operations. We cannot be certain that we
have identified all environmental and health and safety matters affecting our
activities and in the future our environmental, health and safety problems, and
the costs to remediate them, may be materially greater than we expect. </font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2"><b>
<p>Our limited cash resources restrict our ability to pay cash dividends. </b>
</font><font FACE="Times New Roman"></p>
</font><font SIZE="2">
<p ALIGN="JUSTIFY">Since our inception, we have not paid any cash dividends on
our common stock and we do not anticipate paying any cash dividends on our
common stock in the foreseeable future. If we do not pay any dividends on our
common stock, our stockholders will be able to profit from an investment only if
the price of the stock appreciates before the stockholder sells it. </font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2"><b>
<p>Risks Related to Our Intellectual Property </b></font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2"><b>
<p>If we are not able to adequately protect our intellectual property, we may
not be able to compete effectively. </p>
</b>
<p align="justify">Our success depends, to a significant degree, upon the
protection of our proprietary technologies. While we currently own 3 U.S.
patents and have applied for 7 US patents, we will need to pursue additional
protections for our intellectual property as we develop new products and enhance
existing products. We may not be able to obtain appropriate protection for our
intellectual property in a timely manner, or at all. Our inability to obtain
appropriate protections for our intellectual property may allow competitors to
enter our markets and produce or sell the same or similar products. </p>
<p align="justify">If we are forced to resort to legal proceedings to enforce
our intellectual property rights, the proceedings could be burdensome and
expensive. In addition, our proprietary rights could be at risk if we are
unsuccessful in, or cannot afford to pursue, those proceedings. </p>
<p align="justify">We also rely on trade secrets and contract law to protect
some of our proprietary technology. We have entered into confidentiality and
invention agreements with our employees and consultants. Nevertheless, these
agreements may not be honored and they may not effectively protect our right to
our un-patented trade secrets and know-how. Moreover, others may independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets and know-how. </font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2">
<p align="justify">In 1995, the U.S. Patent and Trademark Office adopted changes
to the U.S. patent law that made the term of issued patents 20 years from the
date of filing rather than 17 years from the date of issuance, subject to
specified transition periods. Beginning in June 1995, the patent term became 20
years from the earliest effective filing date of the underlying patent
application. These changes may reduce the effective term of protection for
patents that are pending for more than three years. While we cannot predict the
effect that these changes will have on our business, they could have a material
adverse effect on our ability to protect our proprietary information.
Furthermore, the possibility of extensive delays in the patent issuance process
could effectively reduce the term during which a marketed product is protected
by patents. </p>
<p align="justify">We may need to obtain licenses to patents or other
proprietary rights from third parties. We may not be able to obtain the licenses
required under any patents or proprietary rights or they may not be available on
acceptable terms. If we do not obtain required licenses, we may
<font FACE="Times New Roman" SIZE="2">encounter delays in product development or
find that the development, manufacture or sale of products requiring licenses
could be foreclosed. We may, from time to time, support and collaborate in
research conducted by universities and governmental research organizations. We
may not be able to acquire exclusive rights to the inventions or technical
information derived from these collaborations, and disputes may arise over
rights in derivative or related research programs conducted by us or our
collaborators. </font></p>
<p align="center"><font face="Times New Roman">9</font></p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">If we infringe on the rights of third parties, we may not be
able to sell our products, and we may have to defend against litigation and pay
damages. </p>
<p align="justify"></b>If a competitor were to assert that our products infringe
on its patent or other intellectual property rights, we could incur substantial
litigation costs and be forced to pay substantial damages. Third-party
infringement claims, regardless of their outcome, would not only consume
significant financial resources, but would also divert our management's time and
attention. Such claims could also cause our customers or potential customers to
purchase competitors' products or defer or limit their purchase or use of our
affected products until resolution of the claim. If any of our products are
found to violate third-party intellectual property rights, we may have to
re-engineer one or more of our products, or we may have to obtain licenses from
third parties to continue offering our products without substantial
re-engineering. Our efforts to re-engineer or obtain licenses could require
significant expenditures and may not be successful. </p>
<b>
<p align="justify">Our controlled release products that are generic versions of
branded controlled release products that are covered by one or more patents may
be subject to litigation, which could delay FDA approval and commercial launch
of our products </p>
</b>
<p ALIGN="JUSTIFY">We expect to file or have our collaborators file Abbreviated
New Drug Applications or New Drug Applications (ANDAs or NDAs) for our
controlled release products under development that are covered by one or more
patents of the branded product. It is possible that the owners of the patents
covering the brand name product or the sponsors of the NDA with respect to the
branded product will sue or undertake regulatory initiatives to preserve
marketing exclusivity. Any significant delay in obtaining FDA approval to market
our products as a result of litigation, as well as the expense of such
litigation, whether or not we or our collaborators are successful, could have a
materially adverse effect on our business, financial condition and results of
operations. </p>
<b>
<p>Risks Related to Our Securities: </p>
<p>The price of our common stock could be subject to significant fluctuations.</b>
</p>
<p>Any of the following factors could affect the market price of our common
stock: </p>
<ul>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Our failure to achieve and maintain
  profitability; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Changes in earnings estimates and
  recommendations by financial analysts; </font><font FACE="Times New Roman">
  <br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Actual or anticipated variations in
  our quarterly results of operations; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Changes in market valuations of
  similar companies; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Announcements by us or our
  competitors of significant contracts, new products, acquisitions, commercial
  relationships, joint ventures or capital commitments; </font>
  <font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">The loss of major customers or
  product or component suppliers; </font><font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font FACE="Times New Roman" SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">The loss of significant partnering
  relationships; and <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">General market, political and
  economic conditions. </font><font FACE="Times New Roman"></li>
</ul>
</font><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">We have a significant number of convertible securities
outstanding that could be exercised in the future. Subsequent resale of these
and other shares could cause the Company's stock price to decline. This could
also make it more difficult to raise funds at acceptable levels via future
securities offerings. </p>
<b>
<p align="justify">We have a concentration of stock ownership and control, and a
small number of stockholders have the ability to exert significant control in
matters requiring stockholder vote and may have interests that conflict with
ours. </p>
<p align="justify"></b>Our common stock ownership is highly concentrated. See
&quot;Security Ownership of Certain Beneficial Owners and Management.&quot; As a result, a
relatively small number of stockholders, acting together, have the ability to
control all matters requiring stockholder approval, including the election of
directors and approval of mergers and other significant corporate transactions.
This concentration of ownership may have the effect of delaying, preventing or
deterring a change in control of our company. It could also deprive our
stockholders of an opportunity to receive a premium for their shares as part of
a sale of our company and it may affect the market price of our common stock. In
deciding how to vote on such matters, those stockholders' interests may conflict
with yours. </p>
<b>
<p>Lack of Independent Directors </p>
</b>
<p align="justify">We cannot guarantee that our Board of Directors will always
have a majority of independent directors. In the absence of a majority of
independent directors, our executive officer, who is also a principal
stockholder and director, could establish policies and enter into transactions
without independent review and approval thereof. This could present the
potential for a conflict of interest between the Company and its stockholders
generally and the controlling officers, stockholders or directors. </p>
<p align="center">10</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p>Our common stock is quoted on the OTC Bulletin Board</b>. </p>
<p align="justify">As a result, the holders of our common stock may find it more
difficult to obtain accurate quotations concerning the market value of the
stock. Stockholders also may experience greater difficulties in attempting to
sell the stock than if it was listed on a stock exchange or quoted on Nasdaq.
Because our common stock is not traded on a stock exchange or on Nasdaq, and the
market price of the common stock is less than $5.00 per share, the common stock
is classified as a &quot;penny stock.&quot; Rule 15g-9 of the Securities Exchange Act of
1934 imposes additional sales practice requirements on broker-dealers that
recommend the purchase or sale of penny stocks to persons other than those who
qualify as an &quot;established customer&quot; or an &quot;accredited investor.&quot; This includes
the requirement that a broker-dealer must make a determination that investments
in penny stocks are suitable for the customer and must make special disclosures
to the customer concerning the risks of penny stocks. Application of the penny
stock rules to our common stock could adversely affect the market liquidity of
the shares, which in turn may affect the ability of holders of our common stock
to resell the stock. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in our common stock and may
affect the ability of stockholders to sell their shares. These requirements may
be considered cumbersome by broker-dealers and could impact the willingness of a
particular broker-dealer to make a market in our shares, or they could affect
the value at which our shares trade. Classification of the shares as penny
stocks increases the risk of an investment in our shares. </p>
<b>
<p align="justify">We became public by means of a reverse merger, and as a
result we are subject to the risks associated with the prior activities of the
public company. In addition, we may not be able to attract the attention of
major brokerage firms or institutional buyers. </p>
</b>
<p ALIGN="JUSTIFY">Additional risks may exist because we became public through a
&quot;reverse merger&quot; with a shell corporation. Although the shell did not have
recent or past operations or assets and we performed a due diligence review of
the public company, there can be no assurance that we will not be exposed to
undisclosed liabilities resulting from the prior operations of our company. </p>
<p ALIGN="JUSTIFY">Security analysts of major brokerage firms and securities
institutions may not cover us since there are no broker-dealers who sold our
stock in a public offering who would have an incentive to follow or recommend
the purchase of our common stock. No assurance can be given that established
brokerage firms will want to conduct any financings for us in the future. </p>
<b>
<p align="center">FORWARD-LOOKING STATEMENTS</b> </p>
<p ALIGN="JUSTIFY">This Prospectus contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as &quot;may&quot;, &quot;expect&quot;, &quot;plans&quot;, &quot;intends&quot;,
&quot;anticipate&quot;, &quot;believe&quot;, &quot;estimate&quot; and &quot;continue&quot; or similar words and are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934. You should read statements that contain these words carefully because they
discuss our future expectations contain projections of our future results of
operations or of our financial condition or state other &quot;forward-looking&quot;
information. IntelGenx believes that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
IntelGenx is not able to accurately predict or control. The factors listed above
in the section captioned &quot;Risk Factors&quot;, as well as any cautionary language in
this Prospectus, provide examples of risks, uncertainties and events that may
cause IntelGenx's actual results to differ materially from the expectations
IntelGenx describes in our forward-looking statements. Before you invest in the
common stock, you should be aware that the occurrence of the events described as
risk factors and elsewhere in this Prospectus could have a material adverse
effect on our business, operating results and financial condition.</font><font FACE="Times New Roman"><font size="2">
</font></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">DESCRIPTION OF BUSINESS </b></font>
<font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Corporate History </p>
</b>
<p ALIGN="JUSTIFY">The Company, formerly known as Big Flash Corp., was
incorporated in Delaware on July 27, 1999. On April 28, 2006, the Company,
directly and indirectly through its Canadian holding corporation, completed the
acquisition of 100% of the issued and outstanding shares and warrants of
IntelGenx Corp., a Canadian company incorporated on June 15, 2003. The Company
did not have any operations prior to the acquisition of IntelGenx. In connection
with the acquisition, we changed our name from Big Flash Corp. to IntelGenx
Technologies Corp. IntelGenx Corp. has continued operations as our operating
subsidiary. </p>
<p>Our principal office is located at 6425 Abrams, Ville St-Laurent, Montreal,
Quebec, H4S 1X9. Our website is located at www.IntelGenx.com. The contents of
our website are not incorporated into this filing. </p>
<p align="center">11</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><i>
<p>Inter-corporate Relationships </p>
</i></font>
<p align="center"><img border="0" src="intelg1.gif" width="258" height="187"></p>
<font FACE="Times New Roman" SIZE="2"><b>
<p>Overview </p>
</b>
<p ALIGN="JUSTIFY">We are a drug delivery company focusing on the development of
novel, orally administered drug delivery systems based on our proprietary oral
drug delivery technologies. We have positioned ourselves as a provider of
product development services for the pharmaceutical industry, including the
branded and generic pharmaceutical markets. </p>
<p ALIGN="JUSTIFY">Drug delivery systems are an important tool in the hands of
physicians for purposes of optimizing drug therapy. For the pharmaceutical
industry, drug delivery systems represent an opportunity to extend the market
exclusivity and product lifecycle of drugs whose patent protection is ending.
</p>
<p ALIGN="JUSTIFY">According to a report by CMR International, products
incorporating drug delivery systems represented 13% of the US $337 billion
global pharmaceutical market. In the United States, sales of drug delivery
products totaled $35 billion in 2006. Of this amount, the orally administered
segment of the drug delivery market totaled $21 billion in sales. Controlled
release (CR) dosage technologies play an important role in the development of
orally administered drug delivery systems. Control release technology provides
patients with the required amount of medication over a pre-determined, prolonged
period of time, preferably over 24 hours. Because of the reduced fluctuation of
the active drug in the blood, controlled release products are deemed safer and
more tolerable than conventional dosage forms, and have shown better patient
compliance. </p>
<p ALIGN="JUSTIFY">Our primary business strategy is to develop pharmaceutical
products based upon our proprietary drug delivery technologies and license the
commercial rights to companies in the pharmaceutical industry once the viability
of a product has been demonstrated. In exchange for licensing rights to our
products, we seek funding consisting of advance down payments, milestone fees,
reimbursement for development costs, and royalties on sales. The companies we
partner with are responsible for managing the regulatory approval process of the
product with the U.S. Food &amp; Drug Administration (&quot;FDA&quot;) and/or other regulatory
bodies, as well as for the marketing and distribution of the products. </p>
<p ALIGN="JUSTIFY">In addition to pursuing partnering arrangements that provide
for the full funding of a drug development project, we are planning to undertake
development of selected product opportunities until the marketing and
distribution stage. We would first assess the potential and associated costs for
successful development of a product, and then determine at which stage it would
be most prudent to seek a partner, balancing costs against the potential for
higher returns later in the development process. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Technology Platforms </p>
</b>
<p ALIGN="JUSTIFY">Our product development efforts are based upon three delivery
platform technologies: (1) a Tri-Layer Tablet technology (2) a Quick Release
wafer technology, and (3) a Mucoadhesive Tablet technology. Our Tri-layer
platform technology allows for the development of oral controlled release
products. It is versatile and is aimed at significantly reducing manufacturing
costs as compared to competing delivery technologies. The Quick Release Wafer
technology allows for the instant delivery of pharmaceuticals to the oral
cavity. The Mucoadhesive Tablet allows for the controlled release of active
substances to the oral mucosa. </p>
<p ALIGN="JUSTIFY">The Tri-Layer platform technology represents a new generation
of controlled release layered tablets to modulate the release of active
compounds. The technology is based on a tri-layer tablet with an active core
layer and erodible cover layers. The release of the active drug from the core
matrix initially occurs in a first-order fashion. As the erodible layers start
to disintegrate, the permeation of the active ingredient through the cover
layers increases. Thus, the Tri-Layer tablet can produce quasi-linear
(zero-order) kinetics for releasing a chemical compound over a desired period of
time. The erosion rate of the cover layers can be customized according to the
physico-chemical properties of the active drug. In addition, our multi-layer
technology offers the opportunity to develop combination products in a
regulatory-compliant format. Combination products are made up of two or more
active ingredients that are combined into a single dosage form. </p>
<p ALIGN="JUSTIFY">The Quick Release Wafer is made up of a thin (25-35 micron)
polymeric film comprised of USP components that are safe and approved by the
Food and Drug Administration (FDA) for use in food, pharmaceutical, and cosmetic
products. Derived from the edible film technology used for breath strips and
initially developed for the instant delivery of savory flavors to food
substrates, the Instant Delivery Film has distinct advantages over existing fast
dissolving oral tablets, thereby making it an attractive choice for indications
requiring rapid onset of action like migraine, motion sickness and nausea. </p>
<p ALIGN="center">12</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p align="justify">The Mucoadhesive Tablet is an innovative drug delivery system
capable of adhering to the oral mucosa and releasing the drug onto the site of
application at a desired rate. The Mucoadhesive Tablet exhibits many advantages:
(i) it avoids the first pass effect (whereby the liver metabolizes the active
and greatly reduces the level of drug in the systemic circulation), (ii) it
leads to a higher absorption rate as compared to the conventional oral route and
(iii) it achieves a rapid onset of action for the drug. The Mucoadhesive Tablet
technology is a versatile one where the site of application, residence time and
rate of release of the drug can be modulated to achieve the desired results. </p>
<b>
<p align="justify">Product Portfolio </p>
</b>
<p align="justify">We have assembled a product portfolio that includes a blend
of generic products that management believes have the potential to generate
short-term revenues by presenting branding opportunities that are based on our
proprietary delivery technology. </p>
<p align="justify">INT0001/2004. This is the most advanced generic product
involving our trilayer technology. Equivalency with the reference product Toprol
XL and its European equivalent Beloc-ZOK has been demonstrated <i>in-vitro</i>.
The product has been tested in phase I studies. </p>
<p align="justify">INT0003/2005. We have entered into a partnership with Cary
Pharmaceuticals for the development of a once-daily tablet product containing an
antidepressant and a nicotine antagonist. The product is intended for smoking
cessation. </p>
<p align="justify">INT0004/2006. The formulation development for an
antidepressant has been completed and clinical (phase I) development has
commenced. </p>
<p align="justify">INT0005/2005. We are developing a bilayer tablet containing a
fixed-dose combination of a non-steroidal anti-inflammatory drug and a synthetic
prostaglandin. Formulation development is completed and a pilot bio batch has
been manufactured. </p>
<p align="justify">INT0006/2005. We have entered into a development agreement
with Azur Pharma for the development and manufacture of a prenatal vitamin
supplement. The product was developed using our proprietary technology. We
expect to commercialize the product in mid 2008. </p>
<p align="justify">INT0010/2006. We have entered into an agreement with Cannasat
Therapeutics Inc. for the development of a sublingual tablet product containing
a cannabinoid-based drug for the treatment of neuropathic pain and nausea in
cancer patients undergoing chemotherapy. </p>
<p align="justify">INT0011/2007 Under a development agreement with Cannasat
Therapeutics Inc., we are developing a controlled-release tablet containing
Cannabidiol for the treatment of schizophrenia. </p>
<p align="justify">INT0007/2006. A wafer product based on our proprietary edible
film technology is in early development stage. The product is intended for the
treatment of erectile dysfunction (ED). </p>
<p align="justify">INT0008/2007. A wafer product based on our proprietary edible
film technology is in early development stage. The product is intended for the
treatment of migraine. </p>
<p align="justify">The current development status of each of our products is
summarized in the following table: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" height="278" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5"><font FACE="Times New Roman" SIZE="2"><b>Product</b></font></td>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5"><font FACE="Times New Roman" SIZE="2"><b>
    Application</b></font></td>
    <td WIDTH="34%" height="19" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>
    <p style="margin-left: 5">Status of Development</b></font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="18" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5"></td>
    <td WIDTH="33%" height="18" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5"></td>
    <td WIDTH="34%" height="18" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5"></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0001/2004</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">CHF, Hypertension</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Pivotal batches in preparation</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0003/2005</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Smoking cessation</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Pilot biostudy completed</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0004/2006</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Antidepressant</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Pivotal batches completed</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0010/2006</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Neuropathic pain</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Pilot biostudy completed</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0006/2005</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Prenatal vitamin</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Manufacturing scale-up</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">supplement</font></td>
    <td WIDTH="34%" height="19" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0005/2005</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Osteoarthritis</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Pilot batch completed.</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0007/2006</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">ED</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Formulation development</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="34%" height="19" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">ongoing</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0008/2007</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Migraine</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Formulation development</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="34%" height="19" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">ongoing</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">INT0011/2007</font></td>
    <td WIDTH="33%" height="15" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Schizophrenia</font></td>
    <td WIDTH="34%" height="15" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Formulation development</font></td>
  </tr>
  <tr>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="33%" height="19" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="34%" height="19" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">ongoing</font></td>
  </tr>
</table>
<p style="margin-left: 5" align="center"><font size="2">13</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Our Strategy </p>
</b>
<p ALIGN="JUSTIFY">Our primary growth strategies include: (1) identifying
lifecycle management opportunities for existing &quot;blockbuster&quot; products, (2)
developing generic drugs with high barriers to entry, (3) developing products
for the (non-pharmaceutical) nutritional supplement market, and (4) new drug
delivery technologies. </p>
<b>
<p align="justify">Lifecycle Management Opportunities </p>
</b>
<p ALIGN="JUSTIFY">To achieve our goal of creating attractive business
opportunities, we have undertaken a strategy under which we will position our
delivery technologies as an opportunity for lifecycle management of products for
which the patent protection of the active ingredient is nearing expiration.
While the patent for the underlying substance cannot be extended, patent
protection can be obtained for a new and improved formulation by filing an
application with the FDA under Section 505(b)(2) of the Food, Drug and Cosmetic
Act. The first formulation for a respective active ingredient which is filed
with the FDA under a 505(b)(2) application may qualify for three years of market
exclusivity upon approval. Based upon a review of past partnerships between
third party drug delivery companies and pharmaceutical companies, management
believes that drug delivery companies which possess innovative technologies to
develop these special dosage formulations present an attractive opportunity to
pharmaceutical companies. Accordingly, we believe these &quot;505(b)(2) products&quot;
represent the most attractive opportunity for us to date. </p>
<b>
<p align="justify">Generic Drugs with High Barriers to Entry </p>
</b>
<p ALIGN="JUSTIFY">We will also plan to pursue the development generic drugs
that have certain barriers to entry, e.g., where product development and
manufacturing are complex and can limit the number of potential entrants into
the generic market. We plan to pursue such projects if there is a strong chance
the number of competitors will be small. An example of such a product is our pro
INT0005/2005, a fixed-dose combination medication requiring complex formulation
and manufacturing technology. Our goal is that this will be the first such
product to file for FDA approval. </p>
<b>
<p align="justify">Nutritional Supplement Products </p>
</b>
<p ALIGN="JUSTIFY">We plan to develop additional products for the nutritional
supplement market based upon our proprietary drug delivery technologies. The
market for these supplements is large, with little differentiation between
products. Our proprietary technology is aimed at increasing the absorption rate
of active ingredients. We believe that supplements represent attractive short
term revenue opportunities since they are not as regulated as pharmaceutical
products and do not require FDA approval. </p>
<b>
<p align="justify">Development of New Drug Delivery Technologies </p>
</b>
<p ALIGN="JUSTIFY">The rapidly disintegrating film technology contained in our
Quick Release Wafer and our mucosal adhesive tablet are examples of our efforts
to develop alternate technology platforms. As we work with various partners on
different products, we seek opportunities to develop new proprietary
technologies that may open up new market sectors for us in the future. </p>
<b>
<p align="justify">Competition </p>
</b>
<p ALIGN="JUSTIFY">The pharmaceutical industry is highly competitive and is
subject to the rapid emergence of new technologies, governmental regulations,
healthcare legislation, availability of financing, patent litigation and other
factors. Many of our competitors, including Biovail Corporation, Labopharm Inc.,
and Flamel Technologies S.A., have longer operating histories and greater
financial, technical, marketing, legal and other resources than us. In addition,
many of our competitors have significantly greater experience than we have in
conducting clinical trials of pharmaceutical products, obtaining FDA and other
regulatory approvals of products, and marketing and selling products that have
been approved. We expect that we will be subject to competition from numerous
other companies that currently operate or are planning to enter the markets we
compete in. </p>
<p align="justify">The key factors affecting the success of our drug delivery
products are likely to include, among other factors: </p>
<ul>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">The safety and
  efficacy of our products; <br>
&nbsp;</li>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">The relative speed
  with which we can develop products;<br>
&nbsp;</li>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">Generic competition
  for any product that we develop; <br>
&nbsp;</li>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">Our ability to
  defend our existing intellectual property and to broaden our IP and technology
  base; <br>
&nbsp;</li>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">Our ability to
  differentiate our products; <br>
&nbsp;</li>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">Our ability to
  manufacture our products in compliance with cGMP and any other regulatory
  requirements </li>
</ul>
</font>
<p align="center" style="margin-top: 0; margin-bottom: 0"><font size="2">14</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font SIZE="2">
<p ALIGN="JUSTIFY">In order to establish ourselves as a viable industry partner,
we have to continue to invest in our research and development activities in
order to further strengthen our technology base and to develop the ability to
manufacture our products through our manufacturing partner at competitive costs.
</p>
<b>
<p>Our Competitive Strengths </p>
</b>
<p>We believe that our key competitive strengths include: </p>
<ul>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">Our intellectual property; </font>
  <font FACE="Times New Roman"><br>
&nbsp;</li>
  </font><font SIZE="2">
  <li>
  <p style="margin-top: 0; margin-bottom: 0">The versatility of our drug
  delivery technology ; and <br>
&nbsp;</li>
  <li>
  <p style="margin-top: 0; margin-bottom: 0">The manufacturing cost savings
  associated with our technology. </li>
</ul>
<b>
<p>Manufacturing Partnership </p>
</b>
<p ALIGN="JUSTIFY">We have entered into a collaboration agreement with Keata
Pharma Inc., a wholly owned subsidiary of PharmEng International Inc., based in
Markham, Ontario. Under this agreement, Keata Pharma is our preferred supplier
for the manufacturing of clinical test batches and commercial products. We also
have a reciprocal relationship whereby we recommend Keata Pharma to our partners
for pharmaceutical manufacturing services and Keata Pharma promotes our product
development services to pharmaceutical companies. </p>
<b>
<p>Dependence on Major Customers </p>
</b>
<p ALIGN="JUSTIFY">We do not rely on any one or a few major customers for our
end products. However, we depend upon a limited number of partners for the
development of new products, and to assist in obtaining approvals from
regulatory bodies such as the FDA that are required in order to commercialize
these products. </p>
<b>
<p>Intellectual Property and Patent Protection </p>
</b>
<p ALIGN="JUSTIFY">We protect our intellectual property and technology by
applying for patent protection in the United States and in the most relevant
foreign markets, and through non-disclosure agreements, license agreements and
appropriate restrictions and controls on the distribution of information. We
plan to file core technology patents covering the use of our platform
technologies in any pharmaceutical products. We also rely on trade secrets,
common law trademark rights and trademark registrations. </p>
<p>The following table is a list of our three (3) issued and seven (7) pending
patents: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>Date submitted /</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Patent No.</b></font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Title</b></font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>Subject</b></font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>issued</b></font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">US 6,231,957</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Rapidly disintegrating</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">The composition, manufacturing,</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font SIZE="2">flavor wafer for flavor</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font SIZE="2">and use of rapidly disintegrating</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font SIZE="2">Issued May 15, 2001</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font SIZE="2">enrichment</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font SIZE="2">flavored films for releasing</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">flavors to certain substrates</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">US 6,660,292</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">Rapidly disintegrating</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">Composition and manufacturing</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font SIZE="2">film for precooked</font></td>
    <td WIDTH="25%"><font SIZE="2">of flavored films for releasing</font></td>
    <td WIDTH="25%"><font SIZE="2">Issued December 9,</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font SIZE="2">foods</font></td>
    <td WIDTH="25%"><font SIZE="2">flavors to precooked food</font></td>
    <td WIDTH="25%"><font SIZE="2">2003</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font SIZE="2">substrates</font></td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">US 7,132,113</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Flavored film</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Composition and manufacturing</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">method of multi-layered films</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">Issued April 16, 2002</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">US Appl.</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">Multilayer Tablet</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font SIZE="2">Formulation and Method of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font SIZE="2">2007/0190144</font></td>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font SIZE="2">Preparation of Multilayered</font></td>
    <td WIDTH="25%"><font SIZE="2">Published August 16,</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Tablets</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">2007</font></td>
  </tr>
</table>
<p align="center"><font size="2">15</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">US Appl.</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Multi-Vitamin And</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">2007/0128272</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Mineral Supplement</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Preparation of
    Prenatal</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Published June 7,</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Multivitamin
    Supplement</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">2007</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">PCT/CA2006/0003</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Delayed Release Oral</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method Of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">36<i>;</i> US Appl.</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Dosage Form And</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Making Bilayer Tablets
    Containing</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">February 13, 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">11/403,262</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Method Of Making</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Delayed-Release
    Diclofenac And</font></td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Same</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Misoprostol</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">US Appl.</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Controlled Release</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method Of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">July 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">11/782,838</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Pharmaceutical Tablets</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Making Tablets
    Containing</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">PCT/IB2007/03950</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Bupropion And
    Mecamylamine</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">US Appl. Make</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Stabilized sustained-</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method Of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Special 11/828,287</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">release Bupropion and</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Making Tablets
    Containing</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">August 2007</font></td>
  </tr>
  <tr>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Bupropion /</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Bupropion And
    Mecamylamine</font></td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Mecamylamine tablets</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">US Provisional</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Buccal And Sublingual</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">July 2007</font></td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Appl. Attorney</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Dosage Forms</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Preparation of
    mucoadhesive</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Docket INT34 P-</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">tablets containing THC</font></td>
    <td WIDTH="25%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">311</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">US Provisional</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Cannabinoid</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Formulation And Method of</font></td>
    <td WIDTH="25%" style="border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">July 2007</font></td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Appl. Attorney</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Complexes</font></td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Preparation of gamma-cyclodextrin</font></td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">Docket INT34 P-</font></td>
    <td WIDTH="25%">&nbsp;</td>
    <td WIDTH="25%"><font FACE="Times New Roman" SIZE="2">complexes containing
    CBD</font></td>
    <td WIDTH="25%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">310</font></td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="25%" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p>Government Regulation </p>
</b>
<p ALIGN="JUSTIFY">The pharmaceutical industry is highly regulated. We must
remain current with FDA and other regulatory requirements in order to get new
products approved. Failing to follow FDA and regulatory requirements could lead
to higher R&amp;D expenses. We are responding to these regulatory challenges by
focusing on 505(b)(2) opportunities. By applying our drug delivery technology to
existing drugs, we have access to high-potential product opportunities at lower
R&amp;D expenses and shorter time-to-market timelines compared to new chemical
entity NDA (New Drug Application) products. </p>
<b>
<p ALIGN="JUSTIFY">Research and Development</b> We are currently working on
several 505(b)(2) opportunities using our Tri-Layer and Quick Release Wafer
platform technologies. We source our 505(b)(2) projects in two ways: (1) either
we develop a product to &quot;proof of concept&quot; and then solicit potential
pharmaceutical partners, or (2) potential partners approach us directly or
through the use of an intermediary with a product idea for development. The
pharmaceutical partners provide the funding required for the product development
and in return get the exclusive distribution rights for the products. We receive
development milestone payments from our partners and royalties upon
commercialization. </p>
<b>
<p>Environmental Regulatory Compliance </p>
</b>
<p>We believe that we are in compliance with environmental regulations
applicable to our research and development facility located in Ville
Saint-Laurent, Quebec. </p>
<b>
<p>Employees </p>
</b>
<p>As of December 31, 2007, we had seven full-time employees and two consultants
on staff. Five full-time employees and one consultant are directly involved in
product development activities. Our technical staff includes one individual with
a Ph.D., one individual with an M.D., and three individuals with Masters of
Science degrees. </p>
<b>
<p align="center">DESCRIPTION OF PROPERTY </p>
</b>
<p ALIGN="JUSTIFY">We currently occupy 3,100 square feet of leased space at a
rate of CAN$8.29/square foot in an industrial zone in Ville St.-Laurent, Quebec,
Canada under a 5-year renewable lease agreement signed in 2004. We expanded our
laboratory and office space at this facility to its maximum during the second
quarter of 2006. In order to continue to support ongoing product development
activities and allow the addition of further development programs we might be
required to seek a different location in 2008. Management has therefore entered
into discussions with the current landlord to look for alternative facilities
that would meet our need for additional space at affordable costs. </p>
<p ALIGN="center">16</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION</b></font><font FACE="Times New Roman"><font size="2">
</font></font><font FACE="Times New Roman" SIZE="2"><b><br>
AND RESULTS OF OPERATIONS</b> </p>
<b>
<p>Results of Operations &#151; Year ended December 31, 2007 compared to Year ended
December 31, 2006. </b></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="34%">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="28%" COLSPAN="2" align="right"><font SIZE="2"><b>Increase/</b></font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2"><b>Percentage</b></font></td>
  </tr>
  <tr>
    <td WIDTH="34%">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>2007</b></font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="28%" COLSPAN="2" align="right"><font SIZE="2"><b>(Decrease)</b></font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2"><b>Change</b></font></td>
  </tr>
  <tr>
    <td WIDTH="34%">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="34%" bgcolor="#E9F1F8"><font SIZE="2">Revenue</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">862,731</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">265,901</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">596,830</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">224%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%"><font SIZE="2">Research and Development Expenses</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">777,773</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">510,407</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">267,366</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">52%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" bgcolor="#E9F1F8"><font SIZE="2">Management salaries</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">328,513</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">245,637</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">82,876</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">34%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%"><font SIZE="2">General and Administrative Expenses</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">166,249</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">84,040</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">82,209</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">98%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" bgcolor="#E9F1F8"><font SIZE="2">Professional fees</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">424,817</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">158,925</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">265,892</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">167%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%"><font SIZE="2">Interest and financing fees</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">349,093</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">54,724</font></td>
    <td WIDTH="8%" align="right">&nbsp;</td>
    <td WIDTH="8%" align="right"><font SIZE="2">294,369</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">538%</font></td>
  </tr>
  <tr>
    <td WIDTH="34%" bgcolor="#E9F1F8"><font SIZE="2">Net income (loss)</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(1,100,793)</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(781,136)</font></td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="8%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(319,657)</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">41%</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Revenues </p>
</b>
<p ALIGN="JUSTIFY">Total revenues for the year ended December 31, 2007 were
$862,731, compared with $265,901 for the same period last year, an increase of
$596,830, or 224%. The increase in total revenue for the twelve month period is
primarily attributable to revenues received pursuant to our research and
development agreements with our pharmaceutical partners. The remaining amount is
attributable to increased interest income of $23,103 earned on the cash proceeds
from the sale of our securities in May 2007. </p>
<p align="justify">Our research and development revenues in 2007 consisted of
$492,530 received for development milestones achieved in connection with product
development projects begun prior to 2007, and $342,846 received in connection
with drug development projects initiated in 2007. </p>
<b>
<p align="justify">Research and Development Expenses </p>
</b>
<p align="justify">Research and development expenses for the twelve-month period
ended December 31, 2007 were $777,773, as compared to $510,407 for 2006. The
increase in research and development expenses is attributable to the increased
drug development activities. </p>
<p ALIGN="JUSTIFY">Approximately 92% of our research and development expenses in
2007 were incurred pursuant to research and development agreements entered into
with our pharmaceutical industry partners. The remaining 8% of our research and
development expenses were incurred in connection with internal projects that we
are pursuing independently. </p>
<b>
<p align="justify">General and Administrative Expenses </p>
</b>
<p align="justify">Our general and administrative expenses increased to $166,249
in 2007, as compared to $84,080 in 2006. The increase is primarily attributable
to increases in expenses in connection with our regulatory and capital raising
efforts. </p>
<b>
<p align="justify">Management Salaries </p>
</b>
<p ALIGN="JUSTIFY">Management salaries increased to $328,513 in 2007, as
compared to $245,637 in 2006. Included in management salaries are $97,951 in non
cash compensation in the form of options granted to directors and management
employees in 2007. This amount compares to $137,097 in non cash compensation in
2006. The increase in management salaries is also attributable to the addition
of a full time Chief Financial Officer and Vice-President of Business
Development. </p>
<b>
<p align="justify">Professional Fees </p>
</b>
<p ALIGN="JUSTIFY">Professional fees increased to $424,817 in 2007, as compared
to $158,925 in 2006. Of this amount, $68,349 represents non-cash compensation
paid for investor relations services. The remaining increase of $197,543 is
primarily attributable to increased amounts paid to our legal counsel and
auditors in connection with our reporting obligations as well as our fund
raising. </p>
<p ALIGN="center">17</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="justify">Stock Based Compensation Expense, Warrants and Stock Based
Payments </p>
</b>
<p align="justify">We incurred an aggregate of $202,607 of amortization expense
for stock based compensation in 2007, as compared to $202,116 for 2006. In 2007,
we granted 257,500 stock options pursuant to our 2006 Stock Option Plan,
resulting in $97,951 in amortization expense. The remaining amortization expense
for 2007 was incurred for options granted in 2006 in connection with the
following: a) options grants to company employees resulting in an amortization
expense of $18,190, b) for financing fees related to the April 2006 IntelGenx
Corp. acquisition for $76,591, and c) for investor relations of $9,875. In 2006,
we granted 1,119,000 stock options pursuant to our 2006 Stock Option Plan,
resulting in $202,116 in amortization expense. </p>
<p align="justify">In 2007, we also amortized a total of $68,349 in stock based
compensation issued in 2006 with respect to investor relation services as
compared to $76,900 in 2006. </p>
<p align="justify">We expect to incur an aggregate of $97,381 in stock based
compensation expense in fiscal 2008 and 2009 solely in connection with the
issuance of options during 2006 and 2007. We anticipate issuing additional
options and warrants in the future, which will continue to result in stock-based
compensation and warrant amortization expenses. </p>
<b>
<p align="justify">Interest and Financing Fees </p>
</b>
<p align="justify">We incurred interest and financing fee expense of $349,093
during the year ended December 31, 2007, as compared to $54,724 in 2006.
Included in the financing fees are a non-cash accretion expense of $185,823, and
cash interest payments of $66,180 on the convertible debentures issued in May
2007. Also included in the financing costs is a non cash financing fee of
$76,591 incurred with respect to the amortization of 250,000 options issued in
connection with the acquisition of IntelGenx in April 2006. The total of
non-cash items included in interest and financing fees is $262,414. </p>
<p align="justify">The remainder of $20,499 in interest expense relates to long
term debt which was redeemed in May 2007, as well as interest paid on the
outstanding shareholder loan. Based on the outstanding principal amount of the
convertible debentures issued in May 2007, and assuming no additional
conversions of these debentures into common stock, we expect to incur interest
expenses of $113,000 in 2008. </p>
<b>
<p align="justify">Net Loss </p>
</b>
<p align="justify">Net loss for the year ended December 31, 2007 was $1,100,793,
as compared to a net loss of $781,136 for the year ended December 31, 2006. The
increase in the net loss for the year ended December 31, 2007 is primarily due
to increases in research and development expenses, professional fees and
financing expenses. These expenses were offset by higher research and
development revenues and interest income. In 2007, the Company incurred
non-recurring and non-cash expenses for an approximate total of $444,000 for the
amortization of financing fees, investor relation services, accretion expense,
depreciation, share-based compensation and deferred income taxes. </p>
<b>
<p align="justify">Impact of Inflation </p>
</b>
<p align="justify">Inflation and changing prices has not had any impact on our
revenues and income from continuing operations from inception to today. </p>
<b>
<p align="justify">Income taxes </p>
</b>
<p align="justify">In 2007, we incurred Canadian and provincial net operating
losses of approximately $794,000 and $908,000 respectively, that may be applied
against earnings of future years.</font><font FACE="Times New Roman"> </font>
<font FACE="Times New Roman" SIZE="2">This compares to Canadian and provincial
net operating losses of approximately $350,000 and $387,000 in 2006. Should
there be an acquisition or a change in control of IntelGenx Corp, our Canadian
subsidiary, the utilization of these net operating losses is subject to
significant limitations imposed by Canadian income tax law. A portion of the net
operating losses may expire before they can be utilized (see Financial
Statements Note 13 &#150; Income Taxes). </p>
<p align="justify">As at December 31, 2007, we had non-refundable tax credits of
$24,000 expiring in 2017. In addition, we had deductible research and
development expenses in the amount of $670,000 with no expiration date, as
compared to $340,000 as of December 31, 2006. </p>
<b>
<p align="justify">Key items from the Balance Sheet</b> </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="231">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2"><b>Increase/</b></font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="94" align="right"><font SIZE="2"><b>Percentage</b></font></td>
  </tr>
  <tr>
    <td WIDTH="231">&nbsp;</td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2"><b>2007</b></font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2"><b>(Decrease)</b></font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="94" align="right"><font SIZE="2"><b>Change</b></font></td>
  </tr>
  <tr>
    <td WIDTH="231" bgcolor="#E9F1F8"><font SIZE="2">Current Assets</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">1,035,920</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">488,975</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">546,945</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="94" align="right" bgcolor="#E9F1F8"><font SIZE="2">112%</font></td>
  </tr>
  <tr>
    <td WIDTH="231"><font SIZE="2">Property and Equipment</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">235,244</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">161,861</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">73,383</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="94" align="right"><font SIZE="2">45%</font></td>
  </tr>
  <tr>
    <td WIDTH="231" bgcolor="#E9F1F8"><font SIZE="2">Current Liabilities</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">261,485</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">154,020</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">107,465</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="94" align="right" bgcolor="#E9F1F8"><font SIZE="2">70%</font></td>
  </tr>
  <tr>
    <td WIDTH="231"><font SIZE="2">Loan Payable, Shareholder</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">101,193</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">86,076</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">15,117</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="94" align="right"><font SIZE="2">18%</font></td>
  </tr>
  <tr>
    <td WIDTH="231" bgcolor="#E9F1F8"><font SIZE="2">Long-term debt</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">-</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">82,661</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8"><font SIZE="2">(82,661)</font></td>
    <td WIDTH="93" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="94" align="right" bgcolor="#E9F1F8"><font SIZE="2">100%</font></td>
  </tr>
  <tr>
    <td WIDTH="231"><font SIZE="2">Convertible notes</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">417,634</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">-</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="93" align="right"><font SIZE="2">417,634</font></td>
    <td WIDTH="93" align="right">&nbsp;</td>
    <td WIDTH="94" align="right"><font SIZE="2">N/A</font></td>
  </tr>
</table>
<p align="center"><font size="2">18</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p>Current Assets </p>
</b>
<p ALIGN="JUSTIFY">At December 31, 2007 we had current assets of $1,035,920, as
compared to current assets $488,975 at December 31, 2006. The net increase in
current assets of $546,945 is attributable to increases in cash, accounts
receivable, income taxes, and investment tax credits receivable totaling
$596,416, and a decrease in prepaid expenses in the amount of $49,471. The
increase in accounts receivable is attributable to increased revenues recognized
in the fourth quarter of 2007. The increase in investment tax credits receivable
is attributable to the increased expenses incurred in research and development
in direct relation to the increased development work performed. </p>
<b>
<p>Contractual Obligations and Commitments </p>
</b>
<p>Excluding trade accounts payable and accrued liabilities, the Company is
committed to the following contractual obligations and commitments. </p>
</font>
<div align="center">
  <center>
  <table CELLSPACING="0" BORDER="0" WIDTH="80%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="39%" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom: 1px solid #000000">
      <p style="margin-left: 5">&nbsp;</td>
      <td WIDTH="30%" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom: 1px solid #000000">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 5">2008</b></font></td>
      <td WIDTH="31%" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom: 1px solid #000000">
      <font FACE="Times New Roman" SIZE="2"><b>
      <p style="margin-right: 5">2009</b></font></td>
    </tr>
    <tr>
      <td WIDTH="39%" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 5">Operating Lease Obligations</font></td>
      <td WIDTH="30%" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">$15,900</font></td>
      <td WIDTH="31%" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">$10,800</font></td>
    </tr>
    <tr>
      <td WIDTH="39%" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 5">Interest on Convertible Notes</font></td>
      <td WIDTH="30%" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">113,000</font></td>
      <td WIDTH="31%" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">85,000</font></td>
    </tr>
    <tr>
      <td WIDTH="39%" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-left: 5">Total</font></td>
      <td WIDTH="30%" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">$128,900</font></td>
      <td WIDTH="31%" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
      <font FACE="Times New Roman" SIZE="2">
      <p style="margin-right: 5">$95,800</font></td>
    </tr>
  </table>
  </center>
</div>
<font FACE="Times New Roman" SIZE="2"><b>
<p>Liquidity and Capital Resources </p>
</b>
<p align="justify">At December 31, 2007, we had an accumulated deficit of
$1,918,658, and cash and cash equivalents of $330,967. We also had accounts
receivable of $427,476, of which $70,238 is a sales tax refund which we expect
to receive during the first quarter of 2008. </p>
<p align="justify">At December 31, 2007, we had accounts payable and accrued
liabilities in an aggregate amount of $261,485. Of this amount, approximately
$71,651 represents amounts owing to shareholders, and approximately $37,000 was
due for legal fees rendered. </p>
<p ALIGN="JUSTIFY">We presently do not have any available credit, bank financing
or other external sources of liquidity. Due to our brief operating history and
startup, our operations have not been a consistent source of liquidity. We have
financed our operating and capital expenditures principally through the sale of
debt and equity securities to accredited and institutional investors. In May
2007, we issued convertible debentures in an aggregate principal amount of $1.5
million, of which $1,395,241 remained outstanding as of December 31, 2007.
Management believes that the Company's existing cash resources will be
sufficient to meet our operating requirements for the first six months of 2008.
We are seeking additional funding through additional equity and debt financings.
However, there can be no assurance that that any additional financing will
become available to us, and if available, on terms acceptable to us. Any
financing, if available, may involve restrictive covenants that impact our
ability to conduct our business. If we are unable to raise additional capital
when required or on acceptable terms, we may have to significantly delay, scale
back or discontinue the development and/or commercialization of one or more of
our product candidates. </p>
<p ALIGN="JUSTIFY">Our consolidated financial statements as of December 31, 2007
have been prepared under the assumption that we will continue as a going concern
for the twelve months ending December 31, 2008. The report of our independent
registered public accounting firm accompanying our financial statements includes
an explanatory paragraph referring to our recurring losses from operations and
expressing substantial doubt in our ability to continue as a going concern
without additional capital becoming available. Our ability to continue as a
going concern is dependent upon our ability to obtain additional equity or debt
financing and to generate revenue. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. </p>
<p align="justify">At December 31, 2007, we had total assets of $1,271,164, and
shareholders' equity of $211,864. </p>
<b>
<p>Current Liabilities </p>
</b>
<p ALIGN="JUSTIFY">At December 31, 2007 we had current liabilities of $261,485,
as compared to current liabilities of $154,020 at December 31, 2006. The net
increase of $107,465 consists of an increase of $60,000 in current loans payable
to our President and Chief Executive Officer, an increase of $46,989 in accounts
payable, approximately $24,502 in currency exchange rate fluctuations on
accounts payable, and a decrease in the long-term debt of $24,026. The long-term
debt was redeemed in connection with the completion of our convertible note
financing in May 2007. </p>
<b>
<p>Property and Equipment </p>
</b>
<p ALIGN="JUSTIFY">At December 31, 2007 we had property and equipment valued at
$235,244, as compared to $161,861 at December 31, 2006. The increase is
attributable to acquisitions of $68,723, $5,712, and $8,526 for laboratory,
office, and computer equipment respectively, with $42,003 allocated to
depreciation, as well as a currency exchange rate fluctuation of $32,425. </p>
<p ALIGN="center">19</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Long term debt </p>
</b>
<p align="justify">At December 31, 2007 there was no long term debt as compared
to $82,661 at December 31, 2006. The long term debt was redeemed in connection
with our convertible note financing in May 2007. </p>
<b>
<p align="justify">May 2007 Convertible Note Financing </p>
</b>
<p ALIGN="JUSTIFY">On May 22, 2007, we completed the sale of 8% Secured
Convertible Debentures (the &quot;Debentures&quot;) in an aggregate principal amount of
approximately $1.5 million (the &quot;Purchase Price&quot;) to certain institutional and
accredited investors (the &quot;Investors&quot;), pursuant to a Securities Purchase
Agreement (the &quot;Purchase Agreement&quot;). The Company received net proceeds of
approximately $1.36 million. </p>
<p ALIGN="JUSTIFY">Pursuant to the Purchase Agreement, the Company also issued
to the Investors five year warrants to purchase 2,142,857 shares of the
Company's common stock at an exercise price of $1.02 per share (the &quot;Warrants&quot;).
The Debentures mature twenty-eight (28) months from the date of issuance (the
&quot;Maturity Date&quot;) and are convertible at any time into shares of the Company's
common stock at a fixed conversion price of $.70. The conversion price of the
Debentures and exercise price of the Warrants is subject to adjustment for
certain events, including dividends, distributions or split of the Company's
Common Stock, subsequent equity sales or rights offerings by the Company, or in
the event of the Company's consolidation, merger or reorganization. The
Debentures bear interest at the rate of 8% per annum, which interest is payable
quarterly in cash or, at the Company's option following the effective date of
the registration statement, in shares of common stock equal to the interest
amount divided by the lower of $0.70 or 85% of the Company's 10 day volume
weighted average stock price. </p>
<p align="justify">The Company's obligations under the Purchase Agreement and
the Debentures are secured by a lien on substantially all of the assets of the
Company, pursuant to a Security Agreement. </p>
<p ALIGN="JUSTIFY">In connection with the Purchase Agreement, the Company also
entered into registration rights agreements (the &quot;Registration Rights
Agreements&quot;) providing for the filing of a registration statement (the
&quot;Registration Statement&quot;) with the Securities and Exchange Commission
registering the Common Stock issuable upon conversion of the Debentures and
exercise of the Warrants. The Company was obligated to file the Registration
Statement no later than 45 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 90 days after the date of closing (or 120 days in the event of a &quot;full
review&quot; by the Securities and Exchange Commission). The Company met its
obligations under the Registration Rights Agreements by filing the Registration
Statement within the deadline and ensuring it was declared effective by August
23, 2007. </p>
<p ALIGN="JUSTIFY">In connection with the private placement, the Company paid
Carter Securities LLC, a NASD registered broker-dealer, placement agent and due
diligence fees of approximately $127,500 and four year warrants allowing him to
purchase 214,286 shares of the Company's common stock at an exercise price of
$0.70 per share. In addition, legal and due diligence expenses of the Investors
were paid to Feldman Weinstein &amp; Smith LLP and Valla LLC for a total of $28,750
while an escrow account fee of $3,500 was paid to the Signature Bank.<b> </p>
<p align="justify">Key items from the Statement of Cash Flows </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="27%">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>Increase/</b></font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>Percentage</b></font></td>
  </tr>
  <tr>
    <td WIDTH="27%">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2"><b>2007</b></font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2"><b>2006</b></font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>(Decrease)</b></font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2"><b>Change</b></font></td>
  </tr>
  <tr>
    <td WIDTH="27%">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E9F1F8"><font SIZE="2">Operating Activities</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(968,659)</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(489,651)</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">$</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(479,008)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">98%</font></td>
  </tr>
  <tr>
    <td WIDTH="27%"><font SIZE="2">Financing Activities</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">1,162,806</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">823,543</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2">339,263</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2">41%</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E9F1F8"><font SIZE="2">Investing Activities</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(82,961)</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(97,511)</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(14,550)</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">(15%)</font></td>
  </tr>
  <tr>
    <td WIDTH="27%"><font SIZE="2">Increase in cash and cash</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="27%"><font SIZE="2">equivalent</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">111,186</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="9%" align="right"><font SIZE="2">236,381</font></td>
    <td WIDTH="9%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2">(125,195)</font></td>
    <td WIDTH="10%" align="right">&nbsp;</td>
    <td WIDTH="10%" align="right"><font SIZE="2">(53%)</font></td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E9F1F8"><font SIZE="2">Cash and cash equivalent -</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="27%" bgcolor="#E9F1F8"><font SIZE="2">end of period</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">330,967</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8"><font SIZE="2">227,578</font></td>
    <td WIDTH="9%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">103,389</font></td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="10%" align="right" bgcolor="#E9F1F8"><font SIZE="2">45%</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p align="justify">Net cash used in operating activities was $968,659 for the
year ended December 31, 2007, as compared to $489,651 in 2006. In 2007, net cash
used in operating activities consisted of an operating loss of $1,100,793, and a
decrease in non-cash operating elements of working capital of $312,065. Non-cash
items included in operating activities totaled $444,199 and included the
following items: depreciation, non-cash payments for investor relation services,
share based compensation expense, interest and expense accretion on the
convertible notes issued in May 2007 and deferred income tax provision. Our
operating activities will continue to consume our available funds until we can
generate increased sales revenues. </p>
<p align="justify">Net cash provided by financing activities was $1,162,806 for
the year ended December 31, 2007, as compared to $823,543 in 2006. Of this
amount, $1,500,000 represents proceeds from the sale of convertible debentures
in May 2007, less $229,323 of related transaction costs, and $107,871 paid for
the redemption of the long-term debt. Net Cash provided by financing activities
is expected to increase as the Company is seeking additional financing. </p>
<p align="center">20</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p align="justify">Net cash used in investing activities was $82,961 for the
year ended December 31, 2007, as compared to $97,511 in 2006. The net cash of
$82,961 was used to purchase capital assets in 2007. On December 27, 2007, the
company purchased $60,000 in laboratory equipment from Horst Zerbe, our
President and Chief Executive Officer. We expect to purchase additional
equipment on an as needed basis in order to support our development efforts. </p>
<p align="justify">Cash and cash equivalents are $330,967 at December 31, 2007,
as compared to $227,578 as of December 31, 2006. The net increase in cash and
cash equivalents was the result of proceeds from the sale of convertible notes
in May 2007, offset by increased spending on research and development
activities. </p>
<b>
<p align="justify">MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER</b> <b>MATTERS </b></font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">Our common stock has been quoted on the OTC Bulletin Board
under the symbol &quot;IGXT&quot; since January, 2007. For the quarters indicated, the
following table sets forth the high and low bid prices per share of common
stock. These prices represent inter-dealer quotations without retail markup,
markdown, or commission and may not necessarily represent actual transactions.
</p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="38%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Quarter Ended</font></td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">High ($)</font></td>
    <td WIDTH="16%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Low ($)</font></td>
  </tr>
  <tr>
    <td WIDTH="38%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">June 30, 2008 (through
    April 18, 2008)</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">0.93</font></td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">0.81</font></td>
  </tr>
  <tr>
    <td WIDTH="38%">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%"><font FACE="Times New Roman" SIZE="2">March 31, 2008</font></td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">1.02</font></td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right"><font FACE="Times New Roman" SIZE="2">0.51</font></td>
  </tr>
  <tr>
    <td WIDTH="38%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">December 31, 2007</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">1.05</font></td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">0.45</font></td>
  </tr>
  <tr>
    <td WIDTH="38%">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%"><font FACE="Times New Roman" SIZE="2">September 30, 2007</font></td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">1.90</font></td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right"><font FACE="Times New Roman" SIZE="2">0.87</font></td>
  </tr>
  <tr>
    <td WIDTH="38%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">June 30, 2007</font></td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="15%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">1.31</font></td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">0.60</font></td>
  </tr>
  <tr>
    <td WIDTH="38%">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="38%"><font FACE="Times New Roman" SIZE="2">March 31,2007</font></td>
    <td WIDTH="15%" align="right">&nbsp;</td>
    <td WIDTH="15%" align="right"><font FACE="Times New Roman" SIZE="2">1.20</font></td>
    <td WIDTH="16%" align="right">&nbsp;</td>
    <td WIDTH="16%" align="right"><font FACE="Times New Roman" SIZE="2">0.68</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Holders </p>
</b>
<p align="justify">As of March, 2008, we had approximately 164 active holders of
our common stock. The number of active record holders was determined from the
records of our transfer agent and also includes beneficial owners of common
stock whose shares are held in the names of various security brokers, dealers,
and registered clearing agencies. The transfer agent of our common stock is
StockTrans Inc., 44 W. Lancaster Avenue, Ardmore, Pennsylvania 19003. </p>
<b>
<p align="justify">Dividend Policy</b></font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">We have never declared or paid any cash dividends on our
common stock. We currently intend to retain any earnings to support operations
and to finance the growth and development of our business. Therefore, we do not
expect to pay cash dividends in the foreseeable future. Any future determination
relating to our dividend policy will be made at the discretion of our Board of
Directors and will depend on a number of factors, including future earnings,
capital requirements, financial conditions and future prospect and other factors
that the board of directors may deem relevant.</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">2006 Stock Option Plan </p>
</b>
<p ALIGN="JUSTIFY">A majority of our shareholders approved the 2006 Option Plan
at the Annual General Meeting held on August 10, 2006. Under the 2006 Stock
Option Plan, up to 1,600,749 shares of common stock may be issued upon the
exercise of options granted to directors, management, employees and consultants.
As of March 24, 2008, 1,376,500 options have been issued and remain outstanding
under the 2006 Option Plan. </p>
<p ALIGN="center">21</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="justify">Equity Compensation Plan Information </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="219" align="right"><font FACE="Times New Roman" SIZE="2">Number
    of Securities</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    Weighted-</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">Number
    of securities</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="219" align="right"><font FACE="Times New Roman" SIZE="2">to be
    issued upon</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">Average</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    remaining available</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="219" align="right"><font FACE="Times New Roman" SIZE="2">exercise
    of</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">Exercise
    Price of</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">for
    future issuance</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="219" align="right"><font FACE="Times New Roman" SIZE="2">
    outstanding options,</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    outstanding</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">under
    equity</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="219" align="right"><font FACE="Times New Roman" SIZE="2">
    warrants, and rights</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">options,</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    compensation plans</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <font FACE="Times New Roman" SIZE="2">
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    warrants, and</font></td>
    <td WIDTH="220" align="right"><font FACE="Times New Roman" SIZE="2">
    (excluding securities</font></td>
    </font>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <td WIDTH="220" align="right"><font SIZE="2">rights</font></td>
    <td WIDTH="220" align="right"><font SIZE="2">reflected in the first</font></td>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
    <td WIDTH="220" align="right"><font SIZE="2">Two columns</font></td>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="317" bgcolor="#E9F1F8"><font SIZE="2">Equity Compensation Plans Approved by</font></td>
    <td WIDTH="219" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="317" bgcolor="#E9F1F8"><font SIZE="2">Security Holders</font></td>
    <td WIDTH="219" align="right" bgcolor="#E9F1F8"><font SIZE="2">1,600,749</font></td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8"><font SIZE="2">$0.55</font></td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8"><font SIZE="2">224,249</font></td>
  </tr>
  <tr>
    <td WIDTH="317">&nbsp;</td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="317"><font SIZE="2">Equity Compensation Plans Not Approved</font></td>
    <td WIDTH="219" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
    <td WIDTH="220" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="317"><font SIZE="2">by Security Holders</font></td>
    <td WIDTH="219" align="right"><font SIZE="2">None</font></td>
    <td WIDTH="220" align="right"><font SIZE="2">None</font></td>
    <td WIDTH="220" align="right"><font SIZE="2">None</font></td>
  </tr>
  <tr>
    <td WIDTH="317" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="219" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="317" bgcolor="#E9F1F8"><font SIZE="2">Total</font></td>
    <td WIDTH="219" align="right" bgcolor="#E9F1F8"><font SIZE="2">1,600,749</font></td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8"><font SIZE="2">$0.55</font></td>
    <td WIDTH="220" align="right" bgcolor="#E9F1F8"><font SIZE="2">224,249</font></td>
  </tr>
</table>
<font FACE="Times New Roman">
<p align="justify"><font size="2">On September 26, 2006 we granted options to
purchase 225,000 shares of common stock to three non-employee directors. These
options have an exercise price of $0.41, vest upon issuance and expire on
September 26, 2016. </font></p>
<p align="justify"><font size="2">On October 1, 2006 we granted options to
purchase up to 69,000 shares of common stock to a consultant. These options have
an exercise price of $0.41, vest upon issuance, and expire on October 1, 2016.
</font></p>
<p align="justify"><font size="2">On November 9, 2006 we granted options to
purchase up to 450,000 shares of common stock to the CFO and a management
employee. These options have an exercise price of $0.41, vest upon issuance, and
expire on November 9, 2016. </font></p>
<p align="justify"><font size="2">On November 13, 2006 we granted options to
purchase up to 250,000 shares of common stock to a consultant. These options
have an exercise price of $0.41, vest over two years at the rate of 25% every
six months, and expire on November 13, 2016. </font></p>
<p ALIGN="JUSTIFY"><font size="2">On November 16, 2006 we granted options to
purchase up to 100,000 shares of common stock to employees and 25,000 options to
a consultant. These options have an exercise price of $0.41, vest over 2 years
at the rate of 25% every six months, and expire on November 16, 2016. </font>
</p>
<p align="justify"><font size="2">On August 9, 2007 we granted options to
purchase up to 107,500 shares of common stock to four non-employee directors.
These options have an exercise price of $1.15, vest upon issuance, and expire on
August 9, 2017. </font></p>
<p align="justify"><font size="2">On August 9, 2007 we granted options to
purchase up to 75,000 shares of common stock to our Vice President of Business
Development. These options have an exercise price of $1.15, vest over 2 years at
the rate of 25% every six months, and expire on August 9, 2017 </font></p>
<p align="justify"><font size="2">On August 9, 2007 we granted options to
purchase up to 75,000 shares of common stock to our chief financial officer.
These options have an exercise price of $1.15, vest over 2 years at the rate of
25% every six months, and expire on August 9, 2017 </font></p>
<p align="justify"><font size="2">As of March 7, 2008 there are 224,249 options
remaining to be granted under the 2006 Option Plan. None of the options have
been exercised as of March 7, 2008. </font></p>
</font><font FACE="Times New Roman" size="2"><b>
<p align="center">SELLING SECURITY HOLDERS</b> </font><b></p>
</b><font FACE="Times New Roman">
<p ALIGN="JUSTIFY"><font size="2">In accordance with a certain Registration
Rights Agreement dated as of March 27, 2008 entered into in connection with the
issuance of the Common Stock and Warrants to the selling security holders, we
have agreed with the selling stockholders to register the Common Stock,
Warrants, Warrant Shares, Placement Agent Common Stock and Placement Agent
Warrant Shares. The selling security holders purchased the Common Stock and
Warrants covering these shares in the March 2008 Private Placement (See
&quot;Description of March 2008 Private Placement of Common Stock and Warrants&quot;). The
warrants have not yet been exercised by the selling security holders. </font>
</p>
<p ALIGN="JUSTIFY"><font size="2">Paradigm Capital, Inc. (&quot;Paradigm&quot;), a FINRA
member broker-dealer, served as the placement agent in connection with our March
2008 Private Placement. We do not have any arrangement with Paradigm for it to
act as a broker-dealer for the sale of the shares included herein for the
selling stockholders. Paradigm may be deemed to be an underwriter with respect
to its respective sales of shares to be offered by them in this prospectus. </font></p>
<p ALIGN="JUSTIFY"><font size="2">The shares offered by this prospectus may be
offered from time to time by the selling security holders listed in the
following table. Each selling security holder will determine the number of
shares to be sold and the timing of the sales. Our registration of the shares
does not necessarily mean that the selling security holders will sell all or any
of the shares. Because the selling security holders may offer all, some or none
of their shares, no definitive estimate as to the number of shares thereof that
will be held by the selling security holders after such offering can be
provided, and the following table has been prepared on the assumption that all
shares of common stock offered under this prospectus will ultimately be sold.
</font></p>
<p ALIGN="center"><font size="2">22</font></p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Total Shares</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Total</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">of</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Percentage</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font SIZE="2">Percentage</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Common</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">of Common</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Shares of</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Beneficial</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font SIZE="2">Beneficial</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">of Common</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Stock</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Stock,</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Common Stock</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Ownership</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Percentage of</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Ownership</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Stock Owned</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Plus shares</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Assuming</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Included in</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Before the</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Common Stock</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">After the</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">After</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Issuable Upon</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Full</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Prospectus</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Offering (3)</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Owned Before</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Offering</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Offering</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right"><font SIZE="2">Exercise of</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">Exercise (1)</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">(2)</font></td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right"><font SIZE="2">Offering (3)</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">(4)</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">(4)</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Name</font></td>
    <td WIDTH="11%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">Warrants (1)</font></td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="11%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Scotia Capital ITF</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">AlphaOne</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Offshore Inc.</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Toronto (5)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,858,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">13%</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,858,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,009,605</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">9.99%</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Bershaw &amp; Co.</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">200262</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Toronto (6)</font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">2,286,000</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">10%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">2,286,000</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">2,009,605</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">9.99%</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">BMO Nesbitt</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Burns ITF</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">A/C 402 20091 22</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Toronto (7)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,298,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">10%</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,298,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">2,009,605</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">9.99%</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">BMO Nesbitt</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Burns ITF</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">A/C 402 20227 29</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Toronto (8)</font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">188,000</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">*</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">188,000</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">188,000</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">*</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">BMO Nesbitt</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Burns ITF</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">A/C 402 20266 21</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">Toronto (9)</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">372,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">1.0</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">372,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">372,000</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">1.0</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Paradigm Capital</font></td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%"><font SIZE="2">Inc.,Toronto (10)</font></td>
    <td WIDTH="11%" align="right"><font SIZE="2">640,160</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">3.0</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">640,160</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">640,160</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">3.0</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
    <td WIDTH="12%" align="right"><font SIZE="2">--</font></td>
  </tr>
  <tr>
    <td WIDTH="16%">&nbsp;</td>
    <td WIDTH="11%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
    <td WIDTH="12%" align="right">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" bgcolor="#E9F1F8"><font SIZE="2">TOTALS</font></td>
    <td WIDTH="11%" align="right" bgcolor="#E9F1F8"><font SIZE="2">8,642,160</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">8,642,160</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8"><font SIZE="2">7,228,975</font></td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>* Less than 1%. </p>
<p align="justify">(1) For purposes of this column only, we have included all
shares of common stock owned or beneficially owned by that selling security
holder, and the number of shares of common stock issuable upon exercise of all
warrants owned or beneficially owned by such selling security holder. Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other selling security holder. Each selling security
holder's ownership in this column is based on 20,299,045 shares of our common
stock outstanding as of April 8, 2008. </p>
<p align="justify">(2) Represents an aggregate of: (i) 4,001,000 shares of
outstanding common stock (ii) 4,001,000 shares issuable upon the exercise of
warrants with an exercise price of $1.02, subject to adjustment (iii) 320,080
shares of common stock issuable upon the exercise of the Placement Agent
Options, and (iv) 320,080 shares of common stock issuable upon the exercise of
the Placement Agent Warrants, which also have an exercise price of $1.02,
subject to adjustment. </p>
<p align="justify">(3) The percentages set forth in this column are based on
20,299,045 shares of common stock outstanding as of April 8, 2008. The number
and percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any shares as to which the selling security
holder has sole or shared voting power or investment power and also any shares,
which the selling security holder has the right to acquire within 60 days.
However, the selling stockholders have contractually agreed to restrict their
ability to exercise their warrants and receive shares of our common stock such
that the number of shares of common stock held by them in the aggregate and
their affiliates after such exercise does not exceed 9.99% of the then issued
and outstanding shares of common stock as determined in accordance with Section
13(d) of the Exchange Act. Accordingly, this column represents the aggregate
maximum number and percentage of shares that the selling stockholder can own at
one time (and therefore, offer for resale at any one time) due to their 9.99%
limitation. </p>
<p align="justify">(4) Assumes that all securities registered will be sold. </p>
<p align="justify">(5) Includes 1,429,000 shares of common stock and 1,429,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Alpha One Offshore, Inc. (&quot;Alpha One&quot;) is the owner of
the shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Steve Palmer may be deemed a control person of the shares
owned by this selling security holder. </p>
<p align="center">23</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">(6) Includes 1,143,000 shares of common stock and 1,143,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. AGF Canadian Small Cap Fund (&quot;AGF&quot;) is the owner of the
shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Bob Farquharson may be deemed a control person of the
shares owned by this selling security holder. AGF is affiliated with AGF
Securities, Inc., a FINRA member broker-dealer. We do not have any arrangement
with AGF Securities, Inc. for it to act as a broker-dealer for the sale of the
shares included herein for the selling stockholders. This selling stockholder
may be deemed to be an underwriter with respect to sales of shares to be offered
by it in this prospectus.</p>
<p ALIGN="JUSTIFY">(7) Includes 1,149,000 shares of common stock and 1,149,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Northern Rivers Capital Management, Inc. (&quot;Northern
Rivers&quot;) on behalf of Northern Rivers Innovation Fund LP is the owner of the
shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Hugh Cleland may be deemed a control person of the shares
owned by this selling security holder. </p>
<p ALIGN="JUSTIFY">(8) Includes 94,000 shares of common stock and 94,000 shares
of common stock underlying two-year warrants exercisable at $1.02, subject to
adjustment. Northern Rivers on behalf of Horizons Northern Rivers Fund LP is the
owner of the shares being registered. In accordance with rule 13d-3 under the
Securities Exchange Act of 1934, Hugh Cleland may be deemed a control person of
the shares owned by this selling security holder. </p>
<p ALIGN="JUSTIFY">(9) Includes 186,000 shares of common stock and 186,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Northern Rivers on behalf of Northern Rivers Innovation
RSP Fund is the owner of the shares being registered. In accordance with rule
13d-3 under the Securities Exchange Act of 1934, Hugh Cleland may be deemed a
control person of the shares owned by this selling security holder. </p>
<p ALIGN="JUSTIFY">(10) Includes the following securities issuable upon exercise
of the Placement Agent Options: 320,080 shares of common stock and 320,080
shares of common stock underlying two-year warrants with an exercise price of
$1.02, subject to adjustment. The term of the options is 24 months after the
March 27, 2008 closing date of the March 2008 Private Placement. In accordance
with rule 13d-3 under the Securities Exchange Act of 1934, Tony Pullen may be
deemed a control person of the shares owned by this selling security holder.
Paradigm is a FINRA member broker-dealer. We do not have any arrangement with
Paradigm for it to act as a broker-dealer for the sale of the shares included
herein for the selling stockholders. Paradigm may be deemed to be an underwriter
with respect to its respective sales of shares to be offered by them in this
prospectus. Paradigm served as the placement agent in connection with our March
2008 Private Placement. </p>
<b>
<p>Description of March 2008 Private Placement of Common Stock and Warrants </p>
</b>
<p ALIGN="JUSTIFY">On March 27, 2008, IntelGenx Technologies Corp. completed an
offering of 4,001,000 units of its securities at $0.70 per unit for gross
proceeds of approximately $2.8 million (the &quot;Gross Proceeds&quot;) and net proceeds
of approximately $2,538,651 (&quot;the &quot;Offering&quot;). Each unit consists of one share
of the Company's common stock (the &quot;Common Stock&quot;) and one two-year warrant to
purchase one share of common stock (the &quot;Warrant Shares&quot;) at an initial exercise
price of $1.02 per share, subject to adjustment (the &quot;Warrants&quot;). </p>
<p ALIGN="JUSTIFY">Paradigm Capital Inc. (&quot;Paradigm&quot;) acted as placement agent
for the Offering on a best efforts basis. Paradigm's compensation consists of a
cash commission equal to 7% of the Gross Proceeds and an option to acquire
320,080 units at $0.70 per unit within 24 months of the closing date (the
&quot;Placement Agent Options&quot;) (The shares of common stock issuable upon exercise of
the Placement Agent Options shall be referred to as the Placement Agent Common
Stock, the warrants issuable upon exercise of the Placement Agent Options shall
be referred to as the &quot;Placement Agent Warrants&quot;, and the shares of common stock
issuable upon exercise of the Placement Agent Warrants shall be referred to as
the &quot;Placement Agent Warrant Shares&quot;). </p>
<p ALIGN="JUSTIFY">In connection with the Offering, the Company entered into a
registration rights agreement (the &quot;Registration Rights Agreement&quot;) providing
for the filing of a registration statement (the &quot;Registration Statement&quot;) with
the U.S. Securities and Exchange Commission registering the Common Stock,
Warrant Shares, Warrants, the Placement Agent Common Stock and the Placement
Agent Warrant Shares. The Company is obligated to file the Registration
Statement no later than 30 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 120 days after the date of closing. </p>
<p ALIGN="JUSTIFY">The exercise price of the Warrants is subject to adjustment
to $0.93 per share if, within four months from the closing date (i) the Common
Stock and shares issuable upon exercise of the Warrants have not listed and
commenced trading on either the Toronto Stock Exchange or the TSX Venture
Exchange and (ii) the Registration Statement has not been declared effective.
The exercise price of the Warrants is also subject to adjustment for certain
events, including dividends, distributions or split of the Company's common
stock, subsequent equity sales or rights offerings by the Company, or in the
event of the Company's consolidation, merger or reorganization. </p>
<p ALIGN="JUSTIFY">In addition, the Company is obligated to pay a penalty in an
aggregate amount equal to five percent of the Gross Proceeds if the Common
Stock, Warrant Shares, Placement Agent Common Stock and Placement Agent Warrant
Shares are not listed on the Toronto Stock Exchange or the TSX Venture Exchange
within 60 days from the closing date of the Offering (the &quot;Listing Condition&quot;),
and an additional penalty in an aggregate amount equal to one percent of the
Gross Proceeds for each subsequent calendar month during which the Listing
Condition is not satisfied, subject to a maximum of three months. </p>
<p align="justify">In connection with the Offering, each of the Company's
officers and directors have entered into lock-up agreements in favor of Paradigm
pursuant to which they have agreed not to sell or transfer their shares for a
period ending four months and one day after the closing date. </p>
<p align="center">24</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">The foregoing issuances were exempt from registration under
Section 4(2) of the Act and/or Regulation S, promulgated pursuant to the Act.
None of the purchasers are U.S. persons, no sales efforts were conducted in the
U.S., and the Common Stock and Warrants contain a legend restricting the sale of
such securities in accordance with Regulation S and pursuant to applicable
Canadian securities laws. </p>
<b>
<p>Additional Disclosures</b> </p>
<p>Set forth below is certain additional information regarding the Warrants. </p>
<b>
<p>Total Dollar Value of Securities </b></font><font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">The total dollar value of the common stock and common stock
underlying the warrants that are being registered for resale (using the total
number of shares that we have registered for resale and the market price per
share on the date of sale) are as follows: </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: none">
    <font FACE="Times New Roman" SIZE="2"><b>Common Stock and Common Stock</b></font></td>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: none">&nbsp;</td>
    <td WIDTH="326" align="center" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: none">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-bottom-style: none">
    <font FACE="Times New Roman" SIZE="2"><b>Underlying the</b></font></td>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-bottom-style: none">
    <font FACE="Times New Roman" SIZE="2"><b>Market Price at March 27, 2008</b></font></td>
    <td WIDTH="326" align="center" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: none">
    <font FACE="Times New Roman" SIZE="2"><b>Dollar Value of Underlying</b></font></td>
  </tr>
  <tr>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Warrants</b></font></td>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>(1)</b></font></td>
    <td WIDTH="326" align="center" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Securities</b></font></td>
  </tr>
  <tr>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">8,642,160</font></td>
    <td WIDTH="325" align="center" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$0.80</font></td>
    <td WIDTH="326" align="center" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$6,913,728</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>(1) Fair market value based on the average of the high and low prices
reported on the Over the Counter Bulletin Board on March 27, 2008. </p>
<b>
<p>Cash Payments in Connection with the Common Stock and Warrant Offering </b>
</font><font FACE="Times New Roman"></p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 5">Payment</b></font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-left: 5">Placement agent and other fees</b></font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5"><font SIZE="2"><b>Reference</b></font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 5">Date</b></font></td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2"><b>
    <p style="margin-right: 5">Amount</b></font></td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Placement</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5">Paradigm Capital, Inc.</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Agent Fee</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">March 27, 2008</font></td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">$ 196,049</font></td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">Legal and</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">Due</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000"><font SIZE="2">
    <p style="margin-left: 5">Cassels Brock &amp; Blackwell LLP, Toronto</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">Diligence</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">March 27, 2008</font></td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">$ 66,000</font></td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">Fees of</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000">
    <font SIZE="2">
    <p style="margin-right: 5">Investors</font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="389" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2"><b>
    <p style="margin-left: 5">Total</b></font></td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="195" align="right" style="border-left: 1px solid #000000; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="196" align="right" style="border-left: 1px solid #000000; border-right-style: solid; border-right-width: 1; border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">$ 262,049</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">The Company is obligated to pay a penalty in an aggregate
amount equal to five percent of the gross proceeds from the Offering if the
Common Stock, Warrant Shares, and shares underlying the Placement Agent Option
are not listed on the Toronto Stock Exchange or the TSX Venture Exchange within
60 days from the closing date of the Offering (the &quot;Listing Condition&quot;), and an
additional penalty in an aggregate amount equal to one percent of the Gross
Proceeds for each subsequent calendar month during which the Listing Condition
is not satisfied, subject to a maximum of three months. </font>
<font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Existing Short Positions by Selling Security Holders </b></font>
<font FACE="Times New Roman"></p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">Based upon information provided by the selling security
holders, to the best of management's knowledge, the Company is not aware of any
of the selling security holders having an existing short position in the
Company's common stock. </p>
<b>
<p>Relationships Between the Company and Selling Security Holders and Affiliates</b>
</p>
<p align="justify">The Company hereby confirms that a description of the
relationships and arrangements between and among those parties already is
presented in the prospectus and that all agreements between and/or among those
parties are included as exhibits to the registration statement by incorporation
by reference. </p>
<p align="center">25</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">DIRECTORS AND EXECUTIVE OFFICERS</b> </p>
<p align="justify">The following table sets forth certain information regarding
the executive officers and directors of IntelGenx Technologies Corp. All
officers serve at the pleasure of the Board of Directors. Directors serve until
the election and qualification of their successors. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="24%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Name</b></font></td>
    <td WIDTH="18%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Age</b></font></td>
    <td WIDTH="30%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Position</b></font></td>
    <td WIDTH="28%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2"><b>Since</b></font></td>
  </tr>
  <tr>
    <td WIDTH="24%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="18%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">61</font></td>
    <td WIDTH="30%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Chairman of the Board, President</font></td>
    <td WIDTH="28%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Horst G. Zerbe</font></td>
    <td WIDTH="18%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">and Chief Executive
    Officer</font></td>
    <td WIDTH="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">April 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="24%">&nbsp;</td>
    <td WIDTH="18%">&nbsp;</td>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="28%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font FACE="Times New Roman" SIZE="2">Gino Di Iorio</font></td>
    <td WIDTH="18%"><font FACE="Times New Roman" SIZE="2">40</font></td>
    <td WIDTH="30%"><font FACE="Times New Roman" SIZE="2">Chief Financial
    Officer</font></td>
    <td WIDTH="28%"><font FACE="Times New Roman" SIZE="2">July 2007</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="18%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="28%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Joel Cohen (1)</font></td>
    <td WIDTH="18%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">36</font></td>
    <td WIDTH="30%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Director</font></td>
    <td WIDTH="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">April 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="24%">&nbsp;</td>
    <td WIDTH="18%">&nbsp;</td>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="28%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font FACE="Times New Roman" SIZE="2">J. Bernard Boudreau
    (1) (2)</font></td>
    <td WIDTH="18%"><font FACE="Times New Roman" SIZE="2">63</font></td>
    <td WIDTH="30%"><font FACE="Times New Roman" SIZE="2">Director</font></td>
    <td WIDTH="28%"><font FACE="Times New Roman" SIZE="2">June 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="18%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="28%" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">David Coffin-Beach (2)</font></td>
    <td WIDTH="18%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">60</font></td>
    <td WIDTH="30%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Director</font></td>
    <td WIDTH="28%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">June 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="24%">&nbsp;</td>
    <td WIDTH="18%">&nbsp;</td>
    <td WIDTH="30%">&nbsp;</td>
    <td WIDTH="28%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="24%"><font FACE="Times New Roman" SIZE="2">Reiza Rayman (1) (2)</font></td>
    <td WIDTH="18%"><font FACE="Times New Roman" SIZE="2">44</font></td>
    <td WIDTH="30%"><font FACE="Times New Roman" SIZE="2">Director</font></td>
    <td WIDTH="28%"><font FACE="Times New Roman" SIZE="2">June 2006</font></td>
  </tr>
</table>
<font SIZE="2">
<p align="justify">(1) Audit Committee member </p>
<p align="justify">(2) Compensation Committee member </font>
<font FACE="Times New Roman"></p>
</font><font SIZE="2"><b>
<p align="justify">Biographies </p>
<p align="justify">Horst G. Zerbe, Ph.D. </p>
</b>
<p ALIGN="JUSTIFY">Dr. Zerbe is our President, Chief Executive Officer and
Chairman of the Board and is a full time employee of the Company. Dr. Zerbe has
more than 20 years experience in the pharmaceutical industry. He has been the
President and Chief Executive Officer of IntelGenx Corp. since 2005; prior
thereto, from 1998 to 2005, he served as the president of Smartrix Technologies
Inc. in Montreal; prior thereto, from 1994 to 1998, he was Vice President of R&amp;D
at LTS Lohmann Therapy Systems in West Caldwell, NJ. He has published numerous
scientific papers in recognized journals and holds over 30 patents. </p>
<b>
<p align="justify">Gino Di Iorio, CA </p>
</b>
<p ALIGN="JUSTIFY">Mr. Di Iorio is the Chief Financial Officer of IntelGenx.
From 2006 to 2007, Mr. Di Iorio held the position of CFO at Viropro Inc., a
publicly held development company in the bio-technology industry. From 2005 to
2006 he held the position of Controller at Group Montoni &#150; Division
Construction, a general entrepreneur in the construction industry. Prior to
that, from 2004 to 2005, he held the position of Finance Director at Draft Inc.,
a subsidiary of IPG, a publicly-held American company traded on the New York
Stock Exchange with interests in advertising and public relations. From 1997 to
2003, he held the position of Finance Director at Sitel Canada Inc., a
subsidiary of Sitel Corporation, a publicly-held American company traded on the
New York Stock Exchange with interests in advertising and public relations. </p>
<b>
<p align="justify">Joel Cohen, CFA </p>
</b>
<p ALIGN="JUSTIFY">Mr. Cohen has been a director of IntelGenx Technologies Corp.
since April, 2006. Mr. Cohen also served as the consulting Chief Financial
Officer of IntelGenx from April, 2006 until May 23, 2007. Mr. Cohen has
extensive experience in biotechnology and high tech financings and in financial
analysis. From 2002 until 2007, Mr. Cohen was consulting CFO for Osta
Biotechnologies a publicly traded company on the TSX Venture Exchange (the &quot;TSXV&quot;).
</p>
<b>
<p align="justify">J. Bernard Boudreau, Sr. Vice President, PharmEng Inc. </p>
</b>
<p ALIGN="JUSTIFY">Mr. Boudreau has been a director of IntelGenx since June,
2006. Since 2004, he has been the Senior Vice-president of Pharmeng
International Inc., a full-service consulting and contract manufacturing company
that serves the pharmaceutical, biotechnology and medical device industries in
North America and internationally. Pharmeng is a publically traded company on
the Toronto Stock Exchange. Mr. Boudreau served as Government Leader in the
Senate of Canada and Member of the Federal Cabinet between 1999 and 2001. </p>
<b>
<p align="justify">Reiza Rayman, M.D. </p>
</b>
<p ALIGN="JUSTIFY">Dr. Rayman has been a director of IntelGenx since June, 2006.
Currently, he is pursuing a PhD in the area of Tele-surgery. From 2000 until
2005, Dr. Rayman served as Principal Investigator, Robotic Tele-surgery and
Hybrid Cardiac Surgery, CSTAR, and Assistant Professor, Department of Surgery,
at the University of Western Ontario. Dr. Rayman is currently completing his PhD
in Medical Biophysics. </p>
<p ALIGN="center">26</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p>David Coffin-Beach, Ph.D. </p>
</b>
<p ALIGN="JUSTIFY">Dr. Coffin-Beach has been a director of IntelGenx since June,
2006. On April 18, 2007, Dr. Coffin-Beach was appointed President and COO of
Synovics Pharmaceuticals Inc. a Fort Lauderdale based pharmaceutical company
specializing in both private label OTC products and niche prescription products.
Prior to this appointment, Dr. Coffin-Beach served as President of ATP
Solutions, a privately held consulting firm which specializes in delivering
strategic, technical, marketing and management services to pharmaceutical
manufacturers and investors. Dr. Coffin-Beach was the founder, former President
and Board Member of TorPharm (1994 - 2004), the U.S. division of Apotex Inc. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Key Personnel and Consultants </p>
<p>James Wittenberg, R.Ph, MS </p>
</b>
<p align="justify">Mr. Wittenberg serves as IntelGenx's Vice President Business
Development. He has accumulated over 20 years of experience in the
pharmaceutical industry in market research and most recently as Director of
Business Development at Schwarz Pharma. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Ingrid Zerbe </p>
</b>
<p ALIGN="JUSTIFY">Mrs. Zerbe is our Director of Finance and Administration,
Corporate Secretary and is a full time employee of the Company. Mrs. Zerbe is
the founder of IntelGenx. Mrs. Zerbe served as the president of IntelGenx Corp.
since its incorporation until December, 2005. She also serves as a director of
IntelGenx Corp. since 2003 and was a director of Intelgenx Technologies Corp.
from April 2006 to August 2006. Prior to founding IntelGenx, she worked in the
travel industry. Horst Zerbe and Ingrid Zerbe are husband and wife. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Nadine Paiement, MSc </p>
</b>
<p ALIGN="JUSTIFY">Ms. Paiement serves as IntelGenx's Director of Research and
Development. She holds a Master of Science degree in Polymer Chemistry from
Sherbrooke University, and is co-inventor of IntelGenx's Tri-Layer technology.
Prior to joining IntelGenx in 2005 she worked for five years as a formulation
scientist at Smartrix Technologies, Inc. </p>
<b>
<p align="center">CORPORATE GOVERNANCE </p>
<p>Board of Directors and Committees </p>
</b>
<p>Our board of directors held four meetings in 2007. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Audit Committee </p>
</b>
<p ALIGN="JUSTIFY">Our audit committee assists our board of directors in
fulfilling its responsibilities for oversight and supervision of financial and
accounting matters. The chairman of the audit committee is J. Bernard Boudreau.
Joel Cohen serves as our audit committee financial expert. Our audit committee's
responsibilities include, among others (i) recommending to the board of
directors the engagement of the external auditor and the terms of the external
auditor's engagement; (ii) overseeing the work of the external auditor,
including dispute resolution between management and the external auditor, if
required; (iii) pre-approving all non-audit service to be provided to us by our
external auditor; (iv) reviewing our financial statements, management's
discussion and analysis and annual and interim earnings press releases before
this information is publicly disclosed; (v) assessing the adequacy of procedures
for our public disclosure of financial information; (vi) establishing procedures
to deal with complaints received by us relating to our accounting and auditing
matters; and (vii) reviewing our hiring policies regarding employees of our
external auditor or former auditor. We have adopted, along with our audit
committee, a written charter of the audit committee setting out the mandate and
responsibilities of the audit committee which provides that the audit committee
convene no less than four times per year. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Compensation Committee </p>
</b>
<p ALIGN="JUSTIFY">Our compensation committee reviews and makes recommendations
to our board of directors concerning the compensation of our executive officers
and key employees which include the review of our executive compensation and
other human resource policies, the review and administration of any bonuses and
stock options and major changes to our benefit plans and the review of and
recommendations regarding the performance of the Chief Executive Officer of the
Company. Our compensation committee is comprised of non-management members of
our board of directors and is required to convene at least annually. The
chairman of our compensation committee is David Coffin-Beach. </p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p>Director Independence</b></font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">We cannot guarantee that our Board of Directors will always
have a majority of independent directors. In the absence of a majority of
independent directors, our executive officer, who is also a principal
stockholder and director, could establish policies and enter into transactions
without independent review and approval thereof. This could present the
potential for a conflict of interest between the Company and its stockholders
generally and the controlling officers, stockholders or directors. </p>
<p ALIGN="center">27</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p>Code of Ethics </p>
</b>
<p ALIGN="JUSTIFY">We have adopted a Code of Business Conduct and Ethics that
applies to our directors and officers, including our principal executive
officer, principal financial officer and principal accounting officer. The Code
of Business Conduct and Ethics is posted on our website at http://www.intelgenx.com.
</p>
<b>
<p align="center">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b>
</p>
<p align="justify">The following table sets forth information with respect to
ownership of the Company's securities by its officers and directors and by any
person (including any &quot;group&quot;) who is the beneficial owner of more than 5% of
the Company's common stock. </p>
<p ALIGN="JUSTIFY">In computing the number of shares beneficially owned by each
security holder and the percentage of ownership of that security holder, we have
included all shares of common stock owned or beneficially owned by that security
holder, and the number of shares of common stock issuable upon exercise of all
warrants owned or beneficially owned by such security holder. Those shares,
however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other security holder. Each security holder's percentage of
ownership in the following table is based on 20,299,045 shares of our common
stock outstanding as of April 8, 2008. </p>
<p align="justify">Unless otherwise indicated, the address for each beneficial
owner is c/o IntelGenx Technologies Corp., 425 Abrams, Ville St- Laurent,
Quebec, H4S 1X9. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Name and Address</font></td>
    <td WIDTH="29%" align="right"><font FACE="Times New Roman" SIZE="2">Amount
    and Nature of</font></td>
    <td WIDTH="30%" align="right"><font FACE="Times New Roman" SIZE="2">Percent
    of</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Of Owner</font></td>
    <td WIDTH="29%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Beneficial Ownership</font></td>
    <td WIDTH="30%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Class</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="29%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="30%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Horst G. Zerbe<sup>(1)</sup></font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    4,934,643.5 <sup>(1)</sup></font></td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">24.3%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Ingrid Zerbe<sup>(2)</sup></font></td>
    <td WIDTH="29%" align="right"><font FACE="Times New Roman" SIZE="2">
    4,934,643.5 <sup>(2)</sup></font></td>
    <td WIDTH="30%" align="right"><font FACE="Times New Roman" SIZE="2">24.3%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Joel Cohen<sup>(3)</sup></font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    1,846,713 <sup>(3)</sup></font></td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">9.1%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Bernard Boudreau <sup>
    (4)</sup></font></td>
    <td WIDTH="29%" align="right"><font FACE="Times New Roman" SIZE="2">107,500
    <sup>(4)</sup></font></td>
    <td WIDTH="30%" align="right"><font FACE="Times New Roman" SIZE="2">*</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">David Coffin-Beach
    <sup>(5)</sup></font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">153,191
    <sup>(5)</sup></font></td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">*</font></td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">Reiza Rayman <sup>(6)</sup></font></td>
    <td WIDTH="29%" align="right"><font FACE="Times New Roman" SIZE="2">153,191
    <sup>(6)</sup></font></td>
    <td WIDTH="30%" align="right"><font FACE="Times New Roman" SIZE="2">*</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Gino Di Iorio <sup>(7)</sup></font></td>
    <td WIDTH="29%" align="right" style="border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">18,750 <sup>(7)</sup></font></td>
    <td WIDTH="30%" align="right" style="border-bottom: 1px solid #000000" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">*</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom: 1px solid #000000">
    <font FACE="Times New Roman" SIZE="2">All directors and officers as a group
    (7 persons)</font></td>
    <td WIDTH="29%" align="right" style="border-bottom: 1px solid #000000">
    <font FACE="Times New Roman" SIZE="2">12,148,632</font></td>
    <td WIDTH="30%" align="right" style="border-bottom: 1px solid #000000">
    <font FACE="Times New Roman" SIZE="2">59.9%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">AlphaOne Offshore Inc.</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Ugland House</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    2,009,605 <sup>(8)</sup></font></td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">9.99%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">South Church St.</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8" style="border-bottom-style: solid; border-bottom-width: 1"><font FACE="Times New Roman" SIZE="2">George Town, Grand
    Cayman</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1"><font FACE="Times New Roman" SIZE="2">AGF Canadian Small Cap
    Fund</font></td>
    <td WIDTH="29%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="30%" align="right" style="border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%"><font FACE="Times New Roman" SIZE="2">TD Bank Tower, 31<sup>st</sup>
    Floor</font></td>
    <td WIDTH="29%" align="right"><font FACE="Times New Roman" SIZE="2">
    2,009,605 <sup>(9)</sup></font></td>
    <td WIDTH="30%" align="right"><font FACE="Times New Roman" SIZE="2">9.99%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Toronto ON M5K 1E9</font></td>
    <td WIDTH="29%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
    <td WIDTH="30%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Northern Rivers Capital Management
    Inc.</font></td>
    <td WIDTH="29%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Royal Bank Plaza</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">North Tower, Suite
    2000</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    2,009,605 <sup>(10)</sup></font></td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">9.99%</font></td>
  </tr>
  <tr>
    <td WIDTH="40%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">200 Bay Street, P.O.
    Box 66</font></td>
    <td WIDTH="29%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="40%" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Toronto ON M5J 2J2</font></td>
    <td WIDTH="29%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="30%" align="right" style="border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>* Less than 1%. </p>
<p ALIGN="JUSTIFY">(1) In connection with the acquisition of IntelGenx in 2006,
Horst Zerbe became our President, Chief Executive Officer and Director and
acquired 4,709,643.5 exchangeable shares of our Canadian holding corporation
6544631Canada Inc., a Canadian special purpose corporation which wholly owns
IntelGenx Corp. (the &quot;Exchangeable Shares&quot;). The 4,709,643.5 Exchangeable Shares
are exchangeable, on a one for one basis, into shares of common stock of
IntelGenx Technologies Corp. at Horst Zerbe's discretion. Prior to exchanging
the Exchangeable Shares for shares of common stock, Horst Zerbe has the right to
vote 4,709,643.5 shares of common stock which are currently held in trust on
behalf of Horst Zerbe. The 4,709,643.5 shares of common stock have not been
registered for resale at this time. In addition to the Exchangeable Shares,
Horst Zerbe's beneficial ownership includes 225,000 shares of common stock
underlying options granted November 9, 2006, which are currently exercisable.
The options have an exercise price of $0.41. Horst Zerbe and Ingrid Zerbe are
husband and wife. </p>
<p ALIGN="JUSTIFY">(2) In connection with the acquisition of IntelGenx in 2006,
Ingrid Zerbe became our Secretary and our director of Finance and Administration
and acquired 4,709,643.5 Exchangeable Shares. The 4,709,643.5 Exchangeable
Shares are exchangeable, on a one for one basis, into shares of common stock of
IntelGenx Technologies Corp. at Ingrid Zerbe's discretion. Prior to exchanging
the Exchangeable Shares, Ingrid Zerbe has the right to vote 4,709,643.5 shares
of common stock which are currently held in trust on behalf of Ingrid Zerbe. The
4,709,643.5 shares of common stock have not been registered for resale at this
time. In addition to the Exchangeable Shares, Ingrid Zerbe's beneficial
ownership includes 225,000 shares of common stock underlying options granted
November 9, 2006, which are currently exercisable. The options have an exercise
price of $0.41. Horst Zerbe and Ingrid Zerbe are husband and wife. </p>
<p ALIGN="center">28</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">(3) In connection with the acquisition of IntelGenx in 2006,
Joel Cohen became a Director and acquired 1,571,713 Exchangeable Shares. The
1,571,713 Exchangeable Shares are exchangeable, on a one for one basis, into
shares of common stock of IntelGenx Technologies Corp. at Joel Cohen's
discretion. Prior to exchanging the Exchangeable Shares for shares of common
stock, Joel Cohen has the right to vote 1,571,713 shares of common stock which
are currently held in trust on behalf of Joel Cohen. The 1,571,713 shares of
common stock have not been registered for resale at this time. In addition to
the Exchangeable Shares, Mr. Cohen's beneficial ownership includes 250,000
exercisable options to purchase common stock at an exercise price of $0.41
granted on November 13, 2006 and 25,000 exercisable options to purchase common
stock at an exercise price of $1.15, granted on August 9, 2007. </p>
<p align="justify">(4) Mr. Boudreau's beneficial ownership consists of 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October 2006, and 32,500 exercisable options to purchase common stock
at an exercise price of $1.15, granted on August 9, 2007. </p>
<p ALIGN="JUSTIFY">(5) Dr. Coffin-Beach's beneficial ownership includes 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October, 2006, 25,000 exercisable options to purchase common stock at
an exercise price of $1.15, granted on August 9, 2007, and 53,191 shares of
common stock. </p>
<p ALIGN="JUSTIFY">(6) Dr. Rayman's beneficial ownership includes 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October of 2006, 25,000 exercisable options to purchase common stock
at an exercise price of $1.15, granted on August 9, 2007, and 53,191 shares of
common stock. </p>
<p align="justify">(7) Mr. Di Iorio's beneficial ownership includes 75,000
options to purchase common stock at an exercise price of $1.15, granted on
August 9, 2007, vesting over 2 years, 25% every 6 months. </p>
<p ALIGN="JUSTIFY">(8) Alpha One is the beneficial owner of an aggregate of
1,429,000 shares of common stock and 1,429,000 shares of common stock underlying
two-year warrants exercisable at $1.02, subject to adjustment. However, Alpha
One has contractually agreed to restrict its ability to exercise the warrants
and receive shares of our common stock such that the number of shares of common
stock held by them in the aggregate and their affiliates after such exercise
does not exceed 9.99% of the then issued and outstanding shares of common stock
as determined in accordance with Section 13(d) of the Exchange Act. Accordingly,
this column represents the aggregate maximum number and percentage of shares
that Alpha One can own at one time due to the 9.99% limitation. </p>
<p ALIGN="JUSTIFY">(9) AGF is the beneficial owner of an aggregate of 1,143,000
shares of common stock and 1,143,000 shares of common stock underlying two-year
warrants exercisable at $1.02, subject to adjustment. However, AGF has
contractually agreed to restrict its ability to exercise the warrants and
receive shares of our common stock such that the number of shares of common
stock held by them in the aggregate and their affiliates after such exercise
does not exceed 9.99% of the then issued and outstanding shares of common stock
as determined in accordance with Section 13(d) of the Exchange Act. Accordingly,
this column represents the aggregate maximum number and percentage of shares
that AGF can own at one time due to the 9.99% limitation. </p>
<p ALIGN="JUSTIFY">(10) Northern Rivers is the beneficial owner of an aggregate
of 1,429,000 shares of common stock and 1,429,000 shares of common stock
underlying two-year warrants exercisable at $1.02, subject to adjustment.
However, Northern Rivers has contractually agreed to restrict its ability to
exercise the warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such exercise does not exceed 9.99% of the then issued and
outstanding shares of common stock as determined in accordance with Section
13(d) of the Exchange Act. Accordingly, this column represents the aggregate
maximum number and percentage of shares that Northern Rivers can own at one time
due to the 9.99% limitation. </p>
<b>
<p align="center">EXECUTIVE COMPENSATION</b> </p>
<p ALIGN="JUSTIFY">The following table provides a summary of the compensation
paid to date during the last three completed fiscal years to the President and
Chief Executive Officer and the Chief Financial Officer. No other officers of
the Company qualify as &quot;named executive officers&quot;, which category includes the
Chief Executive Officer and the next two highest paid executive officers whose
salary and bonus exceeds $100,000 in the most recent year (&quot;Named Executive
Officers&quot;). </p>
<p ALIGN="center">29</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Name and</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">Option</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <font FACE="Times New Roman" SIZE="2">All Other</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">principal</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">Awards</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">Compensation</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">position</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">Year</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">Salary ($)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">($)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">($)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font FACE="Times New Roman" SIZE="2">Total ($)</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">(a)</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(b)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(c)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(f)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(i)</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">(j)</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Horst Zerbe,</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">President and</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">2007</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">176,536</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">176,536</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">CEO</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">2006</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">139,053</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">69,680</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">208,733</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">2005</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">8,174</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">10,978</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">19,152</font></td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1">
    <font FACE="Times New Roman" SIZE="2">
    <p style="margin-left: 5">Gino Di Iorio,</font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="20%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5"><font FACE="Times New Roman" SIZE="2">CFO <sup>(1)</sup></font></td>
    <td WIDTH="15%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">2007</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">46,235</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Nil</font></td>
    <td WIDTH="16%" align="center" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">46,235</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">Footnotes: </p>
</b>
<p align="justify">(1) Mr. Di Iorio joined the Company in August, 2007. </p>
</font><b><font FACE="Times New Roman" SIZE="2">
<p align="justify">Employment Agreements </p>
<i>
<p ALIGN="JUSTIFY">Horst Zerbe.</i></font></b><font FACE="Times New Roman" SIZE="2">
Effective December 1, 2005, we entered into an employment agreement with Dr.
Horst Zerbe, our President and Chief Executive Officer. The agreement is for an
indefinite period of time. Under the agreement, Dr. Zerbe is entitled to
receive: (1) a minimum base salary of CAN$175,000 (US$176,536 at year end 2007)
per year; and (2) an annual bonus equal to 50% of base salary upon the
performance of certain milestones set out by the board of directors. </p>
<i><b>
<p ALIGN="JUSTIFY">Gino Di Iorio</b></i>. Effective August 6, 2007, we entered
into an employment agreement with Mr. Gino Di Iorio, to serve as Chief Financial
Officer. Under the agreement, Mr. Di Iorio is entitled to receive: (1) a minimum
base salary of CAN$110,000 (US$110,965 at year-end 2007) per year, and (2)
options grants under the 2006 Stock Option Plan. </p>
<p align="justify">The following table presents information regarding the
outstanding equity awards held by each of the named officers as of December 31,
2007, including the vesting dates for the portions of these awards that had not
vested as of that date. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="100%" colspan="6" style="border-style: solid; border-width: 1">
    <font SIZE="2"><b>
    <p align="center">OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END</b></font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Number of</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Number of</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Securities</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Securities</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Equity Incentive Plan</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Underlying</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Underlying</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Awards: Number of</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Unexercised</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Unexercised</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Securities Underlying</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Option</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Options</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Options</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Unexercised</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Exercise</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Option</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(#)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(#)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Unearned Options</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Price</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Expiration</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">Name</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Exercisable</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Unexercisable</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(#)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Date</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">(a)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(b)</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(c)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(d)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(e)</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(f)</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5">Horst Zerbe</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">225,000</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">0.41</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nov. 9, 2016</font></td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="16%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">Gino Di Iorio</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="16%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">75,000 <sup>1</sup></font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">1.15</font></td>
    <td WIDTH="17%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Aug. 9, 2017</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><sup>
<p align="justify">1</sup> On August 9, 2007, 75,000 options were granted to Mr.
Di Iorio in connection with his employment agreement. The options vest over two
years, none of which are exercisable as of year-end 2007. </p>
<p align="center">30</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p>Summary of Directors' Compensation </p>
</b>
<p ALIGN="JUSTIFY">At present, members of our board of directors do not receive
cash compensation for their services, including attending meetings of the board
of directors or other committee meetings. Our directors do not have service
contracts. However, our directors are entitled to receive stock options in
amounts determined by the board of directors on an annual basis. All directors
are reimbursed for reasonable expenses incurred by them in their capacity as
directors, including travel and other out-of-pocket expenses incurred in
connection with meetings of the board of directors or any committee of the board
of directors. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="105%" colspan="8" align="center" style="border-style: solid; border-width: 1">
    <font SIZE="2">DIRECTOR COMPENSATION</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Fees</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Non-</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Earned</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Non-Equity</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Qualified</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">or</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Incentive</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Deferred</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">All</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Paid in</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Stock</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Plan</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Compensation</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Other</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Cash</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Awards</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Option</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Compensation</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Earnings</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Compensation</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">Name</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Awards ($)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">($)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Total ($)</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">(a)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(b)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(c)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(d)</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(e)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(f)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(g)</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">(j)</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5"><font SIZE="2">Joel</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5"><font SIZE="2">Cohen</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">17,845 <sup>1</sup></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">17,845</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">Bernard</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5"><font SIZE="2">Boudreau</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">23,198 <sup>2</sup></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">23,198</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5">David</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5">Coffin-</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">17,845 <sup>3</sup></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-right: 5">17,845</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <font SIZE="2">
    <p style="margin-left: 5">Beach</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1" bgcolor="#E9F1F8">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-top-style: solid; border-top-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-left: 5">Reiza</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1">
    <p style="margin-left: 5"><font SIZE="2">Rayman</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">17,845 <sup>4</sup></font></td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">Nil</font></td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1">
    <font SIZE="2">
    <p style="margin-right: 5">17,845</font></td>
  </tr>
  <tr>
    <td WIDTH="13%" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-left: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="12%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
    <td WIDTH="13%" align="right" style="border-left-style: solid; border-left-width: 1; border-right-style: solid; border-right-width: 1; border-bottom-style: solid; border-bottom-width: 1">
    <p style="margin-right: 5">&nbsp;</td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p>Footnotes: </p>
</b><sup>
<p>1 </sup>Represents 25,000 options issued on August 9, 2007. </p>
<sup>
<p ALIGN="JUSTIFY">2 </sup>Represents 32,500 options issued on August 9, 2007. </p>
<p ALIGN="JUSTIFY"><sup>3 </sup>Represents 25,000 options issued on August 9, 2007. </p>
<p ALIGN="JUSTIFY"><sup>4 </sup>Represents 25,000 options issued on August 9, 2007. </p>
<b>
<p align="center">TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS</b> </p>
<b>
<p>Review, Approval or Ratification of Transactions with Related Persons</b> </p>
<p ALIGN="JUSTIFY">Although IntelGenx has not adopted formal procedures for the
review, approval or ratification of transactions with related persons, we adhere
to a general policy that such transactions should only be entered into if they
are on terms that, on the whole, are no more favorable, or no less favorable,
than those available from unaffiliated third parties and their approval is in
accordance with applicable law. Such transactions require the approval of our
board of directors. </p>
<p ALIGN="JUSTIFY">On May 23, 2007, Taylor Hutchison, who served as our Chief
Financial Officer from May 23, 2007 until July 16, 2007, purchased debentures in
a principal amount of $25,000 and warrants to purchase 35,714 shares of the
Company's common stock at an exercise price of $1.02 subject to a Purchase
Agreement between IntelGenx and certain institutional and accredited investors.
</p>
<p align="justify">Between February and May of 2007, David Coffin-Beach, one of
our directors, received fees of approximately $18,700 for consulting work
performed for IntelGenx in connection with our May 2007 Private Placement. </p>
<p align="justify">During the year ended December 31, 2007, $5,636 of interest
was paid to Ingrid Zerbe, our secretary and director of finance and
administration for interest on a long-term shareholder loan. The loan is
unsecured, bears interest at 6% per annum and is not repayable prior to January
1, 2009. The amount outstanding at December 31, 2007, was $101,193. Ingrid Zerbe
was also paid $18,606 under an equipment lease for the year ended 2007 with a
comparable amount of $17,850 in 2006. </p>
<p align="center">31</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p ALIGN="JUSTIFY">On August 9, 2007, our non-employee directors Joel Cohen,
David Coffin-Beach, and Reiza Rayman were each granted 25,000 options to
purchase common stock. Bernard Boudreau, a non-employee director, was granted
32,500 options to purchase common stock. The related charge in 2007 for the
total of 107,500 in options grants was $76,733. </p>
<p>On the same date, Gino Di Iorio, our CFO, was granted 75,000 options to
purchase common shares. The related charge for 2007 was $10,609. </p>
<p>On December 27, 2007, the Company purchased from Horst Zerbe, our President
and CEO, $60,000 in laboratory equipment. </p>
<b>
<p align="center">PLAN OF DISTRIBUTION</b> </p>
<p ALIGN="JUSTIFY">Each selling security holder of the common stock and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of the shares of common stock offered by this prospectus on any
stock exchange or automated interdealer quotation system on which the common
stock is listed or quoted at the time of sale, in the over-the-counter market,
in privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at prices otherwise negotiated. A selling security
holder may use any one or more of the following methods when selling shares: </p>
<ul>
  <li>
  <p align="justify" style="margin-top: 0; margin-bottom: 0">ordinary brokerage
  transactions and transactions in which the broker-dealer solicits purchasers;
  <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">block trades in
  which the broker-dealer will attempt to sell the shares as agent but may
  position and resell a portion of the block as principal to facilitate the
  transaction; <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">purchases by a
  broker-dealer as principal and resale by the broker-dealer for its account;
  <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">an exchange
  distribution in accordance with the rules of the applicable exchange; <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">privately
  negotiated transactions;<br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">&nbsp;settlement of
  short sales entered into after the effective date of the registration
  statement of which this prospectus is a part; <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">broker-dealers may
  agree with the selling security holders to sell a specified number of such
  shares at a stipulated price per share; <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">through the writing
  or settlement of options or other hedging transactions, whether through an
  options exchange or otherwise; <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">a combination of
  any such methods of sale; or <br>
&nbsp;</li>
  <li>
  <p ALIGN="justify" style="margin-top: 0; margin-bottom: 0">any other method
  permitted pursuant to applicable law. </li>
</ul>
<p align="justify">The selling security holders may also sell shares under Rule
144 under the Securities Act, if available, rather than under this prospectus.
</p>
<p ALIGN="JUSTIFY">Broker-dealers engaged by the selling stockholders may
arrange for other broker dealers to participate in sales. Broker-dealers may
receive commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. </p>
<p ALIGN="JUSTIFY">A selling stockholder may from time to time pledge or grant a
security interest in some or all of the shares or common stock owned by him and,
if the selling stockholder defaults in the performance of the secured
obligations, the pledgees or secured parties may offer and sell the shares of
common stock from time to time under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus. </p>
<p ALIGN="JUSTIFY">In connection with the sale of our common stock or interests
therein, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions which may in turn engage in short
sales of our common stock in the course of hedging the positions they assume.
The selling stockholders may, after the date of this prospectus, also sell
shares of our common stock short and deliver these securities to close out their
short positions, or loan or pledge their common stock to broker-dealers that in
turn may sell these securities. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). </p>
<p ALIGN="JUSTIFY">The selling stockholders and any broker-dealers or agents
that are involved in selling the shares may be deemed to be &quot;underwriters&quot;
within the meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. </p>
<p align="justify">Because the selling stockholders may be deemed to be
&quot;underwriters&quot; within the meaning of the Securities Act, they will be subject to
the prospectus delivery requirements of the Securities Act. Federal securities
laws, including Regulation M, may restrict the timing of purchases and sales of
our common stock by the selling stockholders and any other persons who are
involved in the distribution of the shares of common stock pursuant to this
prospectus. </p>
<p align="center">32</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p>There is no underwriter or coordinating broker acting in connection with the
proposed sale of the shares by the selling security holders. </p>
<p ALIGN="JUSTIFY">The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.</font><font FACE="Times New Roman"><font size="2">
</font></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">DESCRIPTION OF SECURITIES</b> </p>
<p ALIGN="JUSTIFY">We have an authorized capital of 100,000,000 shares of common
stock, par value $0.00001 per share, and 20,000,000 shares of preferred stock,
par value $0.00001 per share. As of April 18, 2008, 20,299,045 shares of common
stock were outstanding, held of record by approximately 244 holders. </p>
<b>
<p>Common Stock</b> </p>
<p ALIGN="JUSTIFY">The holders of common stock are entitled to one vote per
share on all matters voted on by stockholders, including the election of
directors. Except as otherwise required by law, the holders of common stock
exclusively possess all voting power. The holders of common stock are entitled
to dividends as may be declared from time to time by the Board from funds
available for distribution to holders. No holder of common stock has any
preemptive right to subscribe to any securities of ours of any kind or class or
any cumulative voting rights. The outstanding shares of common stock are, and
the shares, upon issuance and sale as contemplated will be, duly authorized,
validly issued, fully paid and non assessable.</font><font FACE="Times New Roman"><font size="2">
</font></p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">LEGAL PROCEEDINGS </p>
</b>
<p align="justify">There are no material pending legal proceedings to which we
are a party or to which any of our property is subject and to the best of our
knowledge, no such actions against us are contemplated or threatened. </p>
<b>
<p align="center">LEGAL MATTERS</b> </p>
<p>The validity of the common stock offered hereby will be passed upon by
Hodgson Russ LLP. </p>
<b>
<p align="center">EXPERTS </p>
</b>
<p align="justify">The consolidated financial statements of IntelGenx
Technologies Corp. as of and for the years ended December 31, 2007 and 2006
included herein, have been audited by RSM Richter LLP, independent registered
public accountants, as indicated in their reports with respect thereto, and are
in reliance upon the authority of said firm as experts in accounting and
auditing. </p>
<b>
<p align="center">DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES </p>
</b>
<p ALIGN="JUSTIFY">Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the &quot;Act&quot; or &quot;Securities Act&quot;) may be permitted to
directors, officers or persons controlling our Company pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.<b> </p>
<p align="center">WHERE YOU CAN FIND ADDITIONAL INFORMATION </p>
</b>
<p ALIGN="JUSTIFY">We file reports and other information with the Securities and
Exchange Commission. We have also filed a registration statement on Form S-1,
including exhibits, with the SEC with respect to the shares being offered in
this offering. This prospectus is part of the registration statement, but it
does not contain all of the information included in the registration statement
or exhibits. For further information with respect to us and our common stock, we
refer you to the registration statement and to the exhibits and schedules to the
registration statement. Statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance, we refer you to the copy of the contract or
other document filed as an exhibit to the registration statement. Each of these
statements is qualified in all respects by this reference. You may inspect a
copy of the registration statement without charge at the SEC's principal office
in Washington, D.C., and copies of all or any part of the registration statement
may be obtained from the Public Reference Section of the SEC, 100 F. St. NE,
Washington, D.C. 20549, upon payment of fees prescribed by the SEC. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. The address of the Web site is http://www.sec.gov. The SEC's toll
free investor information service can be reached at 1-800-SEC-0330.</font><font FACE="Times New Roman"><font size="2">
</font></font></p>
<p ALIGN="center"><font face="Times New Roman" size="2">33</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">FINANCIAL STATEMENTS </p>
</b>
<p>The financial statements for the fiscal years ending December 31, 2007 and
2006 are set forth on pages F-1 through F-25. </p>
<p ALIGN="JUSTIFY">YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS, OR OF ANY SALE OF OUR COMMON STOCK.</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2"><b>
<p ALIGN="CENTER">IntelGenx Technologies Corp.</b></font><font FACE="Times New Roman">
</font></p>
<p ALIGN="CENTER"><font FACE="Times New Roman" SIZE="2"><b>8,642,160 Shares of
Common Stock</b></font><font FACE="Times New Roman"> </font></p>
<p ALIGN="CENTER"><font FACE="Times New Roman" SIZE="2"><b>PROSPECTUS</b></font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="center">__________________, 2008</font><font FACE="Times New Roman">
</font>
</p>
<p align="center">&nbsp;</p>
<p align="center"><font face="Times New Roman" size="2">34</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2"><b>
<p align="center">PART II - INFORMATION NOT REQUIRED IN PROSPECTUS </p>
<p>ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION</b> </p>
<p>The expenses to be paid by the Registrant are as follows. All amounts, other
than the SEC registration fee, are estimates. </p>
</font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="27%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right"><font FACE="Times New Roman" SIZE="2">Amount
    to</font></td>
  </tr>
  <tr>
    <td WIDTH="60%">&nbsp;</td>
    <td WIDTH="27%" align="right">&nbsp;</td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">Be Paid</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">SEC registration fee</font></td>
    <td WIDTH="27%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">305.67</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Legal fees and
    expenses</font></td>
    <td WIDTH="27%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right"><font FACE="Times New Roman" SIZE="2">
    15,000.00</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Accounting fees and
    expenses</font></td>
    <td WIDTH="27%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">5,000.00</font></td>
  </tr>
  <tr>
    <td WIDTH="60%"><font FACE="Times New Roman" SIZE="2">Miscellaneous</font></td>
    <td WIDTH="27%" align="right"><font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-bottom-style: solid; border-bottom-width: 1">
    <font FACE="Times New Roman" SIZE="2">1,000.00</font></td>
  </tr>
  <tr>
    <td WIDTH="60%" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Total</font></td>
    <td WIDTH="27%" align="right" style="border-bottom-style: none; border-bottom-width: medium" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">$</font></td>
    <td WIDTH="14%" align="right" style="border-top-style: solid; border-top-width: 1; border-bottom-style: double; border-bottom-width: 3" bgcolor="#E9F1F8">
    <font FACE="Times New Roman" SIZE="2">21,305.67</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2"><b>
<p align="justify">ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS</b></font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">Our articles of incorporation provide that none of our
directors will be personally liable to the Company or any of our shareholders
for monetary damages arising from the director's breach of fiduciary duty as a
director, with certain limited exceptions. </p>
<b>
<p align="justify">ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES</b></font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">The following issuance of shares were exempt from
registration under section 4(2) of the Securities Act, Regulation D and/or
Regulation S promulgated there under:</font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">On April 28, 2006 our Canadian subsidiary, IntelGenx,
completed a private placement to certain accredited investors and issued
3,191,489 of its common shares for cash consideration of $1,341,750. Those
shares where than exchanged into 3,191,489 shares of our common stock as part of
the IntelGenx Acquisition (see Item 1 &#150; Description of Business &#150; The IntelGenx
Acquisition). After deduction of costs related to the IntelGenx Acquisition, the
net proceeds from this private placement were $792,421.</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">On April 28, 2006 our special purpose Canadian subsidiary
completed the acquisition of 10,991,000 common shares of IntelGenx, pursuant to
the Share Exchange Agreement and other agreements. Under the Share Exchange
Agreement, Exchangeco acquired all of the issued and outstanding common shares
of IntelGenx in exchange for 10,991,000 Class A Special Shares of Exchangeco,
where each Class A Special Share of Exchangeco is exchangeable into one share of
our common stock.</font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">We also acquired 100,000 common share purchase warrants of
IntelGenx pursuant to a securities purchase agreement which we entered into with
Patrick J. Caruso, in exchange for warrants exercisable for 100,000 shares of
our common stock. Additionally, we entered into a business consultancy agreement
with Mr. Caruso pursuant to which we issued to Mr. Caruso 325,000 shares of
common stock as a non-refundable retainer, and in full payment of investor
relations services to be rendered by Mr. Caruso under the agreement.</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">We also issued warrants to purchase 90,691 shares of common
stock at $0.41 per share for services rendered in connection with the IntelGenx
Acquisition in April 2006. The issuance of the warrants was not registered
under the Securities Act.</font><font FACE="Times New Roman"> </p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">On May 22, 2007, we completed the sale of 8% Secured
Convertible Debentures in an aggregate principal amount of approximately $1.5
million to certain institutional and accredited investors, pursuant to a
Securities Purchase Agreement. The Company received net proceeds of
approximately $1.36 million. </p>
<p align="justify">Between August 28, 2007 and November 26, 2007, we issued
149,657 of our common stock upon conversion of an aggregate principal amount of
$104,759 of 8% Secured Convertible Debentures issued in May 2007.</font><font FACE="Times New Roman">
</p>
</font><font FACE="Times New Roman" SIZE="2">
<p align="justify">On March 27, 2008, we completed an offering of 4,001,000
units of its securities at $0.70 per unit for gross proceeds of approximately
$2.8 million. Each unit consists of one share of the Company's common stock and
one two-year warrant to purchase one share of common stock at an initial
exercise price of $1.02 per share, subject to adjustment. </p>
<p align="center">35</p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b>
<p align="justify">ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES </p>
</b></font>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">2.1</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Share exchange
    agreement dated April 10, 2006, incorporated by reference to the Form 8-K/A
    filed on April 28, 2006</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">3.1</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Articles of
    incorporation (incorporated by reference to the Form SB-2 (File No.
    333-90149) filed on November 16, 1999)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">3.2</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">By-Laws (incorporated
    by reference to the Form SB-2 (File No. 333-91049) filed on November 16,
    1999)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">3.3</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Amendment to the
    Articles of Incorporation (incorporated by reference to amendment No. 2 to
    Form SB-2 (File No. 333-135591) filed on August 28, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">4.1</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Warrants dated March
    16, 2006 issued to Patrick J. Caruso (incorporated by reference to the Form
    SB-2 (File No. 333-135591), filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">5.1</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Legal Opinion (To be
    filed by amendment)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">9.1</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Voting Trust agreement
    (incorporated by reference to the Form 8-K/A filed on April 28, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.1</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Horst Zerbe employment
    agreement (incorporated by reference to the Form SB-2 (File No. 333-135591)
    filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.2</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Joel Cohen consulting
    agreement (incorporated by reference to the Form SB-2 (File No. No.
    333-135591) filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.3</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Ingrid Zerbe
    employment agreement (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.4</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Registration rights
    agreement, incorporated by reference to the Form SB-2 (File No. 333-135591)
    filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.5</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Principal's
    registration rights agreement (incorporated by reference to the Form SB-2
    (File No. 333-135591) filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.6</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Investor relations
    consulting agreement (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006).</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.7</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">2006 Stock Option Plan
    (incorporated by reference to the Form S-8 filed on November 21, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.8</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Securities
    Purchase Agreement (incorporated by reference to the Form 8-K filed on May
    23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.9</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Form of 8% Secured
    Convertible Debenture (incorporated by reference to the Form 8-K filed on
    May 23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.10</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Registration
    Rights Agreement (incorporated by reference to the Form 8-K filed on May 23,
    2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.11</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Form of Warrant
    (incorporated by reference to the Form 8-K filed on May 23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.12</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Security
    Agreement (incorporated by reference to the Form 8-K filed on May 23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.13</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Subsidiary Guarantee
    (incorporated by reference to the Form 8-K filed on May 23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.14</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Deed of Hypothec
    (incorporated by reference to the Form 8-K filed on May 23, 2007)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.15</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Agency Agreement
    (incorporated by reference to the Form 8-K filed on March 28, 2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.16</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Subscription
    Agreement (incorporated by reference to the Form 8-K filed on March 28,
    2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.17</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Form of Amending
    Letter to Subscription Agreement (incorporated by reference to the Form 8-K
    filed on March 28, 2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.18</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Registration
    Rights Agreement (incorporated by reference to the Form 8-K filed on March
    28, 2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">10.19</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Form of Warrant
    (incorporated by reference to the Form 8-K filed on March 28, 2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">10.20</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Form of Lock up
    Agreement (incorporated by reference to the Form 8-K filed on March 28,
    2008)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">
    <a href="exh1021.htm" style="text-decoration: none">10.21</a></font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">
    <a href="exh1021.htm" style="text-decoration: none">Broker's Warrant *</a></font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    <a href="exh14.htm" style="text-decoration: none">14</a></font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">
    <a href="exh14.htm" style="text-decoration: none">Code of Ethics *</a></font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">16.1</font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">Letter on change in
    certifying accountant (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">21.1</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Subsidiaries of the
    small business issuer (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)</font></td>
  </tr>
  <tr>
    <td WIDTH="77"><font FACE="Times New Roman" SIZE="2">
    <a href="exh231.htm" style="text-decoration: none">23.1</a></font></td>
    <td WIDTH="899"><font FACE="Times New Roman" SIZE="2">
    <a href="exh231.htm" style="text-decoration: none">Consent of RSM Richter
    LLP</a></font></td>
  </tr>
  <tr>
    <td WIDTH="77" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">23.2</font></td>
    <td WIDTH="899" bgcolor="#E9F1F8"><font FACE="Times New Roman" SIZE="2">Legal Opinion (see
    Exhibit 5.1)</font></td>
  </tr>
</table>
<font FACE="Times New Roman" SIZE="2">
<p>* Filed herewith. </p>
<b>
<p>ITEM 17. UNDERTAKINGS</b> </p>
<p align="justify">The undersigned Registrant hereby undertakes to provide
certificates in such denominations and registered in such names as required by
the purchasers to permit prompt delivery to each purchaser. </p>
<p ALIGN="JUSTIFY">Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue. </p>
<p ALIGN="center">36</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p align="justify">The undersigned Registrant hereby undertakes: </p>
<p align="justify">(a) (1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement: </p>
<p align="justify">(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933; </p>
<p align="justify">(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the &quot;Calculation of Registration Fee&quot;
table in the effective registration statement. </p>
<p align="justify">(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; </p>
<p align="justify">(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial <i>bona fide</i> offering thereof. </p>
<p align="justify">(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering. </p>
<p align="justify">(4) Not applicable. </p>
<p align="justify">(5) That for the purpose of determining liability under the
Securities Act of 1933 to any purchaser: </p>
<p align="justify">(ii) Each prospectus filed pursuant to Rule 424(b) as part of
this registration statement, shall be deemed to be part of and included in this
registration statement as of the date it is first used after effectiveness;
provided, however, that no statement made in this registration statement or
prospectus that is part of this registration statement or made in a document
incorporated or deemed incorporated by reference into this registration
statement or prospectus that is part of this registration statement will, as to
a purchaser with a time of contract of sale prior to such first use, supersede
or modify any statement that was made in this registration statement or
prospectus that was part of this registration statement or made in any such
document immediately prior to such date of first use. </p>
<p align="justify">(6) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: </p>
<p align="justify">The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser: (i) Any preliminary prospectus of the
undersigned registrant relating to the offering required to be filed pursuant to
Rule 424; </p>
<p align="justify">(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant; </p>
<p align="justify">(iii) The portion of any other free writing prospectus
relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned
registrant; and </p>
<p align="justify">(iv) Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser. </p>
<p align="center">37</p>
</font><hr color="#000000" size="5"><p Style='page-break-before:always'><font FACE="Times New Roman" SIZE="2">
<p align="center"><b>POWER OF ATTORNEY </p>
</b>
<p ALIGN="JUSTIFY">Each person whose signature appears below constitutes and
appoints Horst Zerbe his or her true and lawful attorney in fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all amendments
(including post effective amendments) to the Registration Statement, and to sign
any registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and all post effective amendments thereto,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, each acting alone, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof. </p>
<b>
<p align="center">SIGNATURES</b> </p>
<p>Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the undersigned
on April 28, 2008. </p>
</font>
<div align="right">
  <table CELLSPACING="0" BORDER="0" WIDTH="50%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%">&nbsp;</td>
    </tr>
    <tr>
      <td COLSPAN="2"><font FACE="Times New Roman" SIZE="2"><b>INTELGENX
      TECHNOLOGIES CORP.</b></font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="8%"><font FACE="Times New Roman" SIZE="2">By:</font></td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2"><i><u>/s/ Horst G.
      Zerbe</u></i></font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Name: Horst G. Zerbe</font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Title: Chief
      Executive Officer and President (Principal Executive</font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Officer)</font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%">&nbsp;</td>
    </tr>
    <tr>
      <td WIDTH="8%"><font FACE="Times New Roman" SIZE="2">By:</font></td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2"><i><u>/s/ Gino Di
      Iorio</u></i></font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Name: Gino Di Iorio</font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Title: Chief
      Financial Officer, (Principal Accounting and Financial</font></td>
    </tr>
    <tr>
      <td WIDTH="8%">&nbsp;</td>
      <td WIDTH="92%"><font FACE="Times New Roman" SIZE="2">Officer)</font></td>
    </tr>
  </table>
</div>
<table CELLSPACING="0" BORDER="0" WIDTH="100%" cellpadding="0" style="border-collapse: collapse" bordercolor="#111111">
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">By: <i>/s/ Horst G.
    Zerbe</i></font></td>
    <td WIDTH="47%"><font FACE="Times New Roman" SIZE="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Name: Horst G. Zerbe</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Title: Director, Chief
    Executive Officer and President</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">By: /s/<i>Gino Di
    Iorio</i></font></td>
    <td WIDTH="47%"><font FACE="Times New Roman" SIZE="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Name: Gino Di Iorio</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Title: Chief Financial
    Officer (Principal Accounting and</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Financial Officer)</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">By<i>:/s/ Joel Cohen</i></font></td>
    <td WIDTH="47%"><font FACE="Times New Roman" SIZE="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Name: Joel Cohen</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Title: Director</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">By: /s/ <i>Bernard
    Boudreau</i></font></td>
    <td WIDTH="47%"><font FACE="Times New Roman" SIZE="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Name: Bernard Boudreau</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Title: Director</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">By: /s/ <i>David
    Coffin-Beach</i></font></td>
    <td WIDTH="47%"><font FACE="Times New Roman" SIZE="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Name: David
    Coffin-Beach</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" SIZE="2">Title: Director</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%">&nbsp;</td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="36%"><font FACE="Times New Roman" size="2">By: /s/ <i>Reiza
    Rayman</i></font></td>
    <td WIDTH="64%"><font FACE="Times New Roman" size="2">April 28, 2008</font></td>
  </tr>
  <tr>
    <td WIDTH="36%"><font FACE="Times New Roman" size="2">Name: Reiza Rayman</font></td>
    <td WIDTH="64%">&nbsp;</td>
  </tr>
  <tr>
    <td WIDTH="53%"><font FACE="Times New Roman" size="2">Title: Director</font></td>
    <td WIDTH="47%">&nbsp;</td>
  </tr>
</table>
<p align="center"><font size="2">38</font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'><b><font size="4">
<p>IntelGenx Technologies Corp. </p>
</font>
<p>Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<font size="2">
<p>RSM Richter LLP <br>
Chartered Accountants </font></b><font size="2"><br>
Montreal </p>
</font>
<p>&nbsp;</p>
<font size="2">
<p>RSM Richter LLP is an independent member firm of RSM International, <br>
an affiliation of independent accounting and consulting firms. </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
</font></p>
<p>IntelGenx Technologies Corp.<b> </p>
<font size="2">
<p>Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
</font></b>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="69%"><font size="2"><b>Contents</b></font></td>
    <td align="middle" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="69%">&nbsp;</td>
    <td align="middle" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="69%">&nbsp;</td>
    <td align="middle" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="69%" bgColor="#e9f1f8"><font size="2">Report of Independent
    Registered Public Accounting Firm</font></td>
    <td align="middle" width="31%" bgColor="#e9f1f8"><font size="2">F-1</font></td>
  </tr>
  <tr>
    <td width="69%"><font size="2">Balance Sheet</font></td>
    <td align="middle" width="31%"><font size="2">F-2</font></td>
  </tr>
  <tr>
    <td width="69%" bgColor="#e9f1f8"><font size="2">Statement of Shareholders'
    Equity</font></td>
    <td align="middle" width="31%" bgColor="#e9f1f8"><font size="2">F-3 - F-4</font></td>
  </tr>
  <tr>
    <td width="69%"><font size="2">Statement of Operations and Comprehensive
    Loss</font></td>
    <td align="middle" width="31%"><font size="2">F-5</font></td>
  </tr>
  <tr>
    <td width="69%" bgColor="#e9f1f8"><font size="2">Statement of Cash Flows</font></td>
    <td align="middle" width="31%" bgColor="#e9f1f8"><font size="2">F-6</font></td>
  </tr>
  <tr>
    <td width="69%"><font size="2">Notes to Financial Statements</font></td>
    <td align="middle" width="31%"><font size="2">F-7 - F-25</font></td>
  </tr>
</table>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt"><b>RSM Richter S.E.N.C.R.L.</b></font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt"><b>Comptables agr&#233;&#233;s</b></font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt"><b>Chartered Accountants</b></font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt">2, Place Alexis Nihon</font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt">Montr&#233;al, (Qu&#233;bec) H3Z 3C2</font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt">T&#233;l&#233;phone / Telephone : (514)
    934-3400</font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt">T&#233;l&#233;copieur / Facsimile : (514)
    934-3408</font></td>
  </tr>
  <tr>
    <td width="321">&nbsp;</td>
    <td width="322">&nbsp;</td>
    <td width="322"><font style="FONT-SIZE: 9pt">www.rsmrichter.com</font></td>
  </tr>
</table>
<font size="2"><b>
<p>Report of Independent Registered Public Accounting Firm <br>
</b>To the Shareholders and Board of Directors of </p>
<b>
<p>IntelGenx Technologies Corp. </p>
</b>
<p align="justify">We have audited the accompanying consolidated balance sheets
of IntelGenx Technologies Corp. as at December 31, 2007 and 2006 and the related
consolidated statements of operations and comprehensive loss, shareholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit. </p>
<p align="justify">We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company's internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. </p>
<p align="justify">In our opinion, these consolidated financial statements
present fairly in all material respects, the financial position of the Company
as at December 31, 2007 and 2006 and the results of its operations,
comprehensive loss, and its cash flows for the years then ended in accordance
with accounting principles generally accepted in the United States. </p>
<p align="justify">The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As described in note
2 to the financial statements, the Company has experienced operating losses and
requires significant capital to finance operations and repay existing
indebtedness. This raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in note 2. The financial statements do not include any adjustments that may
result from the outcome of this uncertainty. </p>
<p align="justify">We were not engaged to examine management's assertion about
the effectiveness of the Company's internal control over financial reporting as
at December 31, 2007 included in the accompanying 10 &#150; KSB filing and,
accordingly, we do not express an opinion thereon. </p>
<p align="justify"><u>Signed: RSM Richter LLP</u></p>
<b>
<p>Chartered Accountants </p>
</b>
<p>Montreal, Quebec <br>
March 28, 2008 </p>
<p align="center">F-1 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
</font></p>
<p><font size="2">IntelGenx Technologies Corp.</font><b><font size="2"> </font>
</p>
<font size="2">
<p>Consolidated Balance Sheet As <br>
At December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
</font></b>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%"><font size="2"><b>Assets</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2"><b>Current</b></font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Cash and cash equivalent</font></td>
    <td align="right" width="11%"><font size="2"><b>$</b></font></td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>330,967</b></font></td>
    <td align="right" width="12%"><font size="2">$</font></td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">227,578</font></td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Accounts receivable</font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>427,476</b></font></td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">135,223</font></td>
  </tr>
  <tr>
    <td width="53%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Income taxes recoverable</font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>11,028</b></font></td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">9,380</font></td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Prepaid expenses</font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>23,443</b></font></td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">72,914</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Investment tax credits receivable</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>243,006</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">43,880</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%" bgColor="#e9f1f8">
    <p style="MARGIN-LEFT: 15px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,035,920</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">488,975</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2"><b>Property
    and Equipment </b>(note 6)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>235,244</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">161,861</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 2px solid" width="53%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="11%">
    <font size="2"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,271,164</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="12%">
    <font size="2">$</font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">650,836</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%" bgColor="#e9f1f8">
    <font size="2"><b>Liabilities</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%"><font size="2"><b>Current</b></font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Accounts payable and accrued liabilities (note
    7)</font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>261,485</b></font></td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">129,994</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Current maturity of long-term debt</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">24,026</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>261,485</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">154,020</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2"><b>Long-Term
    Debt</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">82,661</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="53%" bgColor="#e9f1f8">
    <font size="2"><b>Loan Payable, Shareholder </b>(note 8)</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>101,193</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">86,076</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%"><font size="2"><b>Convertible
    Notes, </b>less unamortized discount and deferred charges</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2">&nbsp;&nbsp; of
    $1,082,366<b> </b>(note<b> </b>9)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>417,634</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="53%" bgColor="#e9f1f8">
    <font size="2"><b>Deferred Income Tax Liability</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>278,988</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="53%"><font size="2"><b>Commitment</b>
    (note 10)</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2"><b>Shareholders' Equity</b></font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="53%"><font size="2"><b>Capital Stock </b>(note 11)</font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>162</b></font></td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">160</font></td>
  </tr>
  <tr>
    <td width="53%" bgColor="#e9f1f8"><font size="2"><b>Additional Paid-In
    Capital </b>(note 12)</font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>2,071,818</b></font></td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">1,165,403</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="53%"><font size="2"><b>
    Accumulated Other Comprehensive Income (Loss)</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>58,542</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">(19,619)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="53%" bgColor="#e9f1f8">
    <font size="2"><b>Accumulated Deficit</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2"><b>(1,918,658)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">(817,865)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="53%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="11%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>211,864</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">328,079</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" width="53%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="11%" bgColor="#e9f1f8">
    <font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,271,164</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="12%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">650,836</font></td>
  </tr>
</table>
<font size="2">
<p>See accompanying notes </p>
<b>
<p>Approved on Behalf of the Board </p>
</b>
<p>_________________________, Director </p>
<p>_________________________, Director </p>
<p align="center">F-2 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Consolidated Statement of Shareholders' Equity <br>
For the Year Ended December 31, 2006 <br>
(Expressed in U.S. Funds) </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="31%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Accumulated</b></font></td>
    <td align="right" width="4%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="4%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
  </tr>
  <tr>
    <td width="31%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Additional</b></font></td>
    <td align="right" width="12%" colSpan="2"><font size="2"><b>Other</b></font></td>
    <td align="right" width="4%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Total</b></font></td>
  </tr>
  <tr>
    <td width="31%">&nbsp;</td>
    <td align="right" width="23%" colSpan="3"><font size="2"><b>
    <p align="center">Capital Stock</b></font></td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Paid-In</b></font></td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Comprehensive</b></font></td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Accumulated</b></font></td>
    <td align="right" width="13%" colSpan="2"><font size="2"><b>Shareholders'</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="31%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2"><b>Number</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="15%" colSpan="2">
    <font size="2"><b>Amount</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2"><b>Capital</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" colSpan="2">
    <font size="2"><b>Income (Loss)</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="4%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>Deficit</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="4%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>Equity</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="31%" bgColor="#e9f1f8">
    <font size="2"><b>Balance - December 31, 2005</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">10,000</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">77</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">4,825</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <font size="2">(36,729)</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">(31,827)</font></td>
  </tr>
  <tr>
    <td width="31%"><font size="2">March 9, 2006 - recall and cancellation of
    issued</font></td>
    <td align="right" width="8%"><font size="2">(10,000)</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%"><font size="2">(77)</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%"><font size="2">(77)</font></td>
  </tr>
  <tr>
    <td width="31%"><font size="2">&nbsp;&nbsp;&nbsp; shares</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="31%" bgColor="#e9f1f8"><font size="2">March 9, 2006 - issue of
    common shares</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">10,991,000</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">110</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">(33)</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">77</font></td>
  </tr>
  <tr>
    <td width="31%"><font size="2">April 28, 2006 - issue of common shares</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">3,191,489</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">32</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">792,389</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">792,421</font></td>
  </tr>
  <tr>
    <td width="31%" bgColor="#e9f1f8"><font size="2">April 28, 2006 - asset
    acquired</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">1,825,000</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">18</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">133,232</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">133,250</font></td>
  </tr>
  <tr>
    <td width="31%"><font size="2">Foreign currency translation adjustment</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%"><font size="2">(24,444)</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%"><font size="2">(24,444)</font></td>
  </tr>
  <tr>
    <td width="31%" bgColor="#e9f1f8"><font size="2">Warrants issued</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">37,699</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">37,699</font></td>
  </tr>
  <tr>
    <td width="31%"><font size="2">Stock options issued</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">212,778</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">212,778</font></td>
  </tr>
  <tr>
    <td width="31%" bgColor="#e9f1f8"><font size="2">Compensation expense
    related to services not yet</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="31%" bgColor="#e9f1f8"><font size="2">&nbsp;&nbsp;&nbsp; rendered</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">(10,662)</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">(10,662)</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="31%"><font size="2">Net loss</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2">(781,136)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="4%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2">(781,136)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="31%" bgColor="#e9f1f8">
    <font size="2"><b>Balance - December 31, 2006</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>16,007,489</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>160</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,165,403</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <font size="2"><b>(19,619)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <font size="2"><b>(817,865)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="4%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>328,079</b></font></td>
  </tr>
</table>
</b>
<p>See accompanying notes </p>
<p align="center">F-3 </p>
<b><hr color="#000000" size="5"><p Style='page-break-before:always'>
</b></p>
<p>IntelGenx Technologies Corp. </p>
<p><b>Consolidated Statement of Shareholders' Equity <br>
For the Year Ended December 31, 2007 <br>
(Expressed in U.S. Funds) </b></p>
<b>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="34%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>Accumulated</b></font></td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
  </tr>
  <tr>
    <td width="34%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%"><font size="2"><b>Additional</b></font></td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>Other</b></font></td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>Total</b></font></td>
  </tr>
  <tr>
    <td width="34%">&nbsp;</td>
    <td align="right" width="28%" colSpan="3"><font size="2"><b>
    <p align="center">Capital Stock</b></font></td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="8%"><font size="2"><b>Paid-In </b></font></td>
    <td align="right" width="12%" colSpan="2"><font size="2"><b>Comprehensive</b></font></td>
    <td align="right" width="3%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>Accumulated</b></font></td>
    <td align="right" width="25%" colSpan="2"><font size="2"><b>Shareholders'</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="34%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2"><b>Number</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2"><b>Amount</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2"><b>Capital</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" colSpan="2">
    <font size="2"><b>Income(Loss)</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>Deficit</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>Equity</b></font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="34%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="3%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
  </tr>
  <tr>
    <td width="34%" bgColor="#e9f1f8"><font size="2"><b>Balance - December 31,
    2006</b></font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">16,007,489</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">160</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">1,165,403</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">(19,619)</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">&nbsp;(817,865)</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">328,079</font></td>
  </tr>
  <tr>
    <td width="34%"><font size="2">Foreign currency translation adjustment</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">78,161</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">78,161</font></td>
  </tr>
  <tr>
    <td width="34%" bgColor="#e9f1f8"><font size="2">Debenture conversion</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">149,657</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">2</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">104,757</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">104,759</font></td>
  </tr>
  <tr>
    <td width="34%"><font size="2">Warrants issued, net of transaction costs of
    $121,063</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">452,023</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">452,023</font></td>
  </tr>
  <tr>
    <td width="34%" bgColor="#e9f1f8"><font size="2">Stock-based compensation</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">202,607</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">202,607</font></td>
  </tr>
  <tr>
    <td width="34%"><font size="2">Beneficial conversion feature, net of a
    deferred income</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">147,028</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">147,028</font></td>
  </tr>
  <tr>
    <td width="34%"><font size="2">&nbsp; tax liability of $343,065</font></td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="34%" bgColor="#e9f1f8"><font size="2">Net loss</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="8%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">(1,100,793)</font></td>
    <td align="right" width="3%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">(1,100,793)</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="34%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="34%">
    <font size="2"><b>Balance - December 31, 2007</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>16,157,146</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>162</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>2,071,818</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>58,542</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>(1,918,658)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="3%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>211,864</b></font></td>
  </tr>
</table>
</b>
<p align="center">F-4 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Consolidated Statement of Operations and Comprehensive Loss <br>
For the Year Ended December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
</b></font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2"><b>Revenue</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>835,376</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">261,649</font></td>
  </tr>
  <tr>
    <td width="44%">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    <font size="2"><b>Interest</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>27,355</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">4,252</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" width="44%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>862,731</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>265,901</b></font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%"><font size="2"><b>Expenses</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Research and development</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>777,773</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">510,407</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Research and development tax credits</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%"><font size="2"><b>(174,399)</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%"><font size="2">(39,025)</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Management salaries</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>328,513</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">245,637</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 15px">General and administrative</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>166,249</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">84,040</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Professional fees</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>424,817</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">158,925</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Depreciation</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>42,003</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">33,912</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Foreign exchange</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>113,552</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2">(1,583)</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Interest and financing fees</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>349,093</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">54,724</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    <p style="MARGIN-LEFT: 15px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>2,027,601</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">1,047,037</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%"><font size="2"><b>Loss Before Income Taxes</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%"><font size="2"><b>(1,164,870)</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%"><font size="2">(781,136)</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    <font size="2">Income taxes (note 13)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(64,077)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%"><font size="2"><b>Net Loss</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="14%"><font size="2"><b>(1,100,793)</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="14%"><font size="2">(781,136)</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2"><b>Other Comprehensive
    Income (Loss)</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%"><font size="2">Foreign
    currency translation adjustment</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>78,161</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2">(24,444)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" width="44%" bgColor="#e9f1f8">
    <font size="2"><b>Comprehensive Loss</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2"><b>(1,022,632)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(805,580)</font></td>
  </tr>
  <tr>
    <td width="44%">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 2px solid" width="44%"><font size="2"><b>Basic
    Weighted Average Number of Shares Outstanding</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>16,042,791</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">14,335,000</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 2px solid" width="44%" bgColor="#e9f1f8">
    <font size="2"><b>Basic and Diluted Loss Per Common Share</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2"><b>(0.07)</b></font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(0.05)</font></td>
  </tr>
</table>
<font size="2">
<p>See accompanying notes </p>
<p align="center">F-5 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Consolidated Statement of Cash Flows <br>
For the Year Ended December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
</b></font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2"><b>Funds Provided (Used) -</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2"><b>
    <p style="MARGIN-LEFT: 15px">Operating Activities</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Net loss</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="14%"><font size="2"><b>(1,100,793)</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="14%"><font size="2">(781,136)</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Deferred income taxes</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2"><b>(64,077)</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Depreciation</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>42,003</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">33,912</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Stock issued for investor relations services</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>68,349</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">66,625</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Financing fees paid in warrants</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">37,699</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Employees and directors share-based
    compensation</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>202,607</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">202,116</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="58%" colSpan="2"><font size="2">
    <p style="MARGIN-LEFT: 30px">Interest accretion and amortization of
    debenture costs</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>195,317</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%" bgColor="#e9f1f8">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2"><b>(656,594)</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(440,784)</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Changes in non-cash operating elements of
    working</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">&nbsp;&nbsp; capital</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2"><b>(312,065)</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <font size="2">(48,867)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2"><b>(968,659)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(489,651)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%"><font size="2"><b>
    <p style="MARGIN-LEFT: 15px">Financing Activities</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Promissory note</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">134,689</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Repayment of promissory note</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2">(134,689)</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Increase in long-term debt</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">53,754</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Repayment of long-term debt</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2"><b>(107,871)</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2">(22,632)</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Issue of capital stock</font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">1,341,750</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 30px">Transaction costs</font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2"><b>(229,323)</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2">(549,329)</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%"><font size="2">
    <p style="MARGIN-LEFT: 30px">Convertible notes</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,500,000</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>1,162,806</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">823,543</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%"><font size="2"><b>
    <p style="MARGIN-LEFT: 15px">Investing Activity</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="44%">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: 1px solid" width="44%" bgColor="#e9f1f8">
    <font size="2">
    <p style="MARGIN-LEFT: 30px">Additions to property and equipment</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2"><b>(82,961)</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <font size="2">(97,511)</font></td>
  </tr>
  <tr>
    <td style="BORDER-TOP: 1px solid" width="44%"><font size="2"><b>Increase in
    Cash and Cash Equivalent</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>111,186</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">236,381</font></td>
  </tr>
  <tr>
    <td width="44%" bgColor="#e9f1f8"><font size="2"><b>Effect of Foreign
    Exchange on Cash Balance</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2"><b>(7,797)</b></font></td>
    <td align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%" bgColor="#e9f1f8"><font size="2">(19,741)</font></td>
  </tr>
  <tr>
    <td width="44%"><font size="2"><b>Cash and Cash Equivalent</b></font></td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: #000000 1px solid" width="44%" bgColor="#e9f1f8">
    <font size="2"><b>
    <p style="MARGIN-LEFT: 30px">Beginning of Year</b></font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>227,578</b></font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">10,938</font></td>
  </tr>
  <tr>
    <td style="BORDER-BOTTOM: #000000 1px solid" width="44%"><font size="2"><b>
    <p style="MARGIN-LEFT: 30px">End of Year</b></font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>330,967</b></font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: #000000 1px solid" align="right" width="14%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">227,578</font></td>
  </tr>
</table>
<font size="2">
<p>See accompanying notes </p>
<p align="center">F-6 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">1.</b> </font></p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b><font size="2">Basis of
Presentation and Reorganization of the Corporation Basis of Presentation </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">The Company prepares its financial
statements in accordance with accounting principles generally accepted in the
United States. This basis of accounting involves the application of accrual
accounting and consequently, revenues and gains are recognized when earned, and
expenses and losses are recognized when incurred. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The consolidated financial
statements include the accounts of the Company and its subsidiary companies. On
consolidation, all material interentity transactions and balances have been
eliminated. </p>
<p style="MARGIN-LEFT: 30px">The financial statements are expressed in U.S.
funds. </p>
<b>
<p style="MARGIN-LEFT: 30px">Reorganization of the Corporation </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">On April 28, 2006, Intelgenx Corp.
entered into a share exchange agreement with IntelGenx Technologies Corp.
(formerly Big Flash Corporation), an inactive public shell company, for the
acquisition by IntelGenx Technologies Corp. of all the issued and outstanding
shares of Intelgenx Corp. </p>
<p style="MARGIN-LEFT: 30px" align="justify">Under accounting principles
generally accepted in the United States, the share exchange is considered to be
a capital transaction in substance, rather than a business combination. That is,
the share exchange is equivalent to the issuance of stock by Intelgenx Corp. for
the net monetary assets of IntelGenx Technologies Corp. accompanied by a
recapitalization, and is accounted for as a change in capital structure.
Accordingly, the accounting for the share exchange is identical to that
resulting from a reverse acquisition, except no goodwill is recorded. Under
reverse takeover accounting, the post reverse acquisition comparative historical
financial statements of the legal acquirer, IntelGenx Technologies Corp., are
those of the legal acquiree, Intelgenx Corp., which is considered to be the
accounting acquirer. </p>
<p style="MARGIN-LEFT: 30px" align="justify">All of the Intelgenx Corp. shares,
through a series of exchanges, were exchanged for shares of IntelGenx
Technologies Corp. common shares and/or exchangeable shares of 6544361 Canada
Inc. a wholly-owned subsidiary of IntelGenx Technologies Corp. The exchangeable
shares are exchangeable for common shares of IntelGenx Technologies Corp. on a
one-for-one basis. Until such time as the holders of the exchangeable shares
wish to exchange their shares for IntelGenx Technologies Corp. shares, the
IntelGenx Technologies Corp. shares are held in trust by a trustee on behalf of
the exchangeable shareholders. The trustee shall be entitled to the voting
rights in IntelGenx Technologies Corp. stated in the terms of the exchange and
voting agreement and shall exercise these voting rights according to the
instruction of the holders of the exchangeable shares on a basis of one vote for
every exchangeable share held. </p>
<p align="center">F-7 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">1.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b>Basis of Presentation and
Reorganization of the Corporation (Cont'd) </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">These financial statements reflect
the accounts of the balance sheets, the results of operations and the cash flows
of Intelgenx Corp. at their carrying amounts, since it is deemed to be the
accounting acquirer. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The results of operations, the cash
flows and the assets and liabilities of IntelGenx Technologies Corp. have been
included in these consolidated financial statements since April 28, 2006, the
acquisition date. Amounts reported for the periods prior to April 28, 2006 are
those of Intelgenx Corp. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The fair value assigned to the
asset of IntelGenx Technologies Corp. acquired on April 28, 2006, being prepaid
investor relations services, is $133,250. As part of the transaction, a
shareholder of IntelGenx Technologies Corp. forgave the amount due to
shareholder and related interest payable amounting to $23,160. </p>
<b>
<p style="MARGIN-BOTTOM: 0px">2.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b>Going Concern </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The accompanying financial
statements have been prepared assuming the Company will continue as a going
concern. The Company has reported an accumulated deficit of $1,918,658 (2006 -
$817,865). To date, these losses have been financed principally through common
share issuance, long-term debt and debt from related parties. Additional capital
and/or borrowings will be necessary in order for the Company to continue in
existence until attaining and sustaining profitable operations. </p>
<p style="MARGIN-LEFT: 30px" align="justify">Management has continued to develop
a strategic plan to develop a management team, maintain reporting compliance and
establish contracts with pharmaceutical companies. To date revenues consisted
primarily of research and development fee revenues from four clients and have
not been sufficient to sustain operations. In order to achieve profitability,
revenue streams will have to increase significantly and there is no assurance
that revenues can increase to such a level. The Company has raised additional
cash through the issuance of convertible debt during the year and is currently
undergoing the process of raising additional capital. Should the Company be
unable to continue as a going concern, it may be unable to realize the carrying
value of its assets and to meet its liabilities as they become due. </p>
<b>
<p style="MARGIN-BOTTOM: 0px">3.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b>Nature of Business </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company specializes in the
development of pharmaceutical products in co-operation with various
pharmaceutical companies. Prior to March 31, 2006, the Company was in the
development stage and its efforts were focused on establishing contracts with
pharmaceutical companies and the research and development of pharmaceutical
products. The Company completed the development stage of its operations when the
Company commenced consistently generating revenues from its operations in April
2006. </p>
<p align="center">F-8 </p>
</font><font face="Arial Narrow" size="2"><hr color="#000000" size="5"><p Style='page-break-before:always'>
</font><font size="2"></p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">4.</b> </font></p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>
<font size="2">Summary of Significant Accounting Policies </p>
<p style="MARGIN-LEFT: 30px" align="justify">Use of Estimates </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. The financial
statements include estimates based on currently available information and
management's judgment as to the outcome of future conditions and circumstances.
Significant estimates in these financial statements include the allowance for
doubtful accounts, useful lives and impairment of long-lived assets, stock-based
compensation costs, determination of the fair value of the warrants issued with
the convertible notes, the investments tax credits receivable and the resulting
impact on the allocation of the proceeds between the convertible notes, the
beneficial conversion feature and the warrants. </p>
<p style="MARGIN-LEFT: 30px" align="justify">Changes in the status of certain
facts or circumstances could result in material changes to the estimates used in
the preparation of the financial statements and actual results could differ from
the estimates and assumptions. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Revenue Recognition </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company recognizes revenue from
research and development contracts as the contracted services are performed or
when milestones are achieved, in accordance with the terms of the specific
agreements and when collection of the payment is reasonably assured. In
addition, the performance criteria for the achievement of milestones are met if
substantive effort was required to achieve the milestone and the amount of the
milestone payment appears reasonably commensurate with the effort expended.
Amounts received in advance of the recognition criteria being met, if any, are
included in deferred income. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Sales Tax </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">On June 28, 2006, the FASB ratified
the EITF's consensus reached on EITF 06-3, which relates to the income statement
presentation of taxes collected from customers and remitted to government
authorities. The Task Force affirmed as a consensus on this issue that the
presentation of taxes on either a gross basis or a net basis within the scope of
EITF 06-3 is an accounting policy decision that should be disclosed pursuant to
APB 22. A company should disclose the amount of those taxes that is recognized
on a gross basis in interim and annual financial statements for each period for
which an income statement is presented if those amounts are significant. The
Company adopted EITF 06-3 on January 1, 2007. While the amounts are not
material, the Company's policy is to present such taxes on a net basis in the
consolidated statements of operations. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Financial Instruments </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company estimates the fair
value of its financial instruments based on current interest rates, market value
and pricing of financial instruments with comparable terms. Unless otherwise
indicated, the carrying value of these financial instruments approximates their
fair market value. </p>
<p align="center">F-9 </font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font size="2"></p>
<p>IntelGenx Technologies Corp. </font><b><font size="2"><br>
Notes to Consolidated Financial Statements December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">4. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify">Summary of
Significant Accounting Policies (Cont'd) </p>
<p style="MARGIN-LEFT: 30px" align="justify">Cash and Cash Equivalent </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">Cash and cash equivalent is
comprised of cash on hand and a term deposit with an original maturity date of
less than three months. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Accounts Receivable </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company accounts for trade
receivables at original invoice amount less an estimate made for doubtful
receivables based on a review of all outstanding amounts on a monthly basis.
Management determines the allowance for doubtful accounts by regularly
evaluating individual customer receivables and considering a customer's
financial condition, credit history and current economic conditions. The Company
writes off trade receivables when they are deemed uncollectible. The Company
records recoveries of trade receivables previously written-off when they receive
them. Management considers the reserve for doubtful accounts of $Nil (2006:
$Nil) to be adequate to cover any exposure to loss in its December 31, 2007 and
2006 accounts receivable. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Investment Tax Credits </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">Investment tax credits relating to
qualifying expenditures are recognized in the accounts at the time at which the
related expenditures are incurred and there is reasonable assurance of their
realization. Management has made estimates and assumptions in determining the
expenditures eligible for investment tax credits claimed. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Property and Equipment </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">Property and equipment are recorded
at cost. Provisions for depreciation are based on their estimated useful lives
using the methods as follows: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="75%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="47%" bgColor="#e9f1f8"><font size="2">On the declining balance
    method -</font></td>
    <td width="53%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="47%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Laboratory and office equipment</font></td>
    <td width="53%" bgColor="#e9f1f8"><font size="2">20%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="47%"><font size="2">
    <p style="MARGIN-LEFT: 15px">Computer equipment</font></td>
    <td width="53%"><font size="2">30%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="47%"><font size="2">On the straight-line method -</font></td>
    <td width="53%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="47%" bgColor="#e9f1f8"><font size="2">
    <p style="MARGIN-LEFT: 15px">Leasehold improvements</font></td>
    <td width="53%" bgColor="#e9f1f8"><font size="2">5 years</font></td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px" align="justify">Upon retirement or disposal, the
cost of the asset disposed of and the related accumulated depreciation are
removed from the accounts and any gain or loss is reflected in income.
Expenditures for repair and maintenance are expensed as incurred.</p>
<p align="center">F-10 </font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font size="2"></p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">4.</b> </font></p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b><font size="2">Summary of
Significant Accounting Policies (Cont'd) </font></b></p>
<p style="MARGIN-LEFT: 30px"><b><font size="2">Impairment of Long-Lived Assets
</p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">Long-lived assets held and used by
the Company are reviewed for possible impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of the assets to the estimated undiscounted cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value thereof. </p>
<b>
<p style="MARGIN-LEFT: 30px">Foreign Currency Translation </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company's reporting currency is
the United States dollar. The Canadian dollar is the functional currency of the
Company's Canadian operations which is translated to the United States dollar
using the current rate method. Under this method, accounts are translated as
follows: </p>
<p style="MARGIN-LEFT: 60px" align="justify">Assets and liabilities - at
exchange rates in effect at the balance sheet date; </p>
<p style="MARGIN-LEFT: 60px" align="justify">Revenue and expenses - at average
exchange rates prevailing during the year. </p>
<p style="MARGIN-LEFT: 60px" align="justify">Gains and losses arising from
foreign currency translation are included in other comprehensive income. </p>
<b>
<p style="MARGIN-LEFT: 30px">Income Taxes </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company accounts for income
taxes in accordance with SFAS No. 109, &quot;Accounting for Income Taxes&quot;. Deferred
taxes are provided on the liability method whereby deferred tax assets are
recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment. </p>
<p style="MARGIN-LEFT: 30px" align="justify">In July 2006, the FASB released FIN
48, &quot;Uncertainty in Income Taxes,&quot; which defines accounting for uncertain tax
positions and includes amendments to SFAS No. 109. The Company adopted FIN 48 on
January 1, 2007 (the first fiscal year after December 15, 2006). See Note 13 for
additional information.&quot;</p>
</font><font face="Arial Narrow" size="2"><b>
<p align="center"></b></font><font size="2">F-11 </font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font size="2"></p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px" align="justify">4.</b> </font></p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>
<font size="2">Summary of Significant Accounting Policies (Cont'd) </font></b>
</p>
<p style="MARGIN-LEFT: 30px" align="justify"><b><font size="2">Share-Based
Payments </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">The Company accounts for
share-based payments in accordance with the provisions of FAS 123R &quot;Share-based
payments (Revised)&quot; and accordingly recognizes in its financial statements
share-based payments at their fair value. In addition, it will recognize in the
financial statements an expense based on the grant date fair value of stock
options granted to employees. The expense will be recognized on a straight-line
basis over the vesting period and the offsetting credit will be recorded in
additional paid-in capital. Upon exercise of options, the consideration paid
together with the amount previously recorded as additional paid-in capital will
be recognized as capital stock. The Company estimates its forfeiture rate in
order to determine its compensation expense arising from stock-based awards. The
Company uses the Black-Scholes-Merton option pricing model to determine the fair
value of the options. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Loss Per Share </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">Basic loss per share is calculated
based on the weighted average number of shares outstanding during the year. The
convertible debt, warrants and stock options have been excluded from the
calculation of diluted loss per share since they are anti-dilutive. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Newly Issued Accounting
Pronouncements </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">In February 2007, the Financial
Accounting Standards Board issued FASB Statement No. 159, the Fair Value Option
for Financial Assets and Financial Liabilities (&quot;SFAS 159&quot;), which includes an
amendment to FASB Statement No. 115. The statement permits entities to choose,
at specified election dates, to measure eligible financial assets and financial
liabilities at fair value (referred to as the &quot;fair value option&quot;) and report
associated unrealized gains and losses in earnings. SFAS 159 is effective for
fiscal years beginning after November 15, 2007. No significant impact is
expected on the consolidated financial statements at the time of adoption. </p>
<p style="MARGIN-LEFT: 30px" align="justify">In December 2007, the Financial
Accounting Standards Board (&quot;FASB&quot;) issued SFAS No. 141 (Revised 2007),
&quot;Business Combinations&quot; (&quot;SFAS 141R&quot;). SFAS 141R will significantly change the
accounting for business combinations. Under SFAS 141R, an acquiring entity will
be required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited exceptions. SFAS
141R will change the accounting treatment for certain specific acquisition
related items including: (1) expensing acquisition related costs as incurred;
(2) valuing noncontrolling interests at fair value at the acquisition date; and
(3) expensing restructuring costs associated with an acquired business. SFAS
141R also includes a substantial number of new disclosure requirements. SFAS
141R is to be applied prospectively to business combinations for which the
acquisition date is on or after January 1, 2009. We expect SFAS 141R will have
an impact on our accounting for future business combinations once adopted but
the effect is dependent upon the acquisitions that are made in the future.</p>
<p align="center">F-12 </font></p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
<font size="2"></p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">4. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Summary of Significant
Accounting Policies (Cont'd) </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">In December 2007, the FASB issued
SFAS No. 160, &quot;Noncontrolling Interests in Consolidated Financial Statements&quot; (&quot;SFAS
160&quot;). SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary
(minority interest) is an ownership interest in the consolidated entity that
should be reported as equity in the Consolidated Financial Statements and
separate from the parent company's equity. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the Consolidated Statement
of Operations, of the amounts of consolidated net income attributable to the
parent and to the noncontrolling interest. We expect SFAS 160 will have an
impact on our accounting for future business combinations once adopted but the
effect is dependent upon the acquisitions that are made in the future. </p>
</font><b><font size="2">
<p style="MARGIN-BOTTOM: 0px">5. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Adjustment to Issued Financial
Statements </p>
</font>
<p style="MARGIN-LEFT: 30px"><font size="2">Balance sheet as at December 31,
2006 </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">The balance sheet as at December
31, 2006 has been adjusted, in this filing, to reflect the correction of an
error in the previously issued financial statements. Capital stock was not
disclosed at its par value with the excess of the proceeds in additional paid-in
capital. As a result, capital stock is reduced by $977,846 and additional
paid-in capital is increased by the same amount. This error is not material to
prior years audited statements since it is a reclassification within the
stockholders equity section and has no impact on earnings or cash flows from
operating or financing activities. The application of Staff Accounting Bulletin
108 (&quot;SAB 108&quot;) has allowed a restatement of December 31, 2006 financial
statements during the filing of December 31, 2007 10-KSB. </p>
<p style="MARGIN-LEFT: 30px">Balance sheet as at June 30 and September 30, 2007
</p>
<p style="MARGIN-LEFT: 30px" align="justify">Following the release of the third
quarter financial statements, the Company corrected the calculation of the
volatility of the warrants issued in connection with the convertible notes (note
9). As a result, the volatility changed from 75% to 64%. The impact of the
change resulted in a decrease of $60,566 to the value of the warrants initially
recorded to additional paid-in capital and a decrease of $14,171 to the related
transaction costs. The beneficial conversion feature recorded to additional
paid-in capital was also decreased by $60,566 and the related deferred income
tax liability was increased by $35,211. The convertible notes value decreased by
$100,603. The only impact this change had on net loss was to increase the
interest accretion recorded for 2007 by $13,153. </p>
<p align="center">F-13 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">6.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px"><b>Property and Equipment </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="31%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>2007</b></font></td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="9%"><font size="2">2006</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="31%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="19%" colSpan="2"><font size="2">Accumulated</font></td>
    <td align="right" width="21%" colSpan="2"><font size="2"><b>Net Carrying</b></font></td>
    <td align="right" width="21%" colSpan="2"><font size="2">Net Carrying</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="31%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">Cost</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="19%" colSpan="2">
    <font size="2">Depreciation</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>Amount</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2">Amount</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="31%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="8%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="9%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="31%" bgColor="#e9f1f8"><font size="2">Laboratory and office
    equipment</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">$</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">281,485</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">$</font></td>
    <td align="right" width="8%" bgColor="#e9f1f8"><font size="2">96,412</font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2"><b>$</b></font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2"><b>185,073</b></font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">$</font></td>
    <td align="right" width="9%" bgColor="#e9f1f8"><font size="2">112,968</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="31%"><font size="2">Computer equipment</font></td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%"><font size="2">26,447</font></td>
    <td align="right" width="8%">&nbsp;</td>
    <td align="right" width="8%"><font size="2">10,362</font></td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="9%"><font size="2"><b>16,085</b></font></td>
    <td align="right" width="9%">&nbsp;</td>
    <td align="right" width="9%"><font size="2">9,184</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="31%" bgColor="#e9f1f8">
    <font size="2">Leasehold improvements</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <font size="2">62,987</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="8%" bgColor="#e9f1f8">
    <font size="2">28,901</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <font size="2"><b>34,086</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="9%" bgColor="#e9f1f8">
    <font size="2">39,709</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="31%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">370,919</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="8%">
    <font size="2">135,675</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2"><b>235,244</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="9%">
    <font size="2">161,861</font></td>
  </tr>
</table>
<p style="MARGIN-BOTTOM: 0px">7.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>Accounts
Payable and Accrued Liabilities </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">Included in accounts payable and
accrued liabilities is approximately $71,651 (2006 - $22,500) payable to
shareholders, who are also officers of the Company. </p>
<b>
<p style="MARGIN-BOTTOM: 0px">8.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>Loan Payable,
Shareholder </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The loan payable, shareholder, who
is also an officer of the Company, is unsecured, bears interest at 6% per annum
and is not repayable prior to January 1, 2009. Interest incurred during the year
amounted to approximately $5,636 (2006 - $5,300) which is measured at the
exchange amount. </p>
<b>
<p style="MARGIN-BOTTOM: 0px">9.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>Convertible
Notes </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">On May 22, 2007 the Company entered
into convertible note agreements with certain institutional and accredited
investors for amounts totalling $1,500,000. The convertible notes bear interest
at the rate of 8% per annum and are repayable on September 22, 2009. Interest is
payable quarterly and payments commenced on July 1, 2007. The notes are
convertible into common stock of the Company, at the option of the holders, at a
rate of $0.70 per share. The Company also issued to the holders 2,142,857 stock
purchase warrants exercisable at $1.02 per share before May 22, 2012. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The Company paid approximately
$229,323 in cash consideration for and issued warrants with a fair value of
$82,993 in consideration for transaction costs as explained in note 12. These
transaction costs were allocated between the convertible debt and the warrants
based on their relative fair value. </p>
<p align="center">F-14 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px" align="justify">9.</b> </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify"><b>Convertible
Notes (Cont'd) </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The Company may, at its option,
elect to pay the interest by the issuance of shares of common stock. The number
of shares is to be determined by dividing the amount of the interest payment by
the number which is 85% of the average market price of the Company's common
shares for the 20 trading days immediately prior to the interest payment date
assuming the average market price is equal or greater than $0.70 as adjusted for
reverse and forward share split, recapitalizations and the like that occur after
the date of the Securities Purchase Agreements. </p>
<p style="MARGIN-LEFT: 30px" align="justify">In accordance with EITF Issue 98-5
&quot;Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios&quot;, the Company recognized the value of
the embedded beneficial conversion feature of $490,093 as additional paid-in
capital and an equivalent discount which will be expensed over the term of the
convertible notes. In addition, in accordance with EITF Issue 00-27 &quot;Application
of Issue No.98-5 to Certain Convertible Instruments&quot;, the Company has allocated
the proceeds of issuance between the convertible notes and the detachable
warrants based on their relative fair value. Accordingly, the Company recognized
the fair value of the detachable warrants of $490,093 as additional paid-in
capital and an equivalent discount against the convertible notes. The difference
between the face amount of the convertible notes and their carrying value is
amortized over the life of the convertible notes. As long as any portion of the
convertible notes remains outstanding, the Company shall not pay any cash
dividends or distributions on any equity securities of the Company without prior
written consent from the holders of the convertible note. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The Black-Scholes Model was used to
calculate the fair value of the warrants. The underlying assumptions included in
the Black-Scholes Model were as follows: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="39%" bgColor="#e9f1f8">
    <font size="2">Expected volatility</font></td>
    <td style="BORDER-TOP: 1px solid" width="31%" bgColor="#e9f1f8">
    <font size="2">64%</font></td>
    <td style="BORDER-TOP: medium none" width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="39%"><font size="2">Contractual life</font></td>
    <td width="31%"><font size="2">5 years</font></td>
    <td width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="39%" bgColor="#e9f1f8"><font size="2">Risk-free interest rate</font></td>
    <td width="31%" bgColor="#e9f1f8"><font size="2">4.39%</font></td>
    <td width="30%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="39%"><font size="2">Dividend
    yield</font></td>
    <td style="BORDER-BOTTOM: 1px solid" width="31%"><font size="2">Nil</font></td>
    <td style="BORDER-BOTTOM: 1px solid" width="30%">&nbsp;</td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px" align="justify">Substantially all of the assets of
the Company have been pledged as security of the convertible notes. As at
December 31, 2007, $66,180 of interest has been paid, and $195,317 of interest
has been accreted. During the year, $104,759 of convertible notes were exchanged
for 149,657 shares of common stock. </p>
<p align="center">F-15 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
</b></font><b><font size="2">
<p style="MARGIN-BOTTOM: 0px">10. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Commitment </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">The Company has entered into an
agreement to lease premises up to August 2009. The future minimum lease payments
over the next two years are approximately as follows: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="43">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="305" bgColor="#e9f1f8"><font size="2">2008</font></td>
    <td align="right" width="315" bgColor="#e9f1f8"><font size="2"><b>$ 15,900</b></font></td>
    <td width="323">&nbsp;</td>
  </tr>
  <tr>
    <td width="43">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="305"><font size="2">2009</font></td>
    <td align="right" width="315"><font size="2"><b>10,800</b></font></td>
    <td width="323">&nbsp;</td>
  </tr>
</table>
<b>
<p style="MARGIN-BOTTOM: 0px">11. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Capital Stock </p>
</b></font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="52%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="52%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="11%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="52%"><font size="2">Authorized -</font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="52%"><font size="2">100,000,000 common shares of $0.00001 par
    value</font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="52%"><font size="2">&nbsp;&nbsp; 20,000,000 preferred shares</font></td>
    <td align="right" width="11%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="52%" bgColor="#e9f1f8"><font size="2">Issued -</font></td>
    <td align="right" width="11%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="52%" bgColor="#e9f1f8">
    <font size="2">16,157,146 (2006 &#150; 16,007,489) common shares</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="11%" bgColor="#e9f1f8">
    <font size="2"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2"><b>162</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">$</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">160</font></td>
  </tr>
</table>
<font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">On March 9, 2006, the Company
recalled and cancelled its 10,000 issued and outstanding common shares and
issued in exchange 10,991,000 common shares. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On April 28, 2006, the Company
issued 3,191,489 common shares for cash consideration of $1,341,750. The
transaction costs related to the share issuance amounted to $549,329. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On the same date, the Company
completed a share exchange transaction with IntelGenx Technologies Corp. in
which it acquired prepaid investor relations services amounting to $133,250. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On April 10, 2007, the Board of
Directors of the Corporation approved an amendment, subject to shareholder
approval, to the Corporation's Certificate of Incorporation, to increase the
number of authorized common shares from 20,000,000 to 100,000,000 and to
authorize the creation of 20,000,000 shares of &quot;blank check&quot; preferred shares.
On April 10, 2007, the majority stockholder of the Corporation approved the same
resolution as the Board of Directors. </p>
<p style="MARGIN-LEFT: 30px" align="justify">During the year, the Company issued
149,657 common shares in exchange for $104,759 of convertible notes. </p>
<p align="center">F-16 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">12. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Additional Paid-In Capital </p>
<p style="MARGIN-LEFT: 30px">Warrants </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">During the year ended December 31,
2006, the Company issued 190,691 stock purchase warrants exercisable into common
shares at $0.41 per share which expire on April 28, 2008 and November 13, 2008.
The stock purchase warrants were issued in payment of financing fees. The stock
purchase warrants were accounted for at their fair value, as determined by the
Black-Scholes-Merton valuation model, of $37,699, using the following
assumptions: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="48%" bgColor="#e9f1f8">
    <font size="2">Expected volatility</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="48%" bgColor="#e9f1f8">
    <font size="2">85% and 88%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="48%"><font size="2">Expected life</font></td>
    <td align="right" width="48%"><font size="2">2 years</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="48%" bgColor="#e9f1f8"><font size="2">Risk-free interest rate</font></td>
    <td align="right" width="48%" bgColor="#e9f1f8"><font size="2">3.91% and
    4.78%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="48%"><font size="2">Dividend
    yield</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="48%">
    <font size="2">Nil</font></td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px" align="justify">On May 22, 2007, IntelGenx
Technologies Corp. issued 214,286 stock purchase warrants exercisable into
common shares at $0.70 per share which expire on May 22, 2011. The Stock
purchase warrants were issued as part of the transaction costs in connection
with the convertible notes described in note 9. The stock purchase warrants were
accounted for at their fair value, as determined by the Black-Scholes valuation
model, of $82,993, using the following assumptions: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="48%" bgColor="#e9f1f8">
    <font size="2">Expected volatility</font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="48%" bgColor="#e9f1f8">
    <font size="2">64%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="48%"><font size="2">Expected life</font></td>
    <td align="right" width="48%"><font size="2">4 years</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="48%" bgColor="#e9f1f8"><font size="2">Risk-free interest rate</font></td>
    <td align="right" width="48%" bgColor="#e9f1f8"><font size="2">4.39%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="48%"><font size="2">Dividend
    yield</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="48%">
    <font size="2">Nil</font></td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px">As at December 31, 2007, no stock purchase warrants
have been exercised.</p>
<p align="center">F-17 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </font><b><font size="2"><br>
Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">12. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Additional Paid-In Capital
(Cont'd) </p>
</font></b><font size="2">
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Information with respect to
warrant activity for 2006 and 2007 is as follows: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="40%">&nbsp;</td>
    <td align="right" width="26%">&nbsp;</td>
    <td align="right" width="26%"><font size="2"><b>Weighted average</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2"><b>Number of warrants</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2"><b>exercise price</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="40%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%"><font size="2">
    <b>$</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="40%">&nbsp;</td>
    <td align="right" width="26%">&nbsp;</td>
    <td align="right" width="26%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%" bgColor="#e9f1f8">
    <font size="2">Outstanding &#150; January 1, 2006</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="40%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%"><font size="2">Granted</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2">190,691</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2">0.41</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="40%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    &nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%" bgColor="#e9f1f8">
    <font size="2">Outstanding &#150; December 31, 2006</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">190,691</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">0.41</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="40%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="40%"><font size="2">Warrants attached to convertible notes (note
    9)</font></td>
    <td align="right" width="26%"><font size="2">2,142,857</font></td>
    <td align="right" width="26%"><font size="2">1.02</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="40%" bgColor="#e9f1f8"><font size="2">Warrants issued as part of
    transaction costs</font></td>
    <td align="right" width="26%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="26%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%" bgColor="#e9f1f8">
    <font size="2">(note 12)</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">214,286</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%" bgColor="#e9f1f8">
    <font size="2">1.02</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="40%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="26%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="40%"><font size="2">Outstanding
    &#150; December 31, 2007</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2">2,547,834</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="26%">
    <font size="2">0.97</font></td>
  </tr>
</table>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Stock Options </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">In November 2006, the Company
adopted the 2006 Stock Incentive Plan (&quot;Plan&quot;) for the purpose of issuing both
Incentive Options and Nonqualified Options to officers, employees, directors and
eligible consultants of the Company. A total of 1,600,749 shares of common stock
are reserved for issuance under this plan. Options may be granted under the Plan
on terms and at prices as determined by the Board of Directors except that the
options cannot be granted at less than 100%, of the fair market value of the
common stock on the date of the grant. Each option will be exercisable after the
period or periods specified in the option agreement, but no option may be
exercised after the expiration of 10 years from the date of grant. All options
granted to individuals other than non-employee directors will have a total
vesting period of 24 months from the date of grant, with one quarter of the
total options granted vesting and becoming exercisable every six months. Options
granted to non-employees will vest and become 100% fully exercisable immediately
upon grant. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On September 26, 2006, the Company
granted 225,000 stock options to certain of its directors to purchase common
shares. The stock options are immediately exercisable at $0.41 per share and
expire in five years. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On October 1, 2006, the Company
granted to a consultant for investor relations services 69,000 stock options to
purchase common shares. The stock options are immediately exercisable at $0.41
per share and expire in ten years. </p>
<p align="center">F-18 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">12. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify">Additional
Paid-In Capital (Cont'd) </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">On November 9, 2006, the Company
granted 450,000 stock options to certain of its employees to purchase common
shares. The stock options are immediately exercisable at $0.41 per share and
expire in ten years. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On November 13, 2006, the Company
granted to a consultant for services provided in connection with the transaction
on April 28, 2006, 250,000 stock options to purchase common shares. The stock
options are immediately exercisable at $0.41 per share and expire in ten years.
</p>
<p style="MARGIN-LEFT: 30px" align="justify">On November 16, 2006, the Company
granted 100,000 stock options to certain of its employees to purchase common
shares. On the same date, the Company also granted 25,000 stock options to
purchase common shares to an R&amp;D consultant. The stock options are immediately
exercisable at $0.41 per share and expire in ten years. </p>
<p style="MARGIN-LEFT: 30px" align="justify">On August 9, 2007, the Company
granted 257,500 stock options to employees and directors to purchase common
shares. The stock options are exercisable at $1.15 per share and have a term of
10 years with vesting provisions ranging from immediate to vesting in equal
increments over two years. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The fair values of all options
granted during 2007 and 2006 were estimated as of the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="33%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="32%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="32%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="33%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="32%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="32%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="33%" bgColor="#e9f1f8"><font size="2">Expected option life</font></td>
    <td align="right" width="32%" bgColor="#e9f1f8"><font size="2"><b>5.00 -
    5.75 years</b></font></td>
    <td align="right" width="32%" bgColor="#e9f1f8"><font size="2">2.50 - 5.75
    years</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="33%"><font size="2">Volatility</font></td>
    <td align="right" width="32%"><font size="2"><b>71 %</b></font></td>
    <td align="right" width="32%"><font size="2">88%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="33%" bgColor="#e9f1f8"><font size="2">Risk-free interest rate</font></td>
    <td align="right" width="32%" bgColor="#e9f1f8"><font size="2"><b>4.58%</b></font></td>
    <td align="right" width="32%" bgColor="#e9f1f8"><font size="2">4.78%</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="33%"><font size="2">Dividend
    yield</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="32%">
    <font size="2"><b>Nil</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="32%">
    <font size="2">Nil</font></td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px">The weighted average grant-date fair values for
stock options granted during 2007 and 2006 were $0.74 and $0.33 per option,
respectively.</p>
<p align="center">F-19 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
<b>
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">12. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Additional Paid-In Capital
(Cont'd) </p>
</b>
<p style="MARGIN-LEFT: 30px">Information with respect to stock option activity
for 2006 and 2007 is as follows: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td align="right" width="30%">&nbsp;</td>
    <td align="right" width="31%"><font size="2"><b>Weighted average</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td align="right" width="30%"><font size="2"><b>Number of options</b></font></td>
    <td align="right" width="31%"><font size="2"><b>exercise price</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="36%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="30%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="31%">
    <font size="2"><b>$</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="36%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="30%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="31%" bgColor="#e9f1f8">
    &nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 2px solid" width="36%" bgColor="#e9f1f8">
    <font size="2">Outstanding &#150; January 1, 2006</font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="30%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 2px solid" align="right" width="31%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="36%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="30%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%"><font size="2">Granted</font></td>
    <td align="right" width="30%"><font size="2">1,119,000</font></td>
    <td align="right" width="31%"><font size="2">0.41</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%" bgColor="#e9f1f8"><font size="2">Forfeited</font></td>
    <td align="right" width="30%" bgColor="#e9f1f8"><font size="2">-</font></td>
    <td align="right" width="31%" bgColor="#e9f1f8"><font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%"><font size="2">Expired</font></td>
    <td align="right" width="30%"><font size="2">-</font></td>
    <td align="right" width="31%"><font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="36%" bgColor="#e9f1f8">
    <font size="2">Exercised</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="30%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="31%" bgColor="#e9f1f8">
    <font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="36%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="30%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 2px solid" width="36%"><font size="2">
    Outstanding &#150; December 31, 2006</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="30%">
    <font size="2">1,119,000</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="31%">
    <font size="2">0.41</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td align="right" width="30%">&nbsp;</td>
    <td align="right" width="31%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%" bgColor="#e9f1f8"><font size="2">Granted</font></td>
    <td align="right" width="30%" bgColor="#e9f1f8"><font size="2">257,500</font></td>
    <td align="right" width="31%" bgColor="#e9f1f8"><font size="2">1.15</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%"><font size="2">Forfeited</font></td>
    <td align="right" width="30%"><font size="2">-</font></td>
    <td align="right" width="31%"><font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="36%" bgColor="#e9f1f8"><font size="2">Expired</font></td>
    <td align="right" width="30%" bgColor="#e9f1f8"><font size="2">-</font></td>
    <td align="right" width="31%" bgColor="#e9f1f8"><font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="36%"><font size="2">Exercised</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="30%">
    <font size="2">-</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="31%">
    <font size="2">-</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="36%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="30%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="31%" bgColor="#e9f1f8">
    &nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: #000000 2px solid" width="36%" bgColor="#e9f1f8">
    <font size="2">Outstanding &#150; December 31, 2007</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="30%" bgColor="#e9f1f8">
    <font size="2">1,376,500</font></td>
    <td style="BORDER-BOTTOM: #000000 2px solid" align="right" width="31%" bgColor="#e9f1f8">
    <font size="2">0.55</font></td>
  </tr>
</table>
<p style="MARGIN-LEFT: 30px">Details of stock options outstanding as at December
31, 2007 are as follows: </p>
</font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="54%" colSpan="4">
    <font size="2"><b>
    <p align="center">Outstanding options</b></font></td>
    <td align="right" width="1%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="42%" colSpan="3">
    <font size="2"><b>
    <p align="center">Exercisable options</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td align="right" width="1%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%"><font size="2"><b>Weighted</b></font></td>
    <td align="right" width="12%"><font size="2"><b>Weighted</b></font></td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="13%"><font size="2"><b>Weighted</b></font></td>
    <td align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%"><font size="2"><b>average</b></font></td>
    <td align="right" width="12%"><font size="2"><b>average</b></font></td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="13%"><font size="2"><b>average</b></font></td>
    <td align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%"><font size="2"><b>Exercise</b></font></td>
    <td align="right" width="12%"><font size="2"><b>Number of</b></font></td>
    <td align="right" width="12%"><font size="2"><b>remaining</b></font></td>
    <td align="right" width="12%"><font size="2"><b>exercise</b></font></td>
    <td align="right" width="12%"><font size="2"><b>Aggregate</b></font></td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%"><font size="2"><b>Number</b></font></td>
    <td align="right" width="13%"><font size="2"><b>exercise</b></font></td>
    <td align="right" width="13%"><font size="2"><b>Aggregate</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%"><font size="2"><b>prices</b></font></td>
    <td align="right" width="12%"><font size="2"><b>options</b></font></td>
    <td align="right" width="12%"><font size="2"><b>contractual life</b></font></td>
    <td align="right" width="12%"><font size="2"><b>price</b></font></td>
    <td align="right" width="12%"><font size="2"><b>intrinsic value</b></font></td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%"><font size="2"><b>of options</b></font></td>
    <td align="right" width="13%"><font size="2"><b>price</b></font></td>
    <td align="right" width="13%"><font size="2"><b>intrinsic value</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%"><font size="2"><b>$</b></font></td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%"><font size="2"><b>(years)</b></font></td>
    <td align="right" width="12%"><font size="2"><b>$</b></font></td>
    <td align="right" width="12%"><font size="2"><b>$</b></font></td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="13%"><font size="2"><b>$</b></font></td>
    <td align="right" width="13%"><font size="2"><b>$</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="1%">&nbsp;</td>
    <td align="right" width="12%">&nbsp;</td>
    <td align="right" width="13%">&nbsp;</td>
    <td align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="12%" bgColor="#e9f1f8"><font size="2">0.41</font></td>
    <td align="right" width="12%" bgColor="#e9f1f8"><font size="2">1,119,000</font></td>
    <td align="right" width="12%" bgColor="#e9f1f8"><font size="2">7.84</font></td>
    <td align="right" width="12%" bgColor="#e9f1f8"><font size="2">0.41</font></td>
    <td align="right" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="1%" bgColor="#e9f1f8">&nbsp;</td>
    <td align="right" width="12%" bgColor="#e9f1f8"><font size="2">1,064,312</font></td>
    <td align="right" width="13%" bgColor="#e9f1f8"><font size="2">0.41</font></td>
    <td align="right" width="13%" bgColor="#e9f1f8">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="12%"><font size="2">1.15</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">257,500</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">9.58</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">1.15</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="1%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%">
    <font size="2">138,750</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <font size="2">1.15</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="1%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    &nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="12%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">1,376,500</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">8.16</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">0.55</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">436,410</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="1%" bgColor="#e9f1f8">
    &nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="12%" bgColor="#e9f1f8">
    <font size="2">1,203,062</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <font size="2">0.60</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <font size="2">415,082</font></td>
  </tr>
</table>
<font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">Stock-based compensation expense
recognized in 2007 in regards to the stock options was $202,607 (2006 -
$212,778). As of December 31, 2007, total unrecognized compensation expense
related to unvested stock options was $97,381. This amount is expected to be
recognized as expense over a period of two years. A change in control of the
Company due to acquisition would cause the vesting of these stock options to
accelerate and would result in this amount being charged to stock-based
compensation expense. </p>
<p align="center">F-20 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">13. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Income Taxes </p>
</font></b><font size="2">
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Income taxes reported differ
from the amount computed by applying the statutory rates to losses. The reasons
are as follows: </p>
<div style="PADDING-BOTTOM: 1px; BORDER-BOTTOM: 1px solid">
  <table style="BORDER-COLLAPSE: collapse" borderColor="#111111" height="441" cellSpacing="0" cellPadding="0" width="100%" border="0">
    <tr>
      <td width="34" height="20">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" width="503" height="20">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      &nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <font size="2"><b>2007</b></font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      &nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="113" height="20">
      <font size="2">2006</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" width="503" bgColor="#e9f1f8" height="20">
      <font size="2">Statutory income taxes</font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <font size="2"><b>(352,000)</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="113" bgColor="#e9f1f8" height="20">
      <font size="2">(242,000)</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Net operating losses for which
      no tax benefits have been recorded</font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>140,000</b></font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">76,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" bgColor="#e9f1f8" height="19"><font size="2">Excess of
      amortization over capital cost allowance</font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>14,000</b></font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">11,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Non-deductible expenses</font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>147,000</b></font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">98,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" bgColor="#e9f1f8" height="19"><font size="2">Undeducted
      research and development expenses</font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>143,000</b></font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">105,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Tax deductible portion of
      transaction costs</font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19"><font size="2"><b>(36,000)</b></font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19"><font size="2">(34,000)</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" bgColor="#e9f1f8" height="19"><font size="2">Investment
      tax credit</font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <font size="2"><b>(56,000)</b></font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" bgColor="#e9f1f8" height="19">
      <font size="2">(14,000)</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Lower effective tax rate
      resulting from deferred income taxes</font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    </tr>
    <tr>
      <td width="34" height="20">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" width="503" height="20">
      <font size="2">&nbsp;&nbsp; drawdowns</font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <font size="2"><b>(64,000)</b></font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="113" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    </tr>
    <tr>
      <td width="34" height="20">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="503" bgColor="#e9f1f8" height="21">
      &nbsp;</td>
      <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="21">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
      <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="21">
      <font size="2"><b>(64,000)</b></font></td>
      <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="21">
      <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
      <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="113" bgColor="#e9f1f8" height="21">
      <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" width="503" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="113" height="20">&nbsp;</td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="952" colSpan="5" height="19"><font size="2">The major
      components of the deferred tax assets classified by the source of
      temporary differences are as follows:</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19">&nbsp;</td>
      <td align="right" width="112" height="19">&nbsp;</td>
      <td align="right" width="112" height="19">&nbsp;</td>
      <td align="right" width="112" height="19">&nbsp;</td>
      <td align="right" width="113" height="19">&nbsp;</td>
    </tr>
    <tr>
      <td width="34" height="20">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" width="503" height="20">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>2007</b></font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="113" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">2006</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" width="503" bgColor="#e9f1f8" height="20">
      <font size="2">Property and equipment</font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <font size="2"><b>(15,000)</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="113" bgColor="#e9f1f8" height="20">
      <font size="2">(2,000)</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Net operating losses
      carryforward (expiring 2015-2016)</font></td>
      <td align="right" width="224" colSpan="2" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>264,000</b></font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">109,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" bgColor="#e9f1f8" height="19"><font size="2">Undeducted
      research and development expenses</font></td>
      <td align="right" width="224" bgColor="#e9f1f8" colSpan="2" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>206,000</b></font></td>
      <td align="right" width="112" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" bgColor="#e9f1f8" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">105,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td width="503" height="19"><font size="2">Non-refundable tax credits
      carryforward</font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>23,000</b></font></td>
      <td align="right" width="112" height="19">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td align="right" width="113" height="19">
      <p style="MARGIN-RIGHT: 4px"><font size="2">93,000</font></td>
    </tr>
    <tr>
      <td width="34" height="20">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" width="503" bgColor="#e9f1f8" height="20">
      <font size="2">Transaction costs to be deducted in future years</font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="224" bgColor="#e9f1f8" colSpan="2" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>108,000</b></font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="113" bgColor="#e9f1f8" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">136,000</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" width="503" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="224" colSpan="2" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>586,000</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="113" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">441,000</font></td>
    </tr>
    <tr>
      <td width="34" height="18">
      <p style="MARGIN-LEFT: 30px"></td>
      <td style="BORDER-BOTTOM: 1px solid" width="503" bgColor="#e9f1f8" height="18">
      <font size="2">Valuation allowance</font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="224" bgColor="#e9f1f8" colSpan="2" height="18">
      <font size="2"><b>(586,000)</b></font></td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="112" bgColor="#e9f1f8" height="18">
      <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
      <td style="BORDER-BOTTOM: 1px solid" align="right" width="113" bgColor="#e9f1f8" height="18">
      <font size="2">(441,000)</font></td>
    </tr>
    <tr>
      <td width="34" height="19">
      <p style="MARGIN-LEFT: 30px">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" width="503" height="20">&nbsp;</td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2"><b>-</b></font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="112" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
      <td style="BORDER-TOP: 1px solid" align="right" width="113" height="20">
      <p style="MARGIN-RIGHT: 4px"><font size="2">-</font></td>
    </tr>
  </table>
</div>
<p style="MARGIN-LEFT: 30px" align="justify">There were Canadian and provincial
net operating losses of approximately $794,000 (2006 - $350,000) and $908,000
(2006 - $387,000) respectively, that may be applied against earnings of future
years. Utilization of the net operating losses is subject to significant
limitations imposed by the change in control provisions. A portion of the net
operating losses may expire before they can be utilized. </p>
<p style="MARGIN-LEFT: 30px" align="justify">As at December 31, 2007, the
Company had non-refundable tax credits of $24,000 (2006 -$93,000) expiring in
2017 and undeducted research and development expenses of $670,000 (2006 -
$340,000) with no expiration date. </p>
<p align="center">F-21 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">13. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px" align="justify">Income Taxes
(Cont'd) </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">Due to the reorganization of the
corporation, there were $549,000 of transaction costs of which $113,000 was
deductible in the current year (2006- $109,000). The remaining transaction costs
are deductible for income tax purposes in equal amounts over the next three
years. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The deferred tax benefit of these
items was not recognized in the accounts. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Deferred Income Taxes </p>
</b>
<p style="MARGIN-LEFT: 30px" align="justify">The balance of deferred income
taxes as at December 31, 2007 represents the tax effect of the convertible debt
arising from the difference between the convertible debt's basis for accounting
purposes and that for income tax purposes and it has been charged to additional
paid-in capital. As the convertible debt is repaid, the deferred tax liability
will be charged to expenses. </p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Unrecognized Tax Benefits</b> </p>
<p style="MARGIN-LEFT: 30px" align="justify">On January 1, 2007, the Company
adopted the provisions for FIN 48, which is an interpretation of SFAS No. 109.
FIN 48 prescribes a recognition threshold that a tax position is required to
meet before being recognized in the financial statements and provides guidance
on de-recognition, measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition issues. FIN 48 contains
a two-step approach to recognizing and measuring uncertain tax positions
accounted for in accordance with SFAS No. 109. The first step is to evaluate the
tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained
upon ultimate settlement with a taxing authority, including resolution of
related appeals or litigation processes, if any. The second step is to measure
the tax benefit as the largest amount that is more than 50% likely of being
realized upon ultimate settlement. Prior to January 1, 2007 and the
implementation of FIN 48, the Company recorded tax contingencies when the
exposure item became probable and reasonably estimable, in accordance with SFAS
No. 5, <i>Accounting for Contingencies</i>. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The adoption of FIN 48 has not had
a material effect on our financial position or results of operations for 2007.
</p>
<p style="MARGIN-LEFT: 30px" align="justify">The Company does not expect its
unrecognized tax benefits to change significantly over the next twelve months.
</p>
<b>
<p style="MARGIN-LEFT: 30px" align="justify">Classification of Interest and
Penalties</b> </p>
<p style="MARGIN-LEFT: 30px" align="justify">Additionally, FIN 48 requires the
Company to accrue interest and related penalties, if applicable, on all tax
positions for which reserves have been established consistent with
jurisdictional tax laws<i>. </p>
</i>
<p style="MARGIN-LEFT: 30px" align="justify">The Company's policy to include
interest and penalties related to unrecognized tax benefits within the provision
for income taxes did not change as a result of adopting FIN 48. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The interest and penalties as of
December 31, 2007 and for the years ended December 31, 2007, 2006 and 2005 were
zero. </p>
<p align="center">F-22 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">13. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Income Taxes (Cont'd) </p>
<p style="MARGIN-LEFT: 30px">Tax Years and Examination</font></b><font size="2">
</p>
<p style="MARGIN-LEFT: 30px" align="justify">The Company files tax returns in
each jurisdiction in which it is registered to do business. For each
jurisdiction a statute of limitations period exists. After a statute of
limitations period expires, the respective tax authorities may no longer assess
additional income tax for the expired period. Similarly, the Company is no
longer eligible to file claims for refund for any tax that it may have overpaid.
The following table summarizes the Company's major tax jurisdictions and the tax
years that remain subject to examination by these jurisdictions as of December
31, 2007: </p>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="middle" width="41%">
    <font size="2"><b>Tax Jurisdictions</b></font></td>
    <td align="middle" width="15%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="middle" width="41%">
    <font size="2"><b>Tax Years</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="middle" width="41%" bgColor="#e9f1f8">
    <font size="2">Federal - Canada</font></td>
    <td align="middle" width="15%" bgColor="#e9f1f8">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="middle" width="41%" bgColor="#e9f1f8">
    <font size="2"><b>2003 and onward</b></font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td align="middle" width="41%"><font size="2">Quebec - Canada</font></td>
    <td align="middle" width="15%">&nbsp;</td>
    <td align="middle" width="41%"><font size="2"><b>2003 and onward</b></font></td>
  </tr>
</table>
<b>
<p style="MARGIN-BOTTOM: 0px">14. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Statement of Cash Flows
Information </p>
</b></font>
<table style="BORDER-COLLAPSE: collapse" borderColor="#111111" cellSpacing="0" cellPadding="0" width="100%" border="0">
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="46%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <font size="2"><b>2007</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <font size="2">2006</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="46%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="46%" bgColor="#e9f1f8"><font size="2">Accounts receivable</font></td>
    <td align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td align="right" width="13%" bgColor="#e9f1f8"><font size="2"><b>(292,253)</b></font></td>
    <td align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td align="right" width="13%" bgColor="#e9f1f8"><font size="2">(132,948)</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="46%"><font size="2">Prepaid expenses</font></td>
    <td align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>49,471</b></font></td>
    <td align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="13%"><font size="2">(6,721)</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td width="46%" bgColor="#e9f1f8"><font size="2">Investment tax credits
    receivable</font></td>
    <td align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="13%" bgColor="#e9f1f8"><font size="2"><b>(200,774)</b></font></td>
    <td align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">26,258</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="46%"><font size="2">Accounts
    payable and accrued liabilities</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>131,491</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px"><font size="2">64,544</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" width="46%" bgColor="#e9f1f8">
    <font size="2">Changes in non-cash operating elements of working capital</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <font size="2"><b>(312,065)</b></font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <font size="2">(48,867)</font></td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" width="46%"><font size="2"><b>Additional
    Cash Flow Information:</b></font></td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
    <td style="BORDER-TOP: 1px solid" align="right" width="13%">
    <p style="MARGIN-RIGHT: 4px">&nbsp;</td>
  </tr>
  <tr>
    <td width="1%">
    <p style="MARGIN-LEFT: 30px">&nbsp;</td>
    <td style="BORDER-BOTTOM: 1px solid" width="46%" bgColor="#e9f1f8">
    <font size="2">Interest paid</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>$</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2"><b>81,194</b></font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">$</font></td>
    <td style="BORDER-BOTTOM: 1px solid" align="right" width="13%" bgColor="#e9f1f8">
    <p style="MARGIN-RIGHT: 4px"><font size="2">35,000</font></td>
  </tr>
</table>
<font size="2">
<p align="center">F-23 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
</font><font face="Arial Narrow" size="5">
</p>
<p>I</font><font size="2">ntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">15. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Related Party Transactions </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">During the year the Company
incurred expenses of approximately $18,606 (2006 - $17,850) for laboratory
equipment leased from a shareholder and $5,636 (2006 - $5,300) for interest on
the loan payable shareholder. </p>
<p style="MARGIN-LEFT: 30px" align="justify">Included in professional fees are
approximately $18,104 (2006 - $Nil) paid to a non-employee director of the
Company. </p>
<p style="MARGIN-LEFT: 30px" align="justify">In 2007, the Company amortized
interest and financing fees of approximately $79,477 (2006 - $Nil) for share
based compensation to a former officer and director of the Company in connection
with the private placement closed on April 28, 2006. </p>
<p style="MARGIN-LEFT: 30px" align="justify">Included in management salaries are
$76,733 for options granted to non-employee directors and $10,609 for options
granted to the CFO. </p>
<p style="MARGIN-LEFT: 30px" align="justify">In December 2007, the Company
purchased $60,000 in laboratory equipment from a shareholder who is also an
officer. The Company has had the use of the equipment since 2005. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The above related party
transactions have been measured at the exchange amount which is the amount of
the consideration established and agreed to by the related parties. </p>
</font><b><font size="2">
<p style="MARGIN-BOTTOM: 0px">16. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Comparative Figures </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px">Certain reclassifications of 2006 amounts have been
made to facilitate comparison with the current year. </p>
</font><b><font size="2">
<p style="MARGIN-BOTTOM: 0px">17. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Subsequent Event </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">On March 27, 2008, as part of a
private placement, the Company issued 4,001,000 units for gross proceeds of
$2,800,000. Each unit consists of one common share of the Company and one common
share purchase warrant. Each warrant entitles the holder to purchase one common
share at an exercise price of $1.02 per common share. and expires 24 months
after the date of issuance. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The Company paid an agent a cash
commission in the amount of $196,000, which is equal to 7% of the gross proceeds
of the offering and issued an agent option entitling the agent to acquire
320,080 units at $0.70 per unit, which expires 24 months after the date of
issuance. Each warrant entitles the holder to purchase one common share at an
exercise price of $1.02 per common share and expires 24 months after the date of
issuance of the unit. </p>
<p style="MARGIN-LEFT: 30px" align="justify">The cash consideration paid to the
agent and the fair value of the agent option will be reflected as a reduction to
the additional paid-in capital. </p>
<p align="center">F-24 </p>
<hr color="#000000" size="5"><p Style='page-break-before:always'>
&nbsp;</p>
<p>IntelGenx Technologies Corp. </p>
</font><b><font size="2">
<p>Notes to Consolidated Financial Statements <br>
December 31, 2007 and 2006 <br>
(Expressed in U.S. Funds) </p>
<p style="MARGIN-BOTTOM: 0px">17. </p>
<p style="MARGIN-TOP: -11pt; MARGIN-LEFT: 30px">Subsequent Event (Cont'd) </p>
</font></b><font size="2">
<p style="MARGIN-LEFT: 30px" align="justify">Pursuant to the terms of the
private placement, the Company is obliged to use its best effort to (i) have the
common shares listed on the TSX Venture Exchange, and (ii) prepare and file
with, and have declared effective, by the U.S. Securities and Exchange
Commission, a resale registration statement in respect of the common shares and
the warrants issued to subscribers as well as those issuable upon exercise of
the agents warrants, all prior to 4 months after March 27, 2008. In the event
that these provisions are not satisfied within 4 months, the exercise price of
the warrants shall be reduced to $0.93. In addition, if the Company is not
listed on the TSX Venture Exchange within 2 months of the private placement, the
Company shall: (i) pay to each subscriber under this private placement a cash
penalty in the amount of 5% of the aggregate subscription price paid by the
subscriber and an additional 1% of the aggregate subscribtion price for every
subsequent calendar month thereafter that the listing is not effected, to a
maximum of 3 months; and (ii) reduce the exercise price of the agent's option by
5% with an additional 1% for every subsequent calendar month thereafter that the
listing is not effected. Pursuant to EITF 00-19-2 &quot;Accounting In Registration
Payment Arrangements&quot;, the Company concluded that at inception, payments under
these commitments are not probable. </p>
<p align="center">F-25 </p>
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IntelGenx Technologies Corp. - Form S-1 - Prepared By TNT Filings Inc.
As filed with the Securities and Exchange Commission on April
28, 2008
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IntelGenx Technologies Corp.
(Exact name of registrant as
specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
2834
870299034
(Primary Standard Industrial
(I.R.S.
    Employer Identification Number)
Classification Code Number)
6425 Abrams, Ville St- Laurent, Quebec, H4S 1X9
(514) 331-7440
________________________________________________
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Horst Zerbe
Chief Executive Officer
IntelGenx Technologies Corp, 6425 Abrams, Quebec, H4S 1X9
(514) 331-7440
________________________________________________
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Richard Raymer
Hodgson Russ LLP
150 King Street West, Suite 2309, Toronto, Ontario M5H 1J9
Canada
Tel: (416) 595-5100
As soon as practicable after the effective date of this
Registration Statement
(Approximate date of commencement of proposed sale to the public)
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box:
ý
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: □
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. □
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. □
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a small reporting company:
Large accelerated filer □
Accelerated filer □
Non-accelerated filer □
Smaller reporting company
Q
1
Proposed
maximum
Proposed
offering
maximum
Amount to be
price per
aggregate offering
Amount of
Title of each class of securities
    to be registered
registered
share (5)
price
registration fee
Common stock, par value $.00001 per
    share (1)
4,001,000 shares
$
0.90
$
3,600,900
$
141.51
Common stock
    underlying warrants, par value
$.00001 per share (2)
4,001,000 shares
$
0.90
$
3,600,900
$
141.51
Common Stock Purchase
    Warrants (3)
4,001,000 warrants
--
--
--
Common stock
    underlying options to purchase units
consisting of one
    share of common stock and one
warrant to purchase
    one share of common stock, par
value $.00001 per
    share (4)
640,160 shares
$
0.90
$
576,144
$
22.64
8,642,160 shares
Total
4,001,000 warrants
$
0.90
$
7,777,944
$
305.67
(1) Represents shares of common stock, par value $.00001.
(2) Represents shares of common stock underlying warrants to purchase shares
of common stock, par value $.00001.
(3) Represents common stock purchase warrants exercisable at $1.02 per share,
subject to adjustment, expiring March 27, 2010.
(4) Represents shares of common stock underlying options to purchase units
consisting of one share of common stock and one warrant to purchase one share of
common stock, par value $.00001.
(5) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(g) under the Securities Act of 1933,
using the closing price as reported on the OTC Bulletin Board on April 10, 2008.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
2
SUBJECT TO COMPLETION, dated April 28, 2008
PROSPECTUS
IntelGenx Technologies Corp.
8,642,160
Shares of Common Stock and 4,001,000 Warrants
Offered by Selling Security
Holders
This Prospectus relates to the sale by the selling security
holders listed herein of up to 8,642,160 shares of the common stock and
4,001,000 common stock purchase warrants of IntelGenx Technologies Corp. ("IntelGenx"
or the "Company"). The securities being registered were purchased by the selling
security holders in a private placement completed on March 27, 2008 (the "March
2008 Private Placement"). For a complete description of this private placement
please see the section entitled "Description of the March 2008 Private Placement
of Common Stock and Warrants", below).
The securities being registered include shares of outstanding
common stock (the "Common Stock"), common stock purchase warrants exercisable at
$1.02 per share, subject to adjustment (the "Warrants"), and shares of common
stock underlying the Warrants (the "Warrant Shares"). The securities being
registered also include shares of common stock and shares of common stock
underlying warrants issuable upon the exercise of options issued to the
placement agent in connection with the March 2008 Private Placement (the
"Placement Agent Options"). The Placement Agent Options permit the placement
agent to purchase units, at a price of $0.70 per unit, consisting of one share
of common stock and one warrant, also exercisable at $1.02 per share, subject to
adjustment (The shares of common stock issuable upon exercise of the Placement
Agent Options shall be referred to as the Placement Agent Common Stock, the
warrants issuable upon exercise of the Placement Agent Options shall be referred
to as the "Placement Agent Warrants", and the shares of common stock issuable
upon exercise of the Placement Agent Warrants shall be referred to as the
"Placement Agent Warrant Shares").
Accordingly, the shares being registered include (i)
4,001,000 shares of Common Stock, (ii) 4,001,000 Warrants (iii) 4,001,000
Warrant Shares (iv) 320,080 shares of Placement Agent Common Stock, and (v)
320,080 shares of common stock issuable upon the exercise of the Placement Agent
Warrants.
The shares of common stock will be offered by the selling
security holders at fixed prices, at the then-prevailing market prices at the
time of sale, at varying prices, or in negotiated transactions (See "Plan of
Distribution"). Our common stock is traded on the Over-The-Counter Bulletin
Board under the symbol "IGXT". The closing price of our common stock on April
24, 2008 was $0.95.
IntelGenx will not receive any proceeds from the sale of the
shares of common stock offered by the selling security holders to the public.
However, IntelGenx will receive proceeds from the exercise of the Warrants, as
well as from the exercise of the Placement Agent Options and of the Placement
Agent Warrants. IntelGenx has agreed to pay all of the costs of this offering,
excluding commissions and discounts regarding the sale of the common stock by
the selling security holders.
Brokers or dealers effecting transactions in the shares
should confirm the registration of these securities under the securities laws of
the states in which such transactions occur or the existence of an exemption
from such registration.
Certain selling security holders and any participating
broker-dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
or discounts given to any such broker-dealer may be regarded as underwriting
commissions or discounts under the Securities Act. See "Selling Security
holders" and "Plan of Distribution".
Investing in the common stock of IntelGenx
involves a
high degree of risk. You should invest in the common stock only if you can
afford to lose your entire investment. See "Risk Factors" beginning on page
6.
The information in this prospectus is incomplete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this Prospectus is ______________, 2008
3
TABLE OF CONTENTS
Prospectus Summary
5
The Offering
5
Risk Factors
6
Forward Looking
    Statements
11
Business
11
Management's
    Discussion and Analysis of Financial Condition or Plan of Operations
17
Market for
    Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities
21
Dividend Policy
21
Selling Security
    holders
22
Management
26
Certain Relationships
    and Related Transactions
31
Plan of Distribution
32
Description of Capital
    Stock
33
Legal Matters
33
Experts
33
Where You Can Find
    Additional Information
33
Consolidated Financial
    Statements
F-1
4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus. In this
prospectus, the words "Company," "IntelGenx" "we," "us," and "our," refer
collectively to IntelGenx Technologies Corp. and IntelGenx Corp., our
wholly-owned Canadian subsidiary.
Our Business
We are a drug delivery company  headquartered in Montreal
(Quebec) which focuses on the development of novel oral immediate release and
controlled-release products for the generic pharmaceutical market.
Our product development efforts are based upon three delivery
platform technologies: (1) a Tri-Layer Tablet technology (2) a Quick Release
wafer technology, and (3) a Mucoadhesive Tablet technology. Our Tri-layer
platform technology allows for the development of oral controlled release
products. It is versatile and is aimed at significantly reducing manufacturing
costs as compared to competing delivery technologies. The Quick Release Wafer
technology allows for the instant delivery of pharmaceuticals to the oral
cavity. The Mucoadhesive Tablet allows for the controlled release of active
substances to the oral mucosa.
Our executive offices are located at 6425 Abrams, Ville
Saint-Laurent, Quebec, H4S 1X9, Canada. Our web site address is http://www.IntelGenx.com.
Information contained on our web site is not a part of this prospectus.
The Offering
Shares of common stock offered by the selling
    security holders
Up to 8,642,160 shares of common stock and
    4,001,000 Warrants,
including (i) 4,001,000 shares of Common Stock
    (ii) 4,001,000
Warrant Shares (iii) 320,080 shares of Placement
    Agent Common
Stock, and (iv) 320,080 Placement Agent Warrants
    Shares. Assuming
the full exercise of all of the Warrants, the
    Placement Agent Options,
and the Placement Agent Warrants, the shares being
    registered would
represent approximately 34% of our outstanding
    common stock. (1)
Common stock to be outstanding after the offering
Up to 24,940,205 shares, assuming the exercise
    ofall of the Warrants,
the Placement Agent Options, and the Placement
    Agent Warrants.
Use of proceeds
IntelGenx will not receive any proceeds from the
    sale of the shares of
common stock offered by the selling security
    holders to the public.
However, IntelGenx will receive proceeds from any
    cash exercise of
the Warrants, as well as from the exercise of the
    Placement Agent
Options and of the Placement Agent Warrants. Any
    such proceeds
will be used to support the Company's strategic
    development projects
and for working capital.
OTCBB Ticker Symbol
IGXT
(1) The above information regarding common stock to be
outstanding after the offering is based on 20,299,045 shares of common stock
outstanding as of April 18, 2008 and assumes the subsequent exercise of all of
the warrants by our selling security holders and the options by our placement
agent.
Description of March 2008 Private Placement of Common Stock and Warrants
On March 27, 2008, IntelGenx Technologies Corp. completed an
offering of 4,001,000 units of its securities at $0.70 per unit for gross
proceeds of approximately $2.8 million (the "Gross Proceeds") and net proceeds
of approximately $2,538,651 ("the "Offering"). Each unit consists of one share
of the Company's common stock (the "Common Stock") and one two-year warrant to
purchase one share of common stock (the "Warrant Shares") at an initial exercise
price of $1.02 per share, subject to adjustment (the "Warrants").
Paradigm Capital Inc. ("Paradigm") acted as placement agent
for the Offering on a best efforts basis. Paradigm's compensation consists of a
cash commission equal to 7% of the Gross Proceeds and an option to acquire
320,080 units at $0.70 per unit within 24 months of the closing date (the
"Placement Agent Options") (The shares of common stock issuable upon exercise of
the Placement Agent Options shall be referred to as the Placement Agent Common
Stock, the warrants issuable upon exercise of the Placement Agent Options shall
be referred to as the "Placement Agent Warrants", and the shares of common stock
issuable upon exercise of the Placement Agent Warrants shall be referred to as
the "Placement Agent Warrant Shares").
5
In connection with the Offering, the Company entered into a
registration rights agreement (the "Registration Rights Agreement") providing
for the filing of a registration statement (the "Registration Statement") with
the U.S. Securities and Exchange Commission registering the Common Stock,
Warrant Shares, Warrants, the Placement Agent Common Stock and the Placement
Agent Warrant Shares . The Company is obligated to file the Registration
Statement no later than 30 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 120 days after the date of closing.
The exercise price of the Warrants is subject to adjustment
to $0.93 per share if, within four months from the closing date (i) the Common
Stock and shares issuable upon exercise of the Warrants have not been listed and
commenced trading on either the Toronto Stock Exchange or the TSX Venture
Exchange and (ii) the Registration Statement has not been declared effective.
The exercise price of the Warrants is also subject to adjustment for certain
events, including dividends, distributions or split of the Company's common
stock, subsequent equity sales or rights offerings by the Company, or in the
event of the Company's consolidation, merger or reorganization.
In addition, the Company is obligated to pay a penalty in an
aggregate amount equal to five percent of the Gross Proceeds if the Common
Stock, Warrant Shares, Placement Agent Common Stock and Placement Agent Warrant
Shares are not listed on the Toronto Stock Exchange or the TSX Venture Exchange
within 60 days from the closing date of the Offering (the "Listing Condition"),
and an additional penalty in an aggregate amount equal to one percent of the
Gross Proceeds for each subsequent calendar month during which the Listing
Condition is not satisfied, subject to a maximum of three months.
In connection with the Offering, each of the Company's
officers and directors have entered into lock-up agreements in favor of Paradigm
pursuant to which they have agreed not to sell or transfer their shares for a
period ending four months and one day after the closing date. The foregoing
issuances were exempt from registration under Section 4(2) of the Act and/or
Regulation S, promulgated pursuant to the Act. None of the purchasers are U.S.
persons, no sales efforts were conducted in the U.S., and the Common Stock and
Warrants contain a legend restricting the sale of such securities in accordance
with Regulation S and pursuant to applicable Canadian securities laws.
RISK FACTORS
An investment in our common stock involves significant risks.
You should carefully consider the following risks and all other information set
forth in this prospectus before deciding to invest in shares of our common
stock. If any of the events or developments described below occurs, our
business, financial condition and results of operations may suffer. In that
case, the value of our common stock may decline and you could lose all or part
of your investment.
Risks Related to Our Business
We continue to sustain losses and our revenues are minimal.
Even though we completed the development stage of our
operations in April 2006 when we commenced consistently generating revenues from
our operations, we are still subject to all of the risks inherent in both the
creation of a new business and the development of new products. Our cash flows
may be insufficient to meet expenses relating to our operations and the
development of our business, and may be insufficient to allow us to develop new
products. We currently conduct research and development using our proprietary
platform technologies to develop oral controlled released and other delivery
products. We do not know if we will always be successful in the development of
such products. We have an accumulated deficit of approximately $1,918,658 since
our inception in 2003 to December 2007. To date, these losses have been financed
principally through sales of equity securities, long-term debt and debt from
related parties. Our revenues for the years ended December 31, 2007, December
31, 2006, December 31, 2005 and December 31, 2004 were $862,731, $265,901,
$19,990 and $257,374 respectively. Our revenues consisted primarily of
development fee revenues from four clients and have not been sufficient to
sustain our operations. In order to achieve profitability, our revenue streams
will have to increase and there is no assurance that revenues will increase to
such a level. Additional capital and/or borrowings will be necessary in order
for us to continue in existence until we are able to attain and sustain
profitable operations.
We are subject to currency fluctuations, which may affect our
results.
The majority of our expenses are in Canadian dollars, while
our revenues are primarily in U.S. dollars. The fluctuation of the Canadian
dollar and the U.S. dollar could materially impact our operating results and
financial position.
We may need additional capital to fulfill our business
strategies. We may also incur unforeseen costs. Failure to obtain such capital
would adversely affect our business.
We will need to expend significant capital in order to
continue with our research and development by hiring additional research staff
and acquiring additional equipment. If our cash flows from operations are
insufficient to fund our expected capital needs, or our needs are greater than
anticipated, we will be required to raise additional funds in the future through
private or public sales of equity securities or the incurrence of additional
indebtedness. Additional funding may not be available on favorable terms, or at
all. If we borrow additional funds, we likely will be obligated to make periodic
interest or other debt service payments and may be subject to additional
restrictive covenants. If we fail to obtain sufficient additional capital in the
future, we could be forced to curtail our growth strategy by reducing or
delaying capital expenditures, selling assets or downsizing or restructuring our operations. If we
raise additional funds through public or private sales of equity securities, the
sales may be at prices below the market price of our stock and our shareholders
may suffer significant dilution.
6
The loss of the services of key personnel would adversely affect our
business.
Our future success depends to a significant degree on the
skills, experience and efforts of our executive officers and senior management
staff. The loss of the services of existing personnel, particularly Horst Zerbe,
our Chairman of the Board and Chief Executive Officer, would be detrimental to
our research and development programs and to our overall business.
We are dependent on collaborators to conduct clinical trials of, obtain
regulatory approvals for, and manufacture, market, and sell our controlled
release products.
We depend heavily on our pharmaceutical partners to pay for
part or all of the research and development expenses associated with developing
a new product and to obtain approval from regulatory bodies such as the FDA to
commercialize these products. We also depend on our partners to successfully
distribute these products after receiving regulatory approval. Our revenues from
research and development fees, milestone payments and royalty fees are provided
by our partners. Our inability to successfully find pharmaceutical partners who
are willing to pay us these fees in order to develop new products would
negatively impact our business and our cash flows.
We have limited experience in manufacturing, marketing and
selling pharmaceutical products. Accordingly, if we cannot maintain our existing
collaborations or establish new collaborations with respect to our other
products in development, we will have to establish our own capabilities or
discontinue the commercialization of the affected product. Developing our own
capabilities would be expensive and time consuming and could delay the
commercialization of the affected product. There can be no assurance that we
would be successful in developing these capabilities.
Our existing collaborations are subject to termination on
short notice under certain circumstances including, for example, if the
collaborator determines that the product in development is not likely to be
successfully developed or not likely to receive regulatory approval, if we
breach the agreement or upon a bankruptcy event. If any of our collaborations
are terminated, we may be required to devote additional resources to the
product, seek a new collaborator on short notice or abandon the product. The
terms of any additional collaboration or other arrangements that we establish
may not be favorable to us.
We are also at risk that these collaborations or other
arrangements may not be successful. Factors that may affect the success of our
collaborations include the following:
Our collaborators
  may be pursuing alternative technologies or developing alternative products
  that are competitive to our product, either on their own or in collaboration
  with others.
Our collaborators
  may reduce marketing or sales efforts, or discontinue marketing or sales of
  our products. This would reduce our revenues received on the products.
Our collaborators
  may terminate their collaborations with us. This could make it difficult for
  us to attract new collaborators or adversely affect perception of us in the
  business and financial communities.
Our collaborators
  may pursue higher priority programs or change the focus of their development
  programs, which could affect the collaborator's commitment to us.
  Pharmaceutical and biotechnology companies historically have re-evaluated
  their priorities from time to time, including following mergers and
  consolidations, a common occurrence in recent years.
We face competition in our industry, and many of our
competitors have substantially greater experience and resources than we do.
We compete with other companies within the drug delivery
industry, many of which have more capital, more extensive research and
development capabilities and greater human resources than we do. Some of these
drug delivery competitors include Biovail Corporation, Labopharm Inc., and
Flamel Technologies S.A. Our competitors may develop new or enhanced products or
processes that may be more effective, less expensive, safer or more readily
available than any products or processes that we develop, or they may develop
proprietary positions that prevent us from being able to successfully
commercialize new products or processes that we develop. As a result, our
products or processes may not compete successfully, and research and development
by others may render our products or processes obsolete or uneconomical.
Competition may increase as technological advances are made and commercial
applications broaden.
We are dependent upon sales outside the United States, which are subject to a
number of risks.
Our future results of operation could be harmed by risks inherent in doing
business in international markets, including:
Unforeseen changes in regulatory
  requirements;
Weaker intellectual property rights
  protection in some countries;
New export license requirements,
  changes in tariffs or trade restrictions; and
Political and economic instability in our target markets.
7
We rely upon a third-party manufacturer, which puts us at risk for supplier
business interruptions.
We have entered into an agreement with a third party
manufacturer which will manufacture certain of our products once we complete
development and after we receive regulatory approval. If our third-party
manufacturer fails to perform, our ability to market products and to generate
revenue would be adversely affected. Our failure to deliver products in a timely
manner could lead to the dissatisfaction of our distribution partners and damage
our reputation, causing our distribution partners to cancel existing agreements
with us and to stop doing business with us.
The third-party manufacturer that we depend on to manufacture
our products is required to adhere to FDA regulations regarding current Good
Manufacturing Practices (cGMP), which include testing, control and documentation
requirements. Ongoing compliance with cGMP and other regulatory requirements is
monitored by periodic inspection by the FDA and comparable agencies in other
countries. Failure by our third-party manufacturer to comply with cGMP and other
regulatory requirements could result in actions against them by regulatory
agencies and jeopardize our ability to obtain products on a timely basis.
We are subject to extensive government regulation including the requirement
of approval before our products may be marketed. Even if we obtain marketing
approval, our products will be subject to ongoing regulatory review.
We, our collaborators, our products, and our product
candidates are subject to extensive regulation by governmental authorities in
the United States and other countries. Failure to comply with applicable
requirements could result in warning letters, fines and other civil penalties,
delays in approving or refusal to approve a product candidate, product recall or
seizure, withdrawal of product approvals, interruption of manufacturing or
clinical trials, operating restrictions, injunctions, and criminal prosecution.
Our products cannot be marketed in the United States without
FDA approval. Obtaining FDA approval requires substantial time, effort, and
financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all. We rely on our partners for the
preparation of applications and for obtaining regulatory approvals. If the FDA
does not approve our product candidates in a timely fashion, or does not approve
them at all, our business and financial condition may be adversely affected.
Further, the terms of approval of any marketing application, including the
labeling content, may be more restrictive than we desire and could affect the
marketability of our or our collaborator's products. Subsequent discovery of
problems with an approved product may result in restrictions on the product or
its withdrawal from the market. In addition, both before and after regulatory
approval, we, our collaborators, our products, and our product candidates are
subject to numerous FDA requirements covering testing, manufacturing, quality
control, (cGMP), adverse event reporting, labeling, advertising, promotion,
distribution, and export. Our collaborators and we are subject to surveillance
and periodic inspections to ascertain compliance with these regulations.
Further, the relevant law and regulations may change in ways that could affect
us, our collaborators, our products, and our product candidates. Failure to
comply with regulatory requirements could have a material adverse impact on our
business.
Regulations regarding the manufacture and sale of our future
products are subject to change. We cannot predict what impact, if any, such
changes may have on our business, financial condition or results of operations.
Failure to comply with applicable regulatory requirements could have a material
adverse effect on our business, financial condition and results of operations.
Additionally, the time required for obtaining regulatory
approval is uncertain. We may encounter delays or product rejections based upon
changes in FDA policies, including cGMP, during periods of product development.
We may encounter similar delays in countries outside of the United States. We
may not be able to obtain these regulatory acceptances on a timely basis, or at
all.
The failure to obtain timely regulatory acceptance of our
products, any product marketing limitations, or any product withdrawal would
have a material adverse effect on our business, financial condition and results
of operations. In addition, before it grants approvals, the FDA or any foreign
regulatory authority may impose numerous other requirements with which we must
comply. Regulatory acceptance, if granted, may include significant limitations
on the indicated uses for which the product may be marketed. FDA enforcement
policy strictly prohibits the marketing of accepted products for unapproved
uses. Product acceptance could be withdrawn or civil or criminal sanctions could
be imposed for our failure to comply with regulatory standards or the occurrence
of unforeseen problems following initial marketing.
The third party manufacturers that we depend on to
manufacture our products are required to adhere to FDA regulations regarding
cGMP and similar regulations in other countries, which include testing, control
and documentation requirements. Ongoing compliance with cGMP and other
regulatory requirements is monitored by periodic inspection by the FDA and
comparable agencies in other countries.
We may not be able to expand or enhance our existing product lines with new
products limiting our ability to grow.
If we are not successful in the development and introduction
of new products, our ability to grow will be impeded. We may not be able to
identify products to enhance or expand our product lines. Even if we can
identify potential products, our investment in research and development might be
significant before we could bring the products to market. Moreover, even if we
identify a potential product and expend significant dollars on development, we
may never be able to successfully bring the product to market or achieve market
acceptance for such product. As a result, we may never recover our expenses.
8
The market may not be receptive to products incorporating our drug delivery
technologies.
The commercial success of any of our products that are
approved for marketing by the FDA and other regulatory authorities will depend
upon their acceptance by the medical community and third party payors as
clinically useful, cost-effective and safe. No product based on our technologies
is marketed in the United States, so there can be no assurance as to market
acceptance.
Factors that we believe could materially affect market acceptance of these
products include:
the timing of the receipt of
  marketing approvals and the countries in which such approvals are obtained;
the safety and efficacy of the
  product as compared to competitive products;
the relative convenience and ease
  of administration as compared to competitive products;
the strength of marketing
  distribution support; and
the cost-effectiveness of the
  product and the ability to receive third party reimbursement.
We are subject to environmental regulations and any failure to comply may
result in substantial fines and sanctions.
Our operations are subject to Canadian and international
environmental laws and regulations governing, among other things, emissions to
air, discharges to waters and the generation, handling, storage, transportation,
treatment and disposal of raw materials, waste and other materials. Many of
these laws and regulations provide for substantial fines and criminal sanctions
for violations. We believe that we are and have been operating our business and
facility in a manner that complies in all material respects with environmental,
health and safety laws and regulations; however, we may incur material costs or
liabilities if we fail to operate in full compliance. We do not maintain
environmental damage insurance coverage with respect to the products which we
manufacture.
We may have to make significant expenditures in the future to
comply with evolving environmental, health and safety requirements, including
new requirements that may be adopted or imposed in the future. To meet changing
licensing and regulatory standards, we may have to make significant additional
site or operational modifications that could involve substantial expenditures or
reduction or suspension of some of our operations. We cannot be certain that we
have identified all environmental and health and safety matters affecting our
activities and in the future our environmental, health and safety problems, and
the costs to remediate them, may be materially greater than we expect.
Our limited cash resources restrict our ability to pay cash dividends.
Since our inception, we have not paid any cash dividends on
our common stock and we do not anticipate paying any cash dividends on our
common stock in the foreseeable future. If we do not pay any dividends on our
common stock, our stockholders will be able to profit from an investment only if
the price of the stock appreciates before the stockholder sells it.
Risks Related to Our Intellectual Property
If we are not able to adequately protect our intellectual property, we may
not be able to compete effectively.
Our success depends, to a significant degree, upon the
protection of our proprietary technologies. While we currently own 3 U.S.
patents and have applied for 7 US patents, we will need to pursue additional
protections for our intellectual property as we develop new products and enhance
existing products. We may not be able to obtain appropriate protection for our
intellectual property in a timely manner, or at all. Our inability to obtain
appropriate protections for our intellectual property may allow competitors to
enter our markets and produce or sell the same or similar products.
If we are forced to resort to legal proceedings to enforce
our intellectual property rights, the proceedings could be burdensome and
expensive. In addition, our proprietary rights could be at risk if we are
unsuccessful in, or cannot afford to pursue, those proceedings.
We also rely on trade secrets and contract law to protect
some of our proprietary technology. We have entered into confidentiality and
invention agreements with our employees and consultants. Nevertheless, these
agreements may not be honored and they may not effectively protect our right to
our un-patented trade secrets and know-how. Moreover, others may independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets and know-how.
In 1995, the U.S. Patent and Trademark Office adopted changes
to the U.S. patent law that made the term of issued patents 20 years from the
date of filing rather than 17 years from the date of issuance, subject to
specified transition periods. Beginning in June 1995, the patent term became 20
years from the earliest effective filing date of the underlying patent
application. These changes may reduce the effective term of protection for
patents that are pending for more than three years. While we cannot predict the
effect that these changes will have on our business, they could have a material
adverse effect on our ability to protect our proprietary information.
Furthermore, the possibility of extensive delays in the patent issuance process
could effectively reduce the term during which a marketed product is protected
by patents.
We may need to obtain licenses to patents or other
proprietary rights from third parties. We may not be able to obtain the licenses
required under any patents or proprietary rights or they may not be available on
acceptable terms. If we do not obtain required licenses, we may
encounter delays in product development or
find that the development, manufacture or sale of products requiring licenses
could be foreclosed. We may, from time to time, support and collaborate in
research conducted by universities and governmental research organizations. We
may not be able to acquire exclusive rights to the inventions or technical
information derived from these collaborations, and disputes may arise over
rights in derivative or related research programs conducted by us or our
collaborators.
9
If we infringe on the rights of third parties, we may not be
able to sell our products, and we may have to defend against litigation and pay
damages.
If a competitor were to assert that our products infringe
on its patent or other intellectual property rights, we could incur substantial
litigation costs and be forced to pay substantial damages. Third-party
infringement claims, regardless of their outcome, would not only consume
significant financial resources, but would also divert our management's time and
attention. Such claims could also cause our customers or potential customers to
purchase competitors' products or defer or limit their purchase or use of our
affected products until resolution of the claim. If any of our products are
found to violate third-party intellectual property rights, we may have to
re-engineer one or more of our products, or we may have to obtain licenses from
third parties to continue offering our products without substantial
re-engineering. Our efforts to re-engineer or obtain licenses could require
significant expenditures and may not be successful.
Our controlled release products that are generic versions of
branded controlled release products that are covered by one or more patents may
be subject to litigation, which could delay FDA approval and commercial launch
of our products
We expect to file or have our collaborators file Abbreviated
New Drug Applications or New Drug Applications (ANDAs or NDAs) for our
controlled release products under development that are covered by one or more
patents of the branded product. It is possible that the owners of the patents
covering the brand name product or the sponsors of the NDA with respect to the
branded product will sue or undertake regulatory initiatives to preserve
marketing exclusivity. Any significant delay in obtaining FDA approval to market
our products as a result of litigation, as well as the expense of such
litigation, whether or not we or our collaborators are successful, could have a
materially adverse effect on our business, financial condition and results of
operations.
Risks Related to Our Securities:
The price of our common stock could be subject to significant fluctuations.
Any of the following factors could affect the market price of our common
stock:
Our failure to achieve and maintain
  profitability;
Changes in earnings estimates and
  recommendations by financial analysts;
Actual or anticipated variations in
  our quarterly results of operations;
Changes in market valuations of
  similar companies;
Announcements by us or our
  competitors of significant contracts, new products, acquisitions, commercial
  relationships, joint ventures or capital commitments;
The loss of major customers or
  product or component suppliers;
The loss of significant partnering
  relationships; and
General market, political and
  economic conditions.
We have a significant number of convertible securities
outstanding that could be exercised in the future. Subsequent resale of these
and other shares could cause the Company's stock price to decline. This could
also make it more difficult to raise funds at acceptable levels via future
securities offerings.
We have a concentration of stock ownership and control, and a
small number of stockholders have the ability to exert significant control in
matters requiring stockholder vote and may have interests that conflict with
ours.
Our common stock ownership is highly concentrated. See
"Security Ownership of Certain Beneficial Owners and Management." As a result, a
relatively small number of stockholders, acting together, have the ability to
control all matters requiring stockholder approval, including the election of
directors and approval of mergers and other significant corporate transactions.
This concentration of ownership may have the effect of delaying, preventing or
deterring a change in control of our company. It could also deprive our
stockholders of an opportunity to receive a premium for their shares as part of
a sale of our company and it may affect the market price of our common stock. In
deciding how to vote on such matters, those stockholders' interests may conflict
with yours.
Lack of Independent Directors
We cannot guarantee that our Board of Directors will always
have a majority of independent directors. In the absence of a majority of
independent directors, our executive officer, who is also a principal
stockholder and director, could establish policies and enter into transactions
without independent review and approval thereof. This could present the
potential for a conflict of interest between the Company and its stockholders
generally and the controlling officers, stockholders or directors.
10
Our common stock is quoted on the OTC Bulletin Board
.
As a result, the holders of our common stock may find it more
difficult to obtain accurate quotations concerning the market value of the
stock. Stockholders also may experience greater difficulties in attempting to
sell the stock than if it was listed on a stock exchange or quoted on Nasdaq.
Because our common stock is not traded on a stock exchange or on Nasdaq, and the
market price of the common stock is less than $5.00 per share, the common stock
is classified as a "penny stock." Rule 15g-9 of the Securities Exchange Act of
1934 imposes additional sales practice requirements on broker-dealers that
recommend the purchase or sale of penny stocks to persons other than those who
qualify as an "established customer" or an "accredited investor." This includes
the requirement that a broker-dealer must make a determination that investments
in penny stocks are suitable for the customer and must make special disclosures
to the customer concerning the risks of penny stocks. Application of the penny
stock rules to our common stock could adversely affect the market liquidity of
the shares, which in turn may affect the ability of holders of our common stock
to resell the stock. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in our common stock and may
affect the ability of stockholders to sell their shares. These requirements may
be considered cumbersome by broker-dealers and could impact the willingness of a
particular broker-dealer to make a market in our shares, or they could affect
the value at which our shares trade. Classification of the shares as penny
stocks increases the risk of an investment in our shares.
We became public by means of a reverse merger, and as a
result we are subject to the risks associated with the prior activities of the
public company. In addition, we may not be able to attract the attention of
major brokerage firms or institutional buyers.
Additional risks may exist because we became public through a
"reverse merger" with a shell corporation. Although the shell did not have
recent or past operations or assets and we performed a due diligence review of
the public company, there can be no assurance that we will not be exposed to
undisclosed liabilities resulting from the prior operations of our company.
Security analysts of major brokerage firms and securities
institutions may not cover us since there are no broker-dealers who sold our
stock in a public offering who would have an incentive to follow or recommend
the purchase of our common stock. No assurance can be given that established
brokerage firms will want to conduct any financings for us in the future.
FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may", "expect", "plans", "intends",
"anticipate", "believe", "estimate" and "continue" or similar words and are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities Exchange Act of
1934. You should read statements that contain these words carefully because they
discuss our future expectations contain projections of our future results of
operations or of our financial condition or state other "forward-looking"
information. IntelGenx believes that it is important to communicate our future
expectations to our investors. However, there may be events in the future that
IntelGenx is not able to accurately predict or control. The factors listed above
in the section captioned "Risk Factors", as well as any cautionary language in
this Prospectus, provide examples of risks, uncertainties and events that may
cause IntelGenx's actual results to differ materially from the expectations
IntelGenx describes in our forward-looking statements. Before you invest in the
common stock, you should be aware that the occurrence of the events described as
risk factors and elsewhere in this Prospectus could have a material adverse
effect on our business, operating results and financial condition.
DESCRIPTION OF BUSINESS
Corporate History
The Company, formerly known as Big Flash Corp., was
incorporated in Delaware on July 27, 1999. On April 28, 2006, the Company,
directly and indirectly through its Canadian holding corporation, completed the
acquisition of 100% of the issued and outstanding shares and warrants of
IntelGenx Corp., a Canadian company incorporated on June 15, 2003. The Company
did not have any operations prior to the acquisition of IntelGenx. In connection
with the acquisition, we changed our name from Big Flash Corp. to IntelGenx
Technologies Corp. IntelGenx Corp. has continued operations as our operating
subsidiary.
Our principal office is located at 6425 Abrams, Ville St-Laurent, Montreal,
Quebec, H4S 1X9. Our website is located at www.IntelGenx.com. The contents of
our website are not incorporated into this filing.
11
Inter-corporate Relationships
Overview
We are a drug delivery company focusing on the development of
novel, orally administered drug delivery systems based on our proprietary oral
drug delivery technologies. We have positioned ourselves as a provider of
product development services for the pharmaceutical industry, including the
branded and generic pharmaceutical markets.
Drug delivery systems are an important tool in the hands of
physicians for purposes of optimizing drug therapy. For the pharmaceutical
industry, drug delivery systems represent an opportunity to extend the market
exclusivity and product lifecycle of drugs whose patent protection is ending.
According to a report by CMR International, products
incorporating drug delivery systems represented 13% of the US $337 billion
global pharmaceutical market. In the United States, sales of drug delivery
products totaled $35 billion in 2006. Of this amount, the orally administered
segment of the drug delivery market totaled $21 billion in sales. Controlled
release (CR) dosage technologies play an important role in the development of
orally administered drug delivery systems. Control release technology provides
patients with the required amount of medication over a pre-determined, prolonged
period of time, preferably over 24 hours. Because of the reduced fluctuation of
the active drug in the blood, controlled release products are deemed safer and
more tolerable than conventional dosage forms, and have shown better patient
compliance.
Our primary business strategy is to develop pharmaceutical
products based upon our proprietary drug delivery technologies and license the
commercial rights to companies in the pharmaceutical industry once the viability
of a product has been demonstrated. In exchange for licensing rights to our
products, we seek funding consisting of advance down payments, milestone fees,
reimbursement for development costs, and royalties on sales. The companies we
partner with are responsible for managing the regulatory approval process of the
product with the U.S. Food & Drug Administration ("FDA") and/or other regulatory
bodies, as well as for the marketing and distribution of the products.
In addition to pursuing partnering arrangements that provide
for the full funding of a drug development project, we are planning to undertake
development of selected product opportunities until the marketing and
distribution stage. We would first assess the potential and associated costs for
successful development of a product, and then determine at which stage it would
be most prudent to seek a partner, balancing costs against the potential for
higher returns later in the development process.
Technology Platforms
Our product development efforts are based upon three delivery
platform technologies: (1) a Tri-Layer Tablet technology (2) a Quick Release
wafer technology, and (3) a Mucoadhesive Tablet technology. Our Tri-layer
platform technology allows for the development of oral controlled release
products. It is versatile and is aimed at significantly reducing manufacturing
costs as compared to competing delivery technologies. The Quick Release Wafer
technology allows for the instant delivery of pharmaceuticals to the oral
cavity. The Mucoadhesive Tablet allows for the controlled release of active
substances to the oral mucosa.
The Tri-Layer platform technology represents a new generation
of controlled release layered tablets to modulate the release of active
compounds. The technology is based on a tri-layer tablet with an active core
layer and erodible cover layers. The release of the active drug from the core
matrix initially occurs in a first-order fashion. As the erodible layers start
to disintegrate, the permeation of the active ingredient through the cover
layers increases. Thus, the Tri-Layer tablet can produce quasi-linear
(zero-order) kinetics for releasing a chemical compound over a desired period of
time. The erosion rate of the cover layers can be customized according to the
physico-chemical properties of the active drug. In addition, our multi-layer
technology offers the opportunity to develop combination products in a
regulatory-compliant format. Combination products are made up of two or more
active ingredients that are combined into a single dosage form.
The Quick Release Wafer is made up of a thin (25-35 micron)
polymeric film comprised of USP components that are safe and approved by the
Food and Drug Administration (FDA) for use in food, pharmaceutical, and cosmetic
products. Derived from the edible film technology used for breath strips and
initially developed for the instant delivery of savory flavors to food
substrates, the Instant Delivery Film has distinct advantages over existing fast
dissolving oral tablets, thereby making it an attractive choice for indications
requiring rapid onset of action like migraine, motion sickness and nausea.
12
The Mucoadhesive Tablet is an innovative drug delivery system
capable of adhering to the oral mucosa and releasing the drug onto the site of
application at a desired rate. The Mucoadhesive Tablet exhibits many advantages:
(i) it avoids the first pass effect (whereby the liver metabolizes the active
and greatly reduces the level of drug in the systemic circulation), (ii) it
leads to a higher absorption rate as compared to the conventional oral route and
(iii) it achieves a rapid onset of action for the drug. The Mucoadhesive Tablet
technology is a versatile one where the site of application, residence time and
rate of release of the drug can be modulated to achieve the desired results.
Product Portfolio
We have assembled a product portfolio that includes a blend
of generic products that management believes have the potential to generate
short-term revenues by presenting branding opportunities that are based on our
proprietary delivery technology.
INT0001/2004. This is the most advanced generic product
involving our trilayer technology. Equivalency with the reference product Toprol
XL and its European equivalent Beloc-ZOK has been demonstrated
in-vitro
.
The product has been tested in phase I studies.
INT0003/2005. We have entered into a partnership with Cary
Pharmaceuticals for the development of a once-daily tablet product containing an
antidepressant and a nicotine antagonist. The product is intended for smoking
cessation.
INT0004/2006. The formulation development for an
antidepressant has been completed and clinical (phase I) development has
commenced.
INT0005/2005. We are developing a bilayer tablet containing a
fixed-dose combination of a non-steroidal anti-inflammatory drug and a synthetic
prostaglandin. Formulation development is completed and a pilot bio batch has
been manufactured.
INT0006/2005. We have entered into a development agreement
with Azur Pharma for the development and manufacture of a prenatal vitamin
supplement. The product was developed using our proprietary technology. We
expect to commercialize the product in mid 2008.
INT0010/2006. We have entered into an agreement with Cannasat
Therapeutics Inc. for the development of a sublingual tablet product containing
a cannabinoid-based drug for the treatment of neuropathic pain and nausea in
cancer patients undergoing chemotherapy.
INT0011/2007 Under a development agreement with Cannasat
Therapeutics Inc., we are developing a controlled-release tablet containing
Cannabidiol for the treatment of schizophrenia.
INT0007/2006. A wafer product based on our proprietary edible
film technology is in early development stage. The product is intended for the
treatment of erectile dysfunction (ED).
INT0008/2007. A wafer product based on our proprietary edible
film technology is in early development stage. The product is intended for the
treatment of migraine.
The current development status of each of our products is
summarized in the following table:
Product
Application
Status of Development
INT0001/2004
CHF, Hypertension
Pivotal batches in preparation
INT0003/2005
Smoking cessation
Pilot biostudy completed
INT0004/2006
Antidepressant
Pivotal batches completed
INT0010/2006
Neuropathic pain
Pilot biostudy completed
INT0006/2005
Prenatal vitamin
Manufacturing scale-up
supplement
INT0005/2005
Osteoarthritis
Pilot batch completed.
INT0007/2006
ED
Formulation development
ongoing
INT0008/2007
Migraine
Formulation development
ongoing
INT0011/2007
Schizophrenia
Formulation development
ongoing
13
Our Strategy
Our primary growth strategies include: (1) identifying
lifecycle management opportunities for existing "blockbuster" products, (2)
developing generic drugs with high barriers to entry, (3) developing products
for the (non-pharmaceutical) nutritional supplement market, and (4) new drug
delivery technologies.
Lifecycle Management Opportunities
To achieve our goal of creating attractive business
opportunities, we have undertaken a strategy under which we will position our
delivery technologies as an opportunity for lifecycle management of products for
which the patent protection of the active ingredient is nearing expiration.
While the patent for the underlying substance cannot be extended, patent
protection can be obtained for a new and improved formulation by filing an
application with the FDA under Section 505(b)(2) of the Food, Drug and Cosmetic
Act. The first formulation for a respective active ingredient which is filed
with the FDA under a 505(b)(2) application may qualify for three years of market
exclusivity upon approval. Based upon a review of past partnerships between
third party drug delivery companies and pharmaceutical companies, management
believes that drug delivery companies which possess innovative technologies to
develop these special dosage formulations present an attractive opportunity to
pharmaceutical companies. Accordingly, we believe these "505(b)(2) products"
represent the most attractive opportunity for us to date.
Generic Drugs with High Barriers to Entry
We will also plan to pursue the development generic drugs
that have certain barriers to entry, e.g., where product development and
manufacturing are complex and can limit the number of potential entrants into
the generic market. We plan to pursue such projects if there is a strong chance
the number of competitors will be small. An example of such a product is our pro
INT0005/2005, a fixed-dose combination medication requiring complex formulation
and manufacturing technology. Our goal is that this will be the first such
product to file for FDA approval.
Nutritional Supplement Products
We plan to develop additional products for the nutritional
supplement market based upon our proprietary drug delivery technologies. The
market for these supplements is large, with little differentiation between
products. Our proprietary technology is aimed at increasing the absorption rate
of active ingredients. We believe that supplements represent attractive short
term revenue opportunities since they are not as regulated as pharmaceutical
products and do not require FDA approval.
Development of New Drug Delivery Technologies
The rapidly disintegrating film technology contained in our
Quick Release Wafer and our mucosal adhesive tablet are examples of our efforts
to develop alternate technology platforms. As we work with various partners on
different products, we seek opportunities to develop new proprietary
technologies that may open up new market sectors for us in the future.
Competition
The pharmaceutical industry is highly competitive and is
subject to the rapid emergence of new technologies, governmental regulations,
healthcare legislation, availability of financing, patent litigation and other
factors. Many of our competitors, including Biovail Corporation, Labopharm Inc.,
and Flamel Technologies S.A., have longer operating histories and greater
financial, technical, marketing, legal and other resources than us. In addition,
many of our competitors have significantly greater experience than we have in
conducting clinical trials of pharmaceutical products, obtaining FDA and other
regulatory approvals of products, and marketing and selling products that have
been approved. We expect that we will be subject to competition from numerous
other companies that currently operate or are planning to enter the markets we
compete in.
The key factors affecting the success of our drug delivery
products are likely to include, among other factors:
The safety and
  efficacy of our products;
The relative speed
  with which we can develop products;
Generic competition
  for any product that we develop;
Our ability to
  defend our existing intellectual property and to broaden our IP and technology
  base;
Our ability to
  differentiate our products;
Our ability to
  manufacture our products in compliance with cGMP and any other regulatory
  requirements
14
In order to establish ourselves as a viable industry partner,
we have to continue to invest in our research and development activities in
order to further strengthen our technology base and to develop the ability to
manufacture our products through our manufacturing partner at competitive costs.
Our Competitive Strengths
We believe that our key competitive strengths include:
Our intellectual property;
The versatility of our drug
  delivery technology ; and
The manufacturing cost savings
  associated with our technology.
Manufacturing Partnership
We have entered into a collaboration agreement with Keata
Pharma Inc., a wholly owned subsidiary of PharmEng International Inc., based in
Markham, Ontario. Under this agreement, Keata Pharma is our preferred supplier
for the manufacturing of clinical test batches and commercial products. We also
have a reciprocal relationship whereby we recommend Keata Pharma to our partners
for pharmaceutical manufacturing services and Keata Pharma promotes our product
development services to pharmaceutical companies.
Dependence on Major Customers
We do not rely on any one or a few major customers for our
end products. However, we depend upon a limited number of partners for the
development of new products, and to assist in obtaining approvals from
regulatory bodies such as the FDA that are required in order to commercialize
these products.
Intellectual Property and Patent Protection
We protect our intellectual property and technology by
applying for patent protection in the United States and in the most relevant
foreign markets, and through non-disclosure agreements, license agreements and
appropriate restrictions and controls on the distribution of information. We
plan to file core technology patents covering the use of our platform
technologies in any pharmaceutical products. We also rely on trade secrets,
common law trademark rights and trademark registrations.
The following table is a list of our three (3) issued and seven (7) pending
patents:
Date submitted /
Patent No.
Title
Subject
issued
US 6,231,957
Rapidly disintegrating
The composition, manufacturing,
flavor wafer for flavor
and use of rapidly disintegrating
Issued May 15, 2001
enrichment
flavored films for releasing
flavors to certain substrates
US 6,660,292
Rapidly disintegrating
Composition and manufacturing
film for precooked
of flavored films for releasing
Issued December 9,
foods
flavors to precooked food
2003
substrates
US 7,132,113
Flavored film
Composition and manufacturing
method of multi-layered films
Issued April 16, 2002
US Appl.
Multilayer Tablet
Formulation and Method of
2007/0190144
Preparation of Multilayered
Published August 16,
Tablets
2007
15
US Appl.
Multi-Vitamin And
Formulation And Method of
2007/0128272
Mineral Supplement
Preparation of
    Prenatal
Published June 7,
Multivitamin
    Supplement
2007
PCT/CA2006/0003
Delayed Release Oral
Formulation And Method Of
36
;
US Appl.
Dosage Form And
Making Bilayer Tablets
    Containing
February 13, 2006
11/403,262
Method Of Making
Delayed-Release
    Diclofenac And
Same
Misoprostol
US Appl.
Controlled Release
Formulation And Method Of
July 2006
11/782,838
Pharmaceutical Tablets
Making Tablets
    Containing
PCT/IB2007/03950
Bupropion And
    Mecamylamine
US Appl. Make
Stabilized sustained-
Formulation And Method Of
Special 11/828,287
release Bupropion and
Making Tablets
    Containing
August 2007
Bupropion /
Bupropion And
    Mecamylamine
Mecamylamine tablets
US Provisional
Buccal And Sublingual
Formulation And Method of
July 2007
Appl. Attorney
Dosage Forms
Preparation of
    mucoadhesive
Docket INT34 P-
tablets containing THC
311
US Provisional
Cannabinoid
Formulation And Method of
July 2007
Appl. Attorney
Complexes
Preparation of gamma-cyclodextrin
Docket INT34 P-
complexes containing
    CBD
310
Government Regulation
The pharmaceutical industry is highly regulated. We must
remain current with FDA and other regulatory requirements in order to get new
products approved. Failing to follow FDA and regulatory requirements could lead
to higher R&D expenses. We are responding to these regulatory challenges by
focusing on 505(b)(2) opportunities. By applying our drug delivery technology to
existing drugs, we have access to high-potential product opportunities at lower
R&D expenses and shorter time-to-market timelines compared to new chemical
entity NDA (New Drug Application) products.
Research and Development
We are currently working on
several 505(b)(2) opportunities using our Tri-Layer and Quick Release Wafer
platform technologies. We source our 505(b)(2) projects in two ways: (1) either
we develop a product to "proof of concept" and then solicit potential
pharmaceutical partners, or (2) potential partners approach us directly or
through the use of an intermediary with a product idea for development. The
pharmaceutical partners provide the funding required for the product development
and in return get the exclusive distribution rights for the products. We receive
development milestone payments from our partners and royalties upon
commercialization.
Environmental Regulatory Compliance
We believe that we are in compliance with environmental regulations
applicable to our research and development facility located in Ville
Saint-Laurent, Quebec.
Employees
As of December 31, 2007, we had seven full-time employees and two consultants
on staff. Five full-time employees and one consultant are directly involved in
product development activities. Our technical staff includes one individual with
a Ph.D., one individual with an M.D., and three individuals with Masters of
Science degrees.
DESCRIPTION OF PROPERTY
We currently occupy 3,100 square feet of leased space at a
rate of CAN$8.29/square foot in an industrial zone in Ville St.-Laurent, Quebec,
Canada under a 5-year renewable lease agreement signed in 2004. We expanded our
laboratory and office space at this facility to its maximum during the second
quarter of 2006. In order to continue to support ongoing product development
activities and allow the addition of further development programs we might be
required to seek a different location in 2008. Management has therefore entered
into discussions with the current landlord to look for alternative facilities
that would meet our need for additional space at affordable costs.
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations — Year ended December 31, 2007 compared to Year ended
December 31, 2006.
Increase/
Percentage
2007
2006
(Decrease)
Change
Revenue
$
862,731
$
265,901
$
596,830
224%
Research and Development Expenses
777,773
510,407
267,366
52%
Management salaries
328,513
245,637
82,876
34%
General and Administrative Expenses
166,249
84,040
82,209
98%
Professional fees
424,817
158,925
265,892
167%
Interest and financing fees
349,093
54,724
294,369
538%
Net income (loss)
(1,100,793)
(781,136)
(319,657)
41%
Revenues
Total revenues for the year ended December 31, 2007 were
$862,731, compared with $265,901 for the same period last year, an increase of
$596,830, or 224%. The increase in total revenue for the twelve month period is
primarily attributable to revenues received pursuant to our research and
development agreements with our pharmaceutical partners. The remaining amount is
attributable to increased interest income of $23,103 earned on the cash proceeds
from the sale of our securities in May 2007.
Our research and development revenues in 2007 consisted of
$492,530 received for development milestones achieved in connection with product
development projects begun prior to 2007, and $342,846 received in connection
with drug development projects initiated in 2007.
Research and Development Expenses
Research and development expenses for the twelve-month period
ended December 31, 2007 were $777,773, as compared to $510,407 for 2006. The
increase in research and development expenses is attributable to the increased
drug development activities.
Approximately 92% of our research and development expenses in
2007 were incurred pursuant to research and development agreements entered into
with our pharmaceutical industry partners. The remaining 8% of our research and
development expenses were incurred in connection with internal projects that we
are pursuing independently.
General and Administrative Expenses
Our general and administrative expenses increased to $166,249
in 2007, as compared to $84,080 in 2006. The increase is primarily attributable
to increases in expenses in connection with our regulatory and capital raising
efforts.
Management Salaries
Management salaries increased to $328,513 in 2007, as
compared to $245,637 in 2006. Included in management salaries are $97,951 in non
cash compensation in the form of options granted to directors and management
employees in 2007. This amount compares to $137,097 in non cash compensation in
2006. The increase in management salaries is also attributable to the addition
of a full time Chief Financial Officer and Vice-President of Business
Development.
Professional Fees
Professional fees increased to $424,817 in 2007, as compared
to $158,925 in 2006. Of this amount, $68,349 represents non-cash compensation
paid for investor relations services. The remaining increase of $197,543 is
primarily attributable to increased amounts paid to our legal counsel and
auditors in connection with our reporting obligations as well as our fund
raising.
17
Stock Based Compensation Expense, Warrants and Stock Based
Payments
We incurred an aggregate of $202,607 of amortization expense
for stock based compensation in 2007, as compared to $202,116 for 2006. In 2007,
we granted 257,500 stock options pursuant to our 2006 Stock Option Plan,
resulting in $97,951 in amortization expense. The remaining amortization expense
for 2007 was incurred for options granted in 2006 in connection with the
following: a) options grants to company employees resulting in an amortization
expense of $18,190, b) for financing fees related to the April 2006 IntelGenx
Corp. acquisition for $76,591, and c) for investor relations of $9,875. In 2006,
we granted 1,119,000 stock options pursuant to our 2006 Stock Option Plan,
resulting in $202,116 in amortization expense.
In 2007, we also amortized a total of $68,349 in stock based
compensation issued in 2006 with respect to investor relation services as
compared to $76,900 in 2006.
We expect to incur an aggregate of $97,381 in stock based
compensation expense in fiscal 2008 and 2009 solely in connection with the
issuance of options during 2006 and 2007. We anticipate issuing additional
options and warrants in the future, which will continue to result in stock-based
compensation and warrant amortization expenses.
Interest and Financing Fees
We incurred interest and financing fee expense of $349,093
during the year ended December 31, 2007, as compared to $54,724 in 2006.
Included in the financing fees are a non-cash accretion expense of $185,823, and
cash interest payments of $66,180 on the convertible debentures issued in May
2007. Also included in the financing costs is a non cash financing fee of
$76,591 incurred with respect to the amortization of 250,000 options issued in
connection with the acquisition of IntelGenx in April 2006. The total of
non-cash items included in interest and financing fees is $262,414.
The remainder of $20,499 in interest expense relates to long
term debt which was redeemed in May 2007, as well as interest paid on the
outstanding shareholder loan. Based on the outstanding principal amount of the
convertible debentures issued in May 2007, and assuming no additional
conversions of these debentures into common stock, we expect to incur interest
expenses of $113,000 in 2008.
Net Loss
Net loss for the year ended December 31, 2007 was $1,100,793,
as compared to a net loss of $781,136 for the year ended December 31, 2006. The
increase in the net loss for the year ended December 31, 2007 is primarily due
to increases in research and development expenses, professional fees and
financing expenses. These expenses were offset by higher research and
development revenues and interest income. In 2007, the Company incurred
non-recurring and non-cash expenses for an approximate total of $444,000 for the
amortization of financing fees, investor relation services, accretion expense,
depreciation, share-based compensation and deferred income taxes.
Impact of Inflation
Inflation and changing prices has not had any impact on our
revenues and income from continuing operations from inception to today.
Income taxes
In 2007, we incurred Canadian and provincial net operating
losses of approximately $794,000 and $908,000 respectively, that may be applied
against earnings of future years.
This compares to Canadian and provincial
net operating losses of approximately $350,000 and $387,000 in 2006. Should
there be an acquisition or a change in control of IntelGenx Corp, our Canadian
subsidiary, the utilization of these net operating losses is subject to
significant limitations imposed by Canadian income tax law. A portion of the net
operating losses may expire before they can be utilized (see Financial
Statements Note 13 – Income Taxes).
As at December 31, 2007, we had non-refundable tax credits of
$24,000 expiring in 2017. In addition, we had deductible research and
development expenses in the amount of $670,000 with no expiration date, as
compared to $340,000 as of December 31, 2006.
Key items from the Balance Sheet
Increase/
Percentage
2007
2006
(Decrease)
Change
Current Assets
$
1,035,920
$
488,975
$
546,945
112%
Property and Equipment
235,244
161,861
73,383
45%
Current Liabilities
261,485
154,020
107,465
70%
Loan Payable, Shareholder
101,193
86,076
15,117
18%
Long-term debt
-
82,661
(82,661)
100%
Convertible notes
417,634
-
417,634
N/A
18
Current Assets
At December 31, 2007 we had current assets of $1,035,920, as
compared to current assets $488,975 at December 31, 2006. The net increase in
current assets of $546,945 is attributable to increases in cash, accounts
receivable, income taxes, and investment tax credits receivable totaling
$596,416, and a decrease in prepaid expenses in the amount of $49,471. The
increase in accounts receivable is attributable to increased revenues recognized
in the fourth quarter of 2007. The increase in investment tax credits receivable
is attributable to the increased expenses incurred in research and development
in direct relation to the increased development work performed.
Contractual Obligations and Commitments
Excluding trade accounts payable and accrued liabilities, the Company is
committed to the following contractual obligations and commitments.
2008
2009
Operating Lease Obligations
$15,900
$10,800
Interest on Convertible Notes
113,000
85,000
Total
$128,900
$95,800
Liquidity and Capital Resources
At December 31, 2007, we had an accumulated deficit of
$1,918,658, and cash and cash equivalents of $330,967. We also had accounts
receivable of $427,476, of which $70,238 is a sales tax refund which we expect
to receive during the first quarter of 2008.
At December 31, 2007, we had accounts payable and accrued
liabilities in an aggregate amount of $261,485. Of this amount, approximately
$71,651 represents amounts owing to shareholders, and approximately $37,000 was
due for legal fees rendered.
We presently do not have any available credit, bank financing
or other external sources of liquidity. Due to our brief operating history and
startup, our operations have not been a consistent source of liquidity. We have
financed our operating and capital expenditures principally through the sale of
debt and equity securities to accredited and institutional investors. In May
2007, we issued convertible debentures in an aggregate principal amount of $1.5
million, of which $1,395,241 remained outstanding as of December 31, 2007.
Management believes that the Company's existing cash resources will be
sufficient to meet our operating requirements for the first six months of 2008.
We are seeking additional funding through additional equity and debt financings.
However, there can be no assurance that that any additional financing will
become available to us, and if available, on terms acceptable to us. Any
financing, if available, may involve restrictive covenants that impact our
ability to conduct our business. If we are unable to raise additional capital
when required or on acceptable terms, we may have to significantly delay, scale
back or discontinue the development and/or commercialization of one or more of
our product candidates.
Our consolidated financial statements as of December 31, 2007
have been prepared under the assumption that we will continue as a going concern
for the twelve months ending December 31, 2008. The report of our independent
registered public accounting firm accompanying our financial statements includes
an explanatory paragraph referring to our recurring losses from operations and
expressing substantial doubt in our ability to continue as a going concern
without additional capital becoming available. Our ability to continue as a
going concern is dependent upon our ability to obtain additional equity or debt
financing and to generate revenue. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
At December 31, 2007, we had total assets of $1,271,164, and
shareholders' equity of $211,864.
Current Liabilities
At December 31, 2007 we had current liabilities of $261,485,
as compared to current liabilities of $154,020 at December 31, 2006. The net
increase of $107,465 consists of an increase of $60,000 in current loans payable
to our President and Chief Executive Officer, an increase of $46,989 in accounts
payable, approximately $24,502 in currency exchange rate fluctuations on
accounts payable, and a decrease in the long-term debt of $24,026. The long-term
debt was redeemed in connection with the completion of our convertible note
financing in May 2007.
Property and Equipment
At December 31, 2007 we had property and equipment valued at
$235,244, as compared to $161,861 at December 31, 2006. The increase is
attributable to acquisitions of $68,723, $5,712, and $8,526 for laboratory,
office, and computer equipment respectively, with $42,003 allocated to
depreciation, as well as a currency exchange rate fluctuation of $32,425.
19
Long term debt
At December 31, 2007 there was no long term debt as compared
to $82,661 at December 31, 2006. The long term debt was redeemed in connection
with our convertible note financing in May 2007.
May 2007 Convertible Note Financing
On May 22, 2007, we completed the sale of 8% Secured
Convertible Debentures (the "Debentures") in an aggregate principal amount of
approximately $1.5 million (the "Purchase Price") to certain institutional and
accredited investors (the "Investors"), pursuant to a Securities Purchase
Agreement (the "Purchase Agreement"). The Company received net proceeds of
approximately $1.36 million.
Pursuant to the Purchase Agreement, the Company also issued
to the Investors five year warrants to purchase 2,142,857 shares of the
Company's common stock at an exercise price of $1.02 per share (the "Warrants").
The Debentures mature twenty-eight (28) months from the date of issuance (the
"Maturity Date") and are convertible at any time into shares of the Company's
common stock at a fixed conversion price of $.70. The conversion price of the
Debentures and exercise price of the Warrants is subject to adjustment for
certain events, including dividends, distributions or split of the Company's
Common Stock, subsequent equity sales or rights offerings by the Company, or in
the event of the Company's consolidation, merger or reorganization. The
Debentures bear interest at the rate of 8% per annum, which interest is payable
quarterly in cash or, at the Company's option following the effective date of
the registration statement, in shares of common stock equal to the interest
amount divided by the lower of $0.70 or 85% of the Company's 10 day volume
weighted average stock price.
The Company's obligations under the Purchase Agreement and
the Debentures are secured by a lien on substantially all of the assets of the
Company, pursuant to a Security Agreement.
In connection with the Purchase Agreement, the Company also
entered into registration rights agreements (the "Registration Rights
Agreements") providing for the filing of a registration statement (the
"Registration Statement") with the Securities and Exchange Commission
registering the Common Stock issuable upon conversion of the Debentures and
exercise of the Warrants. The Company was obligated to file the Registration
Statement no later than 45 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 90 days after the date of closing (or 120 days in the event of a "full
review" by the Securities and Exchange Commission). The Company met its
obligations under the Registration Rights Agreements by filing the Registration
Statement within the deadline and ensuring it was declared effective by August
23, 2007.
In connection with the private placement, the Company paid
Carter Securities LLC, a NASD registered broker-dealer, placement agent and due
diligence fees of approximately $127,500 and four year warrants allowing him to
purchase 214,286 shares of the Company's common stock at an exercise price of
$0.70 per share. In addition, legal and due diligence expenses of the Investors
were paid to Feldman Weinstein & Smith LLP and Valla LLC for a total of $28,750
while an escrow account fee of $3,500 was paid to the Signature Bank.
Key items from the Statement of Cash Flows
Increase/
Percentage
2007
2006
(Decrease)
Change
Operating Activities
$
(968,659)
$
(489,651)
$
(479,008)
98%
Financing Activities
1,162,806
823,543
339,263
41%
Investing Activities
(82,961)
(97,511)
(14,550)
(15%)
Increase in cash and cash
equivalent
111,186
236,381
(125,195)
(53%)
Cash and cash equivalent -
end of period
330,967
227,578
103,389
45%
Net cash used in operating activities was $968,659 for the
year ended December 31, 2007, as compared to $489,651 in 2006. In 2007, net cash
used in operating activities consisted of an operating loss of $1,100,793, and a
decrease in non-cash operating elements of working capital of $312,065. Non-cash
items included in operating activities totaled $444,199 and included the
following items: depreciation, non-cash payments for investor relation services,
share based compensation expense, interest and expense accretion on the
convertible notes issued in May 2007 and deferred income tax provision. Our
operating activities will continue to consume our available funds until we can
generate increased sales revenues.
Net cash provided by financing activities was $1,162,806 for
the year ended December 31, 2007, as compared to $823,543 in 2006. Of this
amount, $1,500,000 represents proceeds from the sale of convertible debentures
in May 2007, less $229,323 of related transaction costs, and $107,871 paid for
the redemption of the long-term debt. Net Cash provided by financing activities
is expected to increase as the Company is seeking additional financing.
20
Net cash used in investing activities was $82,961 for the
year ended December 31, 2007, as compared to $97,511 in 2006. The net cash of
$82,961 was used to purchase capital assets in 2007. On December 27, 2007, the
company purchased $60,000 in laboratory equipment from Horst Zerbe, our
President and Chief Executive Officer. We expect to purchase additional
equipment on an as needed basis in order to support our development efforts.
Cash and cash equivalents are $330,967 at December 31, 2007,
as compared to $227,578 as of December 31, 2006. The net increase in cash and
cash equivalents was the result of proceeds from the sale of convertible notes
in May 2007, offset by increased spending on research and development
activities.
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER
MATTERS
Our common stock has been quoted on the OTC Bulletin Board
under the symbol "IGXT" since January, 2007. For the quarters indicated, the
following table sets forth the high and low bid prices per share of common
stock. These prices represent inter-dealer quotations without retail markup,
markdown, or commission and may not necessarily represent actual transactions.
Quarter Ended
High ($)
Low ($)
June 30, 2008 (through
    April 18, 2008)
0.93
0.81
March 31, 2008
1.02
0.51
December 31, 2007
1.05
0.45
September 30, 2007
1.90
0.87
June 30, 2007
1.31
0.60
March 31,2007
1.20
0.68
Holders
As of March, 2008, we had approximately 164 active holders of
our common stock. The number of active record holders was determined from the
records of our transfer agent and also includes beneficial owners of common
stock whose shares are held in the names of various security brokers, dealers,
and registered clearing agencies. The transfer agent of our common stock is
StockTrans Inc., 44 W. Lancaster Avenue, Ardmore, Pennsylvania 19003.
Dividend Policy
We have never declared or paid any cash dividends on our
common stock. We currently intend to retain any earnings to support operations
and to finance the growth and development of our business. Therefore, we do not
expect to pay cash dividends in the foreseeable future. Any future determination
relating to our dividend policy will be made at the discretion of our Board of
Directors and will depend on a number of factors, including future earnings,
capital requirements, financial conditions and future prospect and other factors
that the board of directors may deem relevant.
2006 Stock Option Plan
A majority of our shareholders approved the 2006 Option Plan
at the Annual General Meeting held on August 10, 2006. Under the 2006 Stock
Option Plan, up to 1,600,749 shares of common stock may be issued upon the
exercise of options granted to directors, management, employees and consultants.
As of March 24, 2008, 1,376,500 options have been issued and remain outstanding
under the 2006 Option Plan.
21
Equity Compensation Plan Information
Number
    of Securities
Weighted-
Number
    of securities
to be
    issued upon
Average
remaining available
exercise
    of
Exercise
    Price of
for
    future issuance
outstanding options,
outstanding
under
    equity
warrants, and rights
options,
compensation plans
warrants, and
(excluding securities
rights
reflected in the first
Two columns
Equity Compensation Plans Approved by
Security Holders
1,600,749
$0.55
224,249
Equity Compensation Plans Not Approved
by Security Holders
None
None
None
Total
1,600,749
$0.55
224,249
On September 26, 2006 we granted options to
purchase 225,000 shares of common stock to three non-employee directors. These
options have an exercise price of $0.41, vest upon issuance and expire on
September 26, 2016.
On October 1, 2006 we granted options to
purchase up to 69,000 shares of common stock to a consultant. These options have
an exercise price of $0.41, vest upon issuance, and expire on October 1, 2016.
On November 9, 2006 we granted options to
purchase up to 450,000 shares of common stock to the CFO and a management
employee. These options have an exercise price of $0.41, vest upon issuance, and
expire on November 9, 2016.
On November 13, 2006 we granted options to
purchase up to 250,000 shares of common stock to a consultant. These options
have an exercise price of $0.41, vest over two years at the rate of 25% every
six months, and expire on November 13, 2016.
On November 16, 2006 we granted options to
purchase up to 100,000 shares of common stock to employees and 25,000 options to
a consultant. These options have an exercise price of $0.41, vest over 2 years
at the rate of 25% every six months, and expire on November 16, 2016.
On August 9, 2007 we granted options to
purchase up to 107,500 shares of common stock to four non-employee directors.
These options have an exercise price of $1.15, vest upon issuance, and expire on
August 9, 2017.
On August 9, 2007 we granted options to
purchase up to 75,000 shares of common stock to our Vice President of Business
Development. These options have an exercise price of $1.15, vest over 2 years at
the rate of 25% every six months, and expire on August 9, 2017
On August 9, 2007 we granted options to
purchase up to 75,000 shares of common stock to our chief financial officer.
These options have an exercise price of $1.15, vest over 2 years at the rate of
25% every six months, and expire on August 9, 2017
As of March 7, 2008 there are 224,249 options
remaining to be granted under the 2006 Option Plan. None of the options have
been exercised as of March 7, 2008.
SELLING SECURITY HOLDERS
In accordance with a certain Registration
Rights Agreement dated as of March 27, 2008 entered into in connection with the
issuance of the Common Stock and Warrants to the selling security holders, we
have agreed with the selling stockholders to register the Common Stock,
Warrants, Warrant Shares, Placement Agent Common Stock and Placement Agent
Warrant Shares. The selling security holders purchased the Common Stock and
Warrants covering these shares in the March 2008 Private Placement (See
"Description of March 2008 Private Placement of Common Stock and Warrants"). The
warrants have not yet been exercised by the selling security holders.
Paradigm Capital, Inc. ("Paradigm"), a FINRA
member broker-dealer, served as the placement agent in connection with our March
2008 Private Placement. We do not have any arrangement with Paradigm for it to
act as a broker-dealer for the sale of the shares included herein for the
selling stockholders. Paradigm may be deemed to be an underwriter with respect
to its respective sales of shares to be offered by them in this prospectus.
The shares offered by this prospectus may be
offered from time to time by the selling security holders listed in the
following table. Each selling security holder will determine the number of
shares to be sold and the timing of the sales. Our registration of the shares
does not necessarily mean that the selling security holders will sell all or any
of the shares. Because the selling security holders may offer all, some or none
of their shares, no definitive estimate as to the number of shares thereof that
will be held by the selling security holders after such offering can be
provided, and the following table has been prepared on the assumption that all
shares of common stock offered under this prospectus will ultimately be sold.
22
Total Shares
Total
of
Percentage
Percentage
Common
of Common
Shares of
Beneficial
Beneficial
of Common
Stock
Stock,
Common Stock
Ownership
Percentage of
Ownership
Stock Owned
Plus shares
Assuming
Included in
Before the
Common Stock
After the
After
Issuable Upon
Full
Prospectus
Offering (3)
Owned Before
Offering
Offering
Exercise of
Exercise (1)
(2)
Offering (3)
(4)
(4)
Name
Warrants (1)
Scotia Capital ITF
AlphaOne
Offshore Inc.
Toronto (5)
2,858,000
13%
2,858,000
2,009,605
9.99%
--
--
Bershaw & Co.
200262
Toronto (6)
2,286,000
10%
2,286,000
2,009,605
9.99%
--
--
BMO Nesbitt
Burns ITF
A/C 402 20091 22
Toronto (7)
2,298,000
10%
2,298,000
2,009,605
9.99%
--
--
BMO Nesbitt
Burns ITF
A/C 402 20227 29
Toronto (8)
188,000
*
188,000
188,000
*
--
--
BMO Nesbitt
Burns ITF
A/C 402 20266 21
Toronto (9)
372,000
1.0
372,000
372,000
1.0
--
--
Paradigm Capital
Inc.,Toronto (10)
640,160
3.0
640,160
640,160
3.0
--
--
TOTALS
8,642,160
8,642,160
7,228,975
* Less than 1%.
(1) For purposes of this column only, we have included all
shares of common stock owned or beneficially owned by that selling security
holder, and the number of shares of common stock issuable upon exercise of all
warrants owned or beneficially owned by such selling security holder. Those
shares, however, are not deemed outstanding for the purpose of computing the
percentage ownership of any other selling security holder. Each selling security
holder's ownership in this column is based on 20,299,045 shares of our common
stock outstanding as of April 8, 2008.
(2) Represents an aggregate of: (i) 4,001,000 shares of
outstanding common stock (ii) 4,001,000 shares issuable upon the exercise of
warrants with an exercise price of $1.02, subject to adjustment (iii) 320,080
shares of common stock issuable upon the exercise of the Placement Agent
Options, and (iv) 320,080 shares of common stock issuable upon the exercise of
the Placement Agent Warrants, which also have an exercise price of $1.02,
subject to adjustment.
(3) The percentages set forth in this column are based on
20,299,045 shares of common stock outstanding as of April 8, 2008. The number
and percentage of shares beneficially owned is determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any shares as to which the selling security
holder has sole or shared voting power or investment power and also any shares,
which the selling security holder has the right to acquire within 60 days.
However, the selling stockholders have contractually agreed to restrict their
ability to exercise their warrants and receive shares of our common stock such
that the number of shares of common stock held by them in the aggregate and
their affiliates after such exercise does not exceed 9.99% of the then issued
and outstanding shares of common stock as determined in accordance with Section
13(d) of the Exchange Act. Accordingly, this column represents the aggregate
maximum number and percentage of shares that the selling stockholder can own at
one time (and therefore, offer for resale at any one time) due to their 9.99%
limitation.
(4) Assumes that all securities registered will be sold.
(5) Includes 1,429,000 shares of common stock and 1,429,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Alpha One Offshore, Inc. ("Alpha One") is the owner of
the shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Steve Palmer may be deemed a control person of the shares
owned by this selling security holder.
23
(6) Includes 1,143,000 shares of common stock and 1,143,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. AGF Canadian Small Cap Fund ("AGF") is the owner of the
shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Bob Farquharson may be deemed a control person of the
shares owned by this selling security holder. AGF is affiliated with AGF
Securities, Inc., a FINRA member broker-dealer. We do not have any arrangement
with AGF Securities, Inc. for it to act as a broker-dealer for the sale of the
shares included herein for the selling stockholders. This selling stockholder
may be deemed to be an underwriter with respect to sales of shares to be offered
by it in this prospectus.
(7) Includes 1,149,000 shares of common stock and 1,149,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Northern Rivers Capital Management, Inc. ("Northern
Rivers") on behalf of Northern Rivers Innovation Fund LP is the owner of the
shares being registered. In accordance with rule 13d-3 under the Securities
Exchange Act of 1934, Hugh Cleland may be deemed a control person of the shares
owned by this selling security holder.
(8) Includes 94,000 shares of common stock and 94,000 shares
of common stock underlying two-year warrants exercisable at $1.02, subject to
adjustment. Northern Rivers on behalf of Horizons Northern Rivers Fund LP is the
owner of the shares being registered. In accordance with rule 13d-3 under the
Securities Exchange Act of 1934, Hugh Cleland may be deemed a control person of
the shares owned by this selling security holder.
(9) Includes 186,000 shares of common stock and 186,000
shares of common stock underlying two-year warrants exercisable at $1.02,
subject to adjustment. Northern Rivers on behalf of Northern Rivers Innovation
RSP Fund is the owner of the shares being registered. In accordance with rule
13d-3 under the Securities Exchange Act of 1934, Hugh Cleland may be deemed a
control person of the shares owned by this selling security holder.
(10) Includes the following securities issuable upon exercise
of the Placement Agent Options: 320,080 shares of common stock and 320,080
shares of common stock underlying two-year warrants with an exercise price of
$1.02, subject to adjustment. The term of the options is 24 months after the
March 27, 2008 closing date of the March 2008 Private Placement. In accordance
with rule 13d-3 under the Securities Exchange Act of 1934, Tony Pullen may be
deemed a control person of the shares owned by this selling security holder.
Paradigm is a FINRA member broker-dealer. We do not have any arrangement with
Paradigm for it to act as a broker-dealer for the sale of the shares included
herein for the selling stockholders. Paradigm may be deemed to be an underwriter
with respect to its respective sales of shares to be offered by them in this
prospectus. Paradigm served as the placement agent in connection with our March
2008 Private Placement.
Description of March 2008 Private Placement of Common Stock and Warrants
On March 27, 2008, IntelGenx Technologies Corp. completed an
offering of 4,001,000 units of its securities at $0.70 per unit for gross
proceeds of approximately $2.8 million (the "Gross Proceeds") and net proceeds
of approximately $2,538,651 ("the "Offering"). Each unit consists of one share
of the Company's common stock (the "Common Stock") and one two-year warrant to
purchase one share of common stock (the "Warrant Shares") at an initial exercise
price of $1.02 per share, subject to adjustment (the "Warrants").
Paradigm Capital Inc. ("Paradigm") acted as placement agent
for the Offering on a best efforts basis. Paradigm's compensation consists of a
cash commission equal to 7% of the Gross Proceeds and an option to acquire
320,080 units at $0.70 per unit within 24 months of the closing date (the
"Placement Agent Options") (The shares of common stock issuable upon exercise of
the Placement Agent Options shall be referred to as the Placement Agent Common
Stock, the warrants issuable upon exercise of the Placement Agent Options shall
be referred to as the "Placement Agent Warrants", and the shares of common stock
issuable upon exercise of the Placement Agent Warrants shall be referred to as
the "Placement Agent Warrant Shares").
In connection with the Offering, the Company entered into a
registration rights agreement (the "Registration Rights Agreement") providing
for the filing of a registration statement (the "Registration Statement") with
the U.S. Securities and Exchange Commission registering the Common Stock,
Warrant Shares, Warrants, the Placement Agent Common Stock and the Placement
Agent Warrant Shares. The Company is obligated to file the Registration
Statement no later than 30 days from the date of closing and to use its best
efforts to cause the Registration Statement to be declared effective no later
than 120 days after the date of closing.
The exercise price of the Warrants is subject to adjustment
to $0.93 per share if, within four months from the closing date (i) the Common
Stock and shares issuable upon exercise of the Warrants have not listed and
commenced trading on either the Toronto Stock Exchange or the TSX Venture
Exchange and (ii) the Registration Statement has not been declared effective.
The exercise price of the Warrants is also subject to adjustment for certain
events, including dividends, distributions or split of the Company's common
stock, subsequent equity sales or rights offerings by the Company, or in the
event of the Company's consolidation, merger or reorganization.
In addition, the Company is obligated to pay a penalty in an
aggregate amount equal to five percent of the Gross Proceeds if the Common
Stock, Warrant Shares, Placement Agent Common Stock and Placement Agent Warrant
Shares are not listed on the Toronto Stock Exchange or the TSX Venture Exchange
within 60 days from the closing date of the Offering (the "Listing Condition"),
and an additional penalty in an aggregate amount equal to one percent of the
Gross Proceeds for each subsequent calendar month during which the Listing
Condition is not satisfied, subject to a maximum of three months.
In connection with the Offering, each of the Company's
officers and directors have entered into lock-up agreements in favor of Paradigm
pursuant to which they have agreed not to sell or transfer their shares for a
period ending four months and one day after the closing date.
24
The foregoing issuances were exempt from registration under
Section 4(2) of the Act and/or Regulation S, promulgated pursuant to the Act.
None of the purchasers are U.S. persons, no sales efforts were conducted in the
U.S., and the Common Stock and Warrants contain a legend restricting the sale of
such securities in accordance with Regulation S and pursuant to applicable
Canadian securities laws.
Additional Disclosures
Set forth below is certain additional information regarding the Warrants.
Total Dollar Value of Securities
The total dollar value of the common stock and common stock
underlying the warrants that are being registered for resale (using the total
number of shares that we have registered for resale and the market price per
share on the date of sale) are as follows:
Common Stock and Common Stock
Underlying the
Market Price at March 27, 2008
Dollar Value of Underlying
Warrants
(1)
Securities
8,642,160
$0.80
$6,913,728
(1) Fair market value based on the average of the high and low prices
reported on the Over the Counter Bulletin Board on March 27, 2008.
Cash Payments in Connection with the Common Stock and Warrant Offering
Payment
Placement agent and other fees
Reference
Date
Amount
Placement
Paradigm Capital, Inc.
Agent Fee
March 27, 2008
$ 196,049
Legal and
Due
Cassels Brock & Blackwell LLP, Toronto
Diligence
March 27, 2008
$ 66,000
Fees of
Investors
Total
$ 262,049
The Company is obligated to pay a penalty in an aggregate
amount equal to five percent of the gross proceeds from the Offering if the
Common Stock, Warrant Shares, and shares underlying the Placement Agent Option
are not listed on the Toronto Stock Exchange or the TSX Venture Exchange within
60 days from the closing date of the Offering (the "Listing Condition"), and an
additional penalty in an aggregate amount equal to one percent of the Gross
Proceeds for each subsequent calendar month during which the Listing Condition
is not satisfied, subject to a maximum of three months.
Existing Short Positions by Selling Security Holders
Based upon information provided by the selling security
holders, to the best of management's knowledge, the Company is not aware of any
of the selling security holders having an existing short position in the
Company's common stock.
Relationships Between the Company and Selling Security Holders and Affiliates
The Company hereby confirms that a description of the
relationships and arrangements between and among those parties already is
presented in the prospectus and that all agreements between and/or among those
parties are included as exhibits to the registration statement by incorporation
by reference.
25
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding
the executive officers and directors of IntelGenx Technologies Corp. All
officers serve at the pleasure of the Board of Directors. Directors serve until
the election and qualification of their successors.
Name
Age
Position
Since
61
Chairman of the Board, President
Horst G. Zerbe
and Chief Executive
    Officer
April 2006
Gino Di Iorio
40
Chief Financial
    Officer
July 2007
Joel Cohen (1)
36
Director
April 2006
J. Bernard Boudreau
    (1) (2)
63
Director
June 2006
David Coffin-Beach (2)
60
Director
June 2006
Reiza Rayman (1) (2)
44
Director
June 2006
(1) Audit Committee member
(2) Compensation Committee member
Biographies
Horst G. Zerbe, Ph.D.
Dr. Zerbe is our President, Chief Executive Officer and
Chairman of the Board and is a full time employee of the Company. Dr. Zerbe has
more than 20 years experience in the pharmaceutical industry. He has been the
President and Chief Executive Officer of IntelGenx Corp. since 2005; prior
thereto, from 1998 to 2005, he served as the president of Smartrix Technologies
Inc. in Montreal; prior thereto, from 1994 to 1998, he was Vice President of R&D
at LTS Lohmann Therapy Systems in West Caldwell, NJ. He has published numerous
scientific papers in recognized journals and holds over 30 patents.
Gino Di Iorio, CA
Mr. Di Iorio is the Chief Financial Officer of IntelGenx.
From 2006 to 2007, Mr. Di Iorio held the position of CFO at Viropro Inc., a
publicly held development company in the bio-technology industry. From 2005 to
2006 he held the position of Controller at Group Montoni – Division
Construction, a general entrepreneur in the construction industry. Prior to
that, from 2004 to 2005, he held the position of Finance Director at Draft Inc.,
a subsidiary of IPG, a publicly-held American company traded on the New York
Stock Exchange with interests in advertising and public relations. From 1997 to
2003, he held the position of Finance Director at Sitel Canada Inc., a
subsidiary of Sitel Corporation, a publicly-held American company traded on the
New York Stock Exchange with interests in advertising and public relations.
Joel Cohen, CFA
Mr. Cohen has been a director of IntelGenx Technologies Corp.
since April, 2006. Mr. Cohen also served as the consulting Chief Financial
Officer of IntelGenx from April, 2006 until May 23, 2007. Mr. Cohen has
extensive experience in biotechnology and high tech financings and in financial
analysis. From 2002 until 2007, Mr. Cohen was consulting CFO for Osta
Biotechnologies a publicly traded company on the TSX Venture Exchange (the "TSXV").
J. Bernard Boudreau, Sr. Vice President, PharmEng Inc.
Mr. Boudreau has been a director of IntelGenx since June,
2006. Since 2004, he has been the Senior Vice-president of Pharmeng
International Inc., a full-service consulting and contract manufacturing company
that serves the pharmaceutical, biotechnology and medical device industries in
North America and internationally. Pharmeng is a publically traded company on
the Toronto Stock Exchange. Mr. Boudreau served as Government Leader in the
Senate of Canada and Member of the Federal Cabinet between 1999 and 2001.
Reiza Rayman, M.D.
Dr. Rayman has been a director of IntelGenx since June, 2006.
Currently, he is pursuing a PhD in the area of Tele-surgery. From 2000 until
2005, Dr. Rayman served as Principal Investigator, Robotic Tele-surgery and
Hybrid Cardiac Surgery, CSTAR, and Assistant Professor, Department of Surgery,
at the University of Western Ontario. Dr. Rayman is currently completing his PhD
in Medical Biophysics.
26
David Coffin-Beach, Ph.D.
Dr. Coffin-Beach has been a director of IntelGenx since June,
2006. On April 18, 2007, Dr. Coffin-Beach was appointed President and COO of
Synovics Pharmaceuticals Inc. a Fort Lauderdale based pharmaceutical company
specializing in both private label OTC products and niche prescription products.
Prior to this appointment, Dr. Coffin-Beach served as President of ATP
Solutions, a privately held consulting firm which specializes in delivering
strategic, technical, marketing and management services to pharmaceutical
manufacturers and investors. Dr. Coffin-Beach was the founder, former President
and Board Member of TorPharm (1994 - 2004), the U.S. division of Apotex Inc.
Key Personnel and Consultants
James Wittenberg, R.Ph, MS
Mr. Wittenberg serves as IntelGenx's Vice President Business
Development. He has accumulated over 20 years of experience in the
pharmaceutical industry in market research and most recently as Director of
Business Development at Schwarz Pharma.
Ingrid Zerbe
Mrs. Zerbe is our Director of Finance and Administration,
Corporate Secretary and is a full time employee of the Company. Mrs. Zerbe is
the founder of IntelGenx. Mrs. Zerbe served as the president of IntelGenx Corp.
since its incorporation until December, 2005. She also serves as a director of
IntelGenx Corp. since 2003 and was a director of Intelgenx Technologies Corp.
from April 2006 to August 2006. Prior to founding IntelGenx, she worked in the
travel industry. Horst Zerbe and Ingrid Zerbe are husband and wife.
Nadine Paiement, MSc
Ms. Paiement serves as IntelGenx's Director of Research and
Development. She holds a Master of Science degree in Polymer Chemistry from
Sherbrooke University, and is co-inventor of IntelGenx's Tri-Layer technology.
Prior to joining IntelGenx in 2005 she worked for five years as a formulation
scientist at Smartrix Technologies, Inc.
CORPORATE GOVERNANCE
Board of Directors and Committees
Our board of directors held four meetings in 2007.
Audit Committee
Our audit committee assists our board of directors in
fulfilling its responsibilities for oversight and supervision of financial and
accounting matters. The chairman of the audit committee is J. Bernard Boudreau.
Joel Cohen serves as our audit committee financial expert. Our audit committee's
responsibilities include, among others (i) recommending to the board of
directors the engagement of the external auditor and the terms of the external
auditor's engagement; (ii) overseeing the work of the external auditor,
including dispute resolution between management and the external auditor, if
required; (iii) pre-approving all non-audit service to be provided to us by our
external auditor; (iv) reviewing our financial statements, management's
discussion and analysis and annual and interim earnings press releases before
this information is publicly disclosed; (v) assessing the adequacy of procedures
for our public disclosure of financial information; (vi) establishing procedures
to deal with complaints received by us relating to our accounting and auditing
matters; and (vii) reviewing our hiring policies regarding employees of our
external auditor or former auditor. We have adopted, along with our audit
committee, a written charter of the audit committee setting out the mandate and
responsibilities of the audit committee which provides that the audit committee
convene no less than four times per year.
Compensation Committee
Our compensation committee reviews and makes recommendations
to our board of directors concerning the compensation of our executive officers
and key employees which include the review of our executive compensation and
other human resource policies, the review and administration of any bonuses and
stock options and major changes to our benefit plans and the review of and
recommendations regarding the performance of the Chief Executive Officer of the
Company. Our compensation committee is comprised of non-management members of
our board of directors and is required to convene at least annually. The
chairman of our compensation committee is David Coffin-Beach.
Director Independence
We cannot guarantee that our Board of Directors will always
have a majority of independent directors. In the absence of a majority of
independent directors, our executive officer, who is also a principal
stockholder and director, could establish policies and enter into transactions
without independent review and approval thereof. This could present the
potential for a conflict of interest between the Company and its stockholders
generally and the controlling officers, stockholders or directors.
27
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to our directors and officers, including our principal executive
officer, principal financial officer and principal accounting officer. The Code
of Business Conduct and Ethics is posted on our website at http://www.intelgenx.com.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to
ownership of the Company's securities by its officers and directors and by any
person (including any "group") who is the beneficial owner of more than 5% of
the Company's common stock.
In computing the number of shares beneficially owned by each
security holder and the percentage of ownership of that security holder, we have
included all shares of common stock owned or beneficially owned by that security
holder, and the number of shares of common stock issuable upon exercise of all
warrants owned or beneficially owned by such security holder. Those shares,
however, are not deemed outstanding for the purpose of computing the percentage
ownership of any other security holder. Each security holder's percentage of
ownership in the following table is based on 20,299,045 shares of our common
stock outstanding as of April 8, 2008.
Unless otherwise indicated, the address for each beneficial
owner is c/o IntelGenx Technologies Corp., 425 Abrams, Ville St- Laurent,
Quebec, H4S 1X9.
Name and Address
Amount
    and Nature of
Percent
    of
Of Owner
Beneficial Ownership
Class
Horst G. Zerbe
(1)
4,934,643.5
(1)
24.3%
Ingrid Zerbe
(2)
4,934,643.5
(2)
24.3%
Joel Cohen
(3)
1,846,713
(3)
9.1%
Bernard Boudreau
(4)
107,500
(4)
*
David Coffin-Beach
(5)
153,191
(5)
*
Reiza Rayman
(6)
153,191
(6)
*
Gino Di Iorio
(7)
18,750
(7)
*
All directors and officers as a group
    (7 persons)
12,148,632
59.9%
AlphaOne Offshore Inc.
Ugland House
2,009,605
(8)
9.99%
South Church St.
George Town, Grand
    Cayman
AGF Canadian Small Cap
    Fund
TD Bank Tower, 31
st
Floor
2,009,605
(9)
9.99%
Toronto ON M5K 1E9
Northern Rivers Capital Management
    Inc.
Royal Bank Plaza
North Tower, Suite
    2000
2,009,605
(10)
9.99%
200 Bay Street, P.O.
    Box 66
Toronto ON M5J 2J2
* Less than 1%.
(1) In connection with the acquisition of IntelGenx in 2006,
Horst Zerbe became our President, Chief Executive Officer and Director and
acquired 4,709,643.5 exchangeable shares of our Canadian holding corporation
6544631Canada Inc., a Canadian special purpose corporation which wholly owns
IntelGenx Corp. (the "Exchangeable Shares"). The 4,709,643.5 Exchangeable Shares
are exchangeable, on a one for one basis, into shares of common stock of
IntelGenx Technologies Corp. at Horst Zerbe's discretion. Prior to exchanging
the Exchangeable Shares for shares of common stock, Horst Zerbe has the right to
vote 4,709,643.5 shares of common stock which are currently held in trust on
behalf of Horst Zerbe. The 4,709,643.5 shares of common stock have not been
registered for resale at this time. In addition to the Exchangeable Shares,
Horst Zerbe's beneficial ownership includes 225,000 shares of common stock
underlying options granted November 9, 2006, which are currently exercisable.
The options have an exercise price of $0.41. Horst Zerbe and Ingrid Zerbe are
husband and wife.
(2) In connection with the acquisition of IntelGenx in 2006,
Ingrid Zerbe became our Secretary and our director of Finance and Administration
and acquired 4,709,643.5 Exchangeable Shares. The 4,709,643.5 Exchangeable
Shares are exchangeable, on a one for one basis, into shares of common stock of
IntelGenx Technologies Corp. at Ingrid Zerbe's discretion. Prior to exchanging
the Exchangeable Shares, Ingrid Zerbe has the right to vote 4,709,643.5 shares
of common stock which are currently held in trust on behalf of Ingrid Zerbe. The
4,709,643.5 shares of common stock have not been registered for resale at this
time. In addition to the Exchangeable Shares, Ingrid Zerbe's beneficial
ownership includes 225,000 shares of common stock underlying options granted
November 9, 2006, which are currently exercisable. The options have an exercise
price of $0.41. Horst Zerbe and Ingrid Zerbe are husband and wife.
28
(3) In connection with the acquisition of IntelGenx in 2006,
Joel Cohen became a Director and acquired 1,571,713 Exchangeable Shares. The
1,571,713 Exchangeable Shares are exchangeable, on a one for one basis, into
shares of common stock of IntelGenx Technologies Corp. at Joel Cohen's
discretion. Prior to exchanging the Exchangeable Shares for shares of common
stock, Joel Cohen has the right to vote 1,571,713 shares of common stock which
are currently held in trust on behalf of Joel Cohen. The 1,571,713 shares of
common stock have not been registered for resale at this time. In addition to
the Exchangeable Shares, Mr. Cohen's beneficial ownership includes 250,000
exercisable options to purchase common stock at an exercise price of $0.41
granted on November 13, 2006 and 25,000 exercisable options to purchase common
stock at an exercise price of $1.15, granted on August 9, 2007.
(4) Mr. Boudreau's beneficial ownership consists of 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October 2006, and 32,500 exercisable options to purchase common stock
at an exercise price of $1.15, granted on August 9, 2007.
(5) Dr. Coffin-Beach's beneficial ownership includes 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October, 2006, 25,000 exercisable options to purchase common stock at
an exercise price of $1.15, granted on August 9, 2007, and 53,191 shares of
common stock.
(6) Dr. Rayman's beneficial ownership includes 75,000
exercisable options to purchase common stock at an exercise price of $0.41,
granted in October of 2006, 25,000 exercisable options to purchase common stock
at an exercise price of $1.15, granted on August 9, 2007, and 53,191 shares of
common stock.
(7) Mr. Di Iorio's beneficial ownership includes 75,000
options to purchase common stock at an exercise price of $1.15, granted on
August 9, 2007, vesting over 2 years, 25% every 6 months.
(8) Alpha One is the beneficial owner of an aggregate of
1,429,000 shares of common stock and 1,429,000 shares of common stock underlying
two-year warrants exercisable at $1.02, subject to adjustment. However, Alpha
One has contractually agreed to restrict its ability to exercise the warrants
and receive shares of our common stock such that the number of shares of common
stock held by them in the aggregate and their affiliates after such exercise
does not exceed 9.99% of the then issued and outstanding shares of common stock
as determined in accordance with Section 13(d) of the Exchange Act. Accordingly,
this column represents the aggregate maximum number and percentage of shares
that Alpha One can own at one time due to the 9.99% limitation.
(9) AGF is the beneficial owner of an aggregate of 1,143,000
shares of common stock and 1,143,000 shares of common stock underlying two-year
warrants exercisable at $1.02, subject to adjustment. However, AGF has
contractually agreed to restrict its ability to exercise the warrants and
receive shares of our common stock such that the number of shares of common
stock held by them in the aggregate and their affiliates after such exercise
does not exceed 9.99% of the then issued and outstanding shares of common stock
as determined in accordance with Section 13(d) of the Exchange Act. Accordingly,
this column represents the aggregate maximum number and percentage of shares
that AGF can own at one time due to the 9.99% limitation.
(10) Northern Rivers is the beneficial owner of an aggregate
of 1,429,000 shares of common stock and 1,429,000 shares of common stock
underlying two-year warrants exercisable at $1.02, subject to adjustment.
However, Northern Rivers has contractually agreed to restrict its ability to
exercise the warrants and receive shares of our common stock such that the
number of shares of common stock held by them in the aggregate and their
affiliates after such exercise does not exceed 9.99% of the then issued and
outstanding shares of common stock as determined in accordance with Section
13(d) of the Exchange Act. Accordingly, this column represents the aggregate
maximum number and percentage of shares that Northern Rivers can own at one time
due to the 9.99% limitation.
EXECUTIVE COMPENSATION
The following table provides a summary of the compensation
paid to date during the last three completed fiscal years to the President and
Chief Executive Officer and the Chief Financial Officer. No other officers of
the Company qualify as "named executive officers", which category includes the
Chief Executive Officer and the next two highest paid executive officers whose
salary and bonus exceeds $100,000 in the most recent year ("Named Executive
Officers").
29
Name and
Option
All Other
principal
Awards
Compensation
position
Year
Salary ($)
($)
($)
Total ($)
(a)
(b)
(c)
(f)
(i)
(j)
Horst Zerbe,
President and
2007
176,536
Nil
Nil
176,536
CEO
2006
139,053
69,680
Nil
208,733
2005
8,174
Nil
10,978
19,152
Gino Di Iorio,
CFO
(1)
2007
46,235
Nil
Nil
46,235
Footnotes:
(1) Mr. Di Iorio joined the Company in August, 2007.
Employment Agreements
Horst Zerbe.
Effective December 1, 2005, we entered into an employment agreement with Dr.
Horst Zerbe, our President and Chief Executive Officer. The agreement is for an
indefinite period of time. Under the agreement, Dr. Zerbe is entitled to
receive: (1) a minimum base salary of CAN$175,000 (US$176,536 at year end 2007)
per year; and (2) an annual bonus equal to 50% of base salary upon the
performance of certain milestones set out by the board of directors.
Gino Di Iorio
. Effective August 6, 2007, we entered
into an employment agreement with Mr. Gino Di Iorio, to serve as Chief Financial
Officer. Under the agreement, Mr. Di Iorio is entitled to receive: (1) a minimum
base salary of CAN$110,000 (US$110,965 at year-end 2007) per year, and (2)
options grants under the 2006 Stock Option Plan.
The following table presents information regarding the
outstanding equity awards held by each of the named officers as of December 31,
2007, including the vesting dates for the portions of these awards that had not
vested as of that date.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Number of
Number of
Securities
Securities
Equity Incentive Plan
Underlying
Underlying
Awards: Number of
Unexercised
Unexercised
Securities Underlying
Option
Options
Options
Unexercised
Exercise
Option
(#)
(#)
Unearned Options
Price
Expiration
Name
Exercisable
Unexercisable
(#)
($)
Date
(a)
(b)
(c)
(d)
(e)
(f)
Horst Zerbe
225,000
0.41
Nov. 9, 2016
Gino Di Iorio
Nil
75,000
1
Nil
1.15
Aug. 9, 2017
1 On August 9, 2007, 75,000 options were granted to Mr.
Di Iorio in connection with his employment agreement. The options vest over two
years, none of which are exercisable as of year-end 2007.
30
Summary of Directors' Compensation
At present, members of our board of directors do not receive
cash compensation for their services, including attending meetings of the board
of directors or other committee meetings. Our directors do not have service
contracts. However, our directors are entitled to receive stock options in
amounts determined by the board of directors on an annual basis. All directors
are reimbursed for reasonable expenses incurred by them in their capacity as
directors, including travel and other out-of-pocket expenses incurred in
connection with meetings of the board of directors or any committee of the board
of directors.
DIRECTOR COMPENSATION
Fees
Non-
Earned
Non-Equity
Qualified
or
Incentive
Deferred
All
Paid in
Stock
Plan
Compensation
Other
Cash
Awards
Option
Compensation
Earnings
Compensation
Name
($)
($)
Awards ($)
($)
($)
($)
Total ($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(j)
Joel
Cohen
Nil
Nil
17,845
1
Nil
Nil
Nil
17,845
Bernard
Boudreau
Nil
Nil
23,198
2
Nil
Nil
Nil
23,198
David
Coffin-
Nil
Nil
17,845
3
Nil
Nil
Nil
17,845
Beach
Reiza
Rayman
Nil
Nil
17,845
4
Nil
Nil
Nil
17,845
Footnotes:
1 Represents 25,000 options issued on August 9, 2007.
2 Represents 32,500 options issued on August 9, 2007.
3
Represents 25,000 options issued on August 9, 2007.
4
Represents 25,000 options issued on August 9, 2007.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS
Review, Approval or Ratification of Transactions with Related Persons
Although IntelGenx has not adopted formal procedures for the
review, approval or ratification of transactions with related persons, we adhere
to a general policy that such transactions should only be entered into if they
are on terms that, on the whole, are no more favorable, or no less favorable,
than those available from unaffiliated third parties and their approval is in
accordance with applicable law. Such transactions require the approval of our
board of directors.
On May 23, 2007, Taylor Hutchison, who served as our Chief
Financial Officer from May 23, 2007 until July 16, 2007, purchased debentures in
a principal amount of $25,000 and warrants to purchase 35,714 shares of the
Company's common stock at an exercise price of $1.02 subject to a Purchase
Agreement between IntelGenx and certain institutional and accredited investors.
Between February and May of 2007, David Coffin-Beach, one of
our directors, received fees of approximately $18,700 for consulting work
performed for IntelGenx in connection with our May 2007 Private Placement.
During the year ended December 31, 2007, $5,636 of interest
was paid to Ingrid Zerbe, our secretary and director of finance and
administration for interest on a long-term shareholder loan. The loan is
unsecured, bears interest at 6% per annum and is not repayable prior to January
1, 2009. The amount outstanding at December 31, 2007, was $101,193. Ingrid Zerbe
was also paid $18,606 under an equipment lease for the year ended 2007 with a
comparable amount of $17,850 in 2006.
31
On August 9, 2007, our non-employee directors Joel Cohen,
David Coffin-Beach, and Reiza Rayman were each granted 25,000 options to
purchase common stock. Bernard Boudreau, a non-employee director, was granted
32,500 options to purchase common stock. The related charge in 2007 for the
total of 107,500 in options grants was $76,733.
On the same date, Gino Di Iorio, our CFO, was granted 75,000 options to
purchase common shares. The related charge for 2007 was $10,609.
On December 27, 2007, the Company purchased from Horst Zerbe, our President
and CEO, $60,000 in laboratory equipment.
PLAN OF DISTRIBUTION
Each selling security holder of the common stock and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of the shares of common stock offered by this prospectus on any
stock exchange or automated interdealer quotation system on which the common
stock is listed or quoted at the time of sale, in the over-the-counter market,
in privately negotiated transactions or otherwise, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices or at prices otherwise negotiated. A selling security
holder may use any one or more of the following methods when selling shares:
ordinary brokerage
  transactions and transactions in which the broker-dealer solicits purchasers;
block trades in
  which the broker-dealer will attempt to sell the shares as agent but may
  position and resell a portion of the block as principal to facilitate the
  transaction;
purchases by a
  broker-dealer as principal and resale by the broker-dealer for its account;
an exchange
  distribution in accordance with the rules of the applicable exchange;
privately
  negotiated transactions;
settlement of
  short sales entered into after the effective date of the registration
  statement of which this prospectus is a part;
broker-dealers may
  agree with the selling security holders to sell a specified number of such
  shares at a stipulated price per share;
through the writing
  or settlement of options or other hedging transactions, whether through an
  options exchange or otherwise;
a combination of
  any such methods of sale; or
any other method
  permitted pursuant to applicable law.
The selling security holders may also sell shares under Rule
144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may
arrange for other broker dealers to participate in sales. Broker-dealers may
receive commissions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
A selling stockholder may from time to time pledge or grant a
security interest in some or all of the shares or common stock owned by him and,
if the selling stockholder defaults in the performance of the secured
obligations, the pledgees or secured parties may offer and sell the shares of
common stock from time to time under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus.
In connection with the sale of our common stock or interests
therein, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions which may in turn engage in short
sales of our common stock in the course of hedging the positions they assume.
The selling stockholders may, after the date of this prospectus, also sell
shares of our common stock short and deliver these securities to close out their
short positions, or loan or pledge their common stock to broker-dealers that in
turn may sell these securities. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The selling stockholders and any broker-dealers or agents
that are involved in selling the shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Because the selling stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act, they will be subject to
the prospectus delivery requirements of the Securities Act. Federal securities
laws, including Regulation M, may restrict the timing of purchases and sales of
our common stock by the selling stockholders and any other persons who are
involved in the distribution of the shares of common stock pursuant to this
prospectus.
32
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the shares by the selling security holders.
The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
DESCRIPTION OF SECURITIES
We have an authorized capital of 100,000,000 shares of common
stock, par value $0.00001 per share, and 20,000,000 shares of preferred stock,
par value $0.00001 per share. As of April 18, 2008, 20,299,045 shares of common
stock were outstanding, held of record by approximately 244 holders.
Common Stock
The holders of common stock are entitled to one vote per
share on all matters voted on by stockholders, including the election of
directors. Except as otherwise required by law, the holders of common stock
exclusively possess all voting power. The holders of common stock are entitled
to dividends as may be declared from time to time by the Board from funds
available for distribution to holders. No holder of common stock has any
preemptive right to subscribe to any securities of ours of any kind or class or
any cumulative voting rights. The outstanding shares of common stock are, and
the shares, upon issuance and sale as contemplated will be, duly authorized,
validly issued, fully paid and non assessable.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which we
are a party or to which any of our property is subject and to the best of our
knowledge, no such actions against us are contemplated or threatened.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon by
Hodgson Russ LLP.
EXPERTS
The consolidated financial statements of IntelGenx
Technologies Corp. as of and for the years ended December 31, 2007 and 2006
included herein, have been audited by RSM Richter LLP, independent registered
public accountants, as indicated in their reports with respect thereto, and are
in reliance upon the authority of said firm as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act" or "Securities Act") may be permitted to
directors, officers or persons controlling our Company pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports and other information with the Securities and
Exchange Commission. We have also filed a registration statement on Form S-1,
including exhibits, with the SEC with respect to the shares being offered in
this offering. This prospectus is part of the registration statement, but it
does not contain all of the information included in the registration statement
or exhibits. For further information with respect to us and our common stock, we
refer you to the registration statement and to the exhibits and schedules to the
registration statement. Statements contained in this Prospectus as to the
contents of any contract or any other document referred to are not necessarily
complete, and in each instance, we refer you to the copy of the contract or
other document filed as an exhibit to the registration statement. Each of these
statements is qualified in all respects by this reference. You may inspect a
copy of the registration statement without charge at the SEC's principal office
in Washington, D.C., and copies of all or any part of the registration statement
may be obtained from the Public Reference Section of the SEC, 100 F. St. NE,
Washington, D.C. 20549, upon payment of fees prescribed by the SEC. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC. The address of the Web site is http://www.sec.gov. The SEC's toll
free investor information service can be reached at 1-800-SEC-0330.
33
FINANCIAL STATEMENTS
The financial statements for the fiscal years ending December 31, 2007 and
2006 are set forth on pages F-1 through F-25.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE
PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF
THE DATE OF THIS PROSPECTUS REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS, OR OF ANY SALE OF OUR COMMON STOCK.
IntelGenx Technologies Corp.
8,642,160 Shares of
Common Stock
PROSPECTUS
__________________, 2008
34
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Registrant are as follows. All amounts, other
than the SEC registration fee, are estimates.
Amount
    to
Be Paid
SEC registration fee
$
305.67
Legal fees and
    expenses
$
15,000.00
Accounting fees and
    expenses
$
5,000.00
Miscellaneous
$
1,000.00
Total
$
21,305.67
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our articles of incorporation provide that none of our
directors will be personally liable to the Company or any of our shareholders
for monetary damages arising from the director's breach of fiduciary duty as a
director, with certain limited exceptions.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following issuance of shares were exempt from
registration under section 4(2) of the Securities Act, Regulation D and/or
Regulation S promulgated there under:
On April 28, 2006 our Canadian subsidiary, IntelGenx,
completed a private placement to certain accredited investors and issued
3,191,489 of its common shares for cash consideration of $1,341,750. Those
shares where than exchanged into 3,191,489 shares of our common stock as part of
the IntelGenx Acquisition (see Item 1 – Description of Business – The IntelGenx
Acquisition). After deduction of costs related to the IntelGenx Acquisition, the
net proceeds from this private placement were $792,421.
On April 28, 2006 our special purpose Canadian subsidiary
completed the acquisition of 10,991,000 common shares of IntelGenx, pursuant to
the Share Exchange Agreement and other agreements. Under the Share Exchange
Agreement, Exchangeco acquired all of the issued and outstanding common shares
of IntelGenx in exchange for 10,991,000 Class A Special Shares of Exchangeco,
where each Class A Special Share of Exchangeco is exchangeable into one share of
our common stock.
We also acquired 100,000 common share purchase warrants of
IntelGenx pursuant to a securities purchase agreement which we entered into with
Patrick J. Caruso, in exchange for warrants exercisable for 100,000 shares of
our common stock. Additionally, we entered into a business consultancy agreement
with Mr. Caruso pursuant to which we issued to Mr. Caruso 325,000 shares of
common stock as a non-refundable retainer, and in full payment of investor
relations services to be rendered by Mr. Caruso under the agreement.
We also issued warrants to purchase 90,691 shares of common
stock at $0.41 per share for services rendered in connection with the IntelGenx
Acquisition in April 2006. The issuance of the warrants was not registered
under the Securities Act.
On May 22, 2007, we completed the sale of 8% Secured
Convertible Debentures in an aggregate principal amount of approximately $1.5
million to certain institutional and accredited investors, pursuant to a
Securities Purchase Agreement. The Company received net proceeds of
approximately $1.36 million.
Between August 28, 2007 and November 26, 2007, we issued
149,657 of our common stock upon conversion of an aggregate principal amount of
$104,759 of 8% Secured Convertible Debentures issued in May 2007.
On March 27, 2008, we completed an offering of 4,001,000
units of its securities at $0.70 per unit for gross proceeds of approximately
$2.8 million. Each unit consists of one share of the Company's common stock and
one two-year warrant to purchase one share of common stock at an initial
exercise price of $1.02 per share, subject to adjustment.
35
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
2.1
Share exchange
    agreement dated April 10, 2006, incorporated by reference to the Form 8-K/A
    filed on April 28, 2006
3.1
Articles of
    incorporation (incorporated by reference to the Form SB-2 (File No.
    333-90149) filed on November 16, 1999)
3.2
By-Laws (incorporated
    by reference to the Form SB-2 (File No. 333-91049) filed on November 16,
    1999)
3.3
Amendment to the
    Articles of Incorporation (incorporated by reference to amendment No. 2 to
    Form SB-2 (File No. 333-135591) filed on August 28, 2006)
4.1
Warrants dated March
    16, 2006 issued to Patrick J. Caruso (incorporated by reference to the Form
    SB-2 (File No. 333-135591), filed on July 3, 2006)
5.1
Legal Opinion (To be
    filed by amendment)
9.1
Voting Trust agreement
    (incorporated by reference to the Form 8-K/A filed on April 28, 2006)
10.1
Horst Zerbe employment
    agreement (incorporated by reference to the Form SB-2 (File No. 333-135591)
    filed on July 3, 2006)
10.2
Joel Cohen consulting
    agreement (incorporated by reference to the Form SB-2 (File No. No.
    333-135591) filed on July 3, 2006)
10.3
Ingrid Zerbe
    employment agreement (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)
10.4
Registration rights
    agreement, incorporated by reference to the Form SB-2 (File No. 333-135591)
    filed on July 3, 2006)
10.5
Principal's
    registration rights agreement (incorporated by reference to the Form SB-2
    (File No. 333-135591) filed on July 3, 2006)
10.6
Investor relations
    consulting agreement (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006).
10.7
2006 Stock Option Plan
    (incorporated by reference to the Form S-8 filed on November 21, 2006)
10.8
Form of Securities
    Purchase Agreement (incorporated by reference to the Form 8-K filed on May
    23, 2007)
10.9
Form of 8% Secured
    Convertible Debenture (incorporated by reference to the Form 8-K filed on
    May 23, 2007)
10.10
Form of Registration
    Rights Agreement (incorporated by reference to the Form 8-K filed on May 23,
    2007)
10.11
Form of Warrant
    (incorporated by reference to the Form 8-K filed on May 23, 2007)
10.12
Form of Security
    Agreement (incorporated by reference to the Form 8-K filed on May 23, 2007)
10.13
Subsidiary Guarantee
    (incorporated by reference to the Form 8-K filed on May 23, 2007)
10.14
Deed of Hypothec
    (incorporated by reference to the Form 8-K filed on May 23, 2007)
10.15
Agency Agreement
    (incorporated by reference to the Form 8-K filed on March 28, 2008)
10.16
Form of Subscription
    Agreement (incorporated by reference to the Form 8-K filed on March 28,
    2008)
10.17
Form of Amending
    Letter to Subscription Agreement (incorporated by reference to the Form 8-K
    filed on March 28, 2008)
10.18
Form of Registration
    Rights Agreement (incorporated by reference to the Form 8-K filed on March
    28, 2008)
10.19
Form of Warrant
    (incorporated by reference to the Form 8-K filed on March 28, 2008)
10.20
Form of Lock up
    Agreement (incorporated by reference to the Form 8-K filed on March 28,
    2008)
10.21
Broker's Warrant *
14
Code of Ethics *
16.1
Letter on change in
    certifying accountant (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)
21.1
Subsidiaries of the
    small business issuer (incorporated by reference to the Form SB-2 (File No.
    333-135591) filed on July 3, 2006)
23.1
Consent of RSM Richter
    LLP
23.2
Legal Opinion (see
    Exhibit 5.1)
* Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide
certificates in such denominations and registered in such names as required by
the purchasers to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
36
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial
bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) Not applicable.
(5) That for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
(ii) Each prospectus filed pursuant to Rule 424(b) as part of
this registration statement, shall be deemed to be part of and included in this
registration statement as of the date it is first used after effectiveness;
provided, however, that no statement made in this registration statement or
prospectus that is part of this registration statement or made in a document
incorporated or deemed incorporated by reference into this registration
statement or prospectus that is part of this registration statement will, as to
a purchaser with a time of contract of sale prior to such first use, supersede
or modify any statement that was made in this registration statement or
prospectus that was part of this registration statement or made in any such
document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities:
The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser: (i) Any preliminary prospectus of the
undersigned registrant relating to the offering required to be filed pursuant to
Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used or referred to by
the undersigned registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned
registrant; and
(iv) Any other communication that is an offer in the offering
made by the undersigned registrant to the purchaser.
37
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Horst Zerbe his or her true and lawful attorney in fact and agent, with
full power of substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any or all amendments
(including post effective amendments) to the Registration Statement, and to sign
any registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, and all post effective amendments thereto,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, each acting alone, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the undersigned
on April 28, 2008.
INTELGENX
      TECHNOLOGIES CORP.
By:
/s/ Horst G.
      Zerbe
Name: Horst G. Zerbe
Title: Chief
      Executive Officer and President (Principal Executive
Officer)
By:
/s/ Gino Di
      Iorio
Name: Gino Di Iorio
Title: Chief
      Financial Officer, (Principal Accounting and Financial
Officer)
By:
/s/ Horst G.
    Zerbe
April 28, 2008
Name: Horst G. Zerbe
Title: Director, Chief
    Executive Officer and President
By: /s/
Gino Di
    Iorio
April 28, 2008
Name: Gino Di Iorio
Title: Chief Financial
    Officer (Principal Accounting and
Financial Officer)
By
:/s/ Joel Cohen
April 28, 2008
Name: Joel Cohen
Title: Director
By: /s/
Bernard
    Boudreau
April 28, 2008
Name: Bernard Boudreau
Title: Director
By: /s/
David
    Coffin-Beach
April 28, 2008
Name: David
    Coffin-Beach
Title: Director
By: /s/
Reiza
    Rayman
April 28, 2008
Name: Reiza Rayman
Title: Director
38
IntelGenx Technologies Corp.
Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
RSM Richter LLP
Chartered Accountants
Montreal
RSM Richter LLP is an independent member firm of RSM International,
an affiliation of independent accounting and consulting firms.
IntelGenx Technologies Corp.
Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
Contents
Report of Independent
    Registered Public Accounting Firm
F-1
Balance Sheet
F-2
Statement of Shareholders'
    Equity
F-3 - F-4
Statement of Operations and Comprehensive
    Loss
F-5
Statement of Cash Flows
F-6
Notes to Financial Statements
F-7 - F-25
RSM Richter S.E.N.C.R.L.
Comptables agréés
Chartered Accountants
2, Place Alexis Nihon
Montréal, (Québec) H3Z 3C2
Téléphone / Telephone : (514)
    934-3400
Télécopieur / Facsimile : (514)
    934-3408
www.rsmrichter.com
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
IntelGenx Technologies Corp.
We have audited the accompanying consolidated balance sheets
of IntelGenx Technologies Corp. as at December 31, 2007 and 2006 and the related
consolidated statements of operations and comprehensive loss, shareholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform an audit to obtain reasonable assurance whether
the financial statements are free of material misstatement. We were not engaged
to perform an audit of the Company's internal control over financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, these consolidated financial statements
present fairly in all material respects, the financial position of the Company
as at December 31, 2007 and 2006 and the results of its operations,
comprehensive loss, and its cash flows for the years then ended in accordance
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As described in note
2 to the financial statements, the Company has experienced operating losses and
requires significant capital to finance operations and repay existing
indebtedness. This raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in note 2. The financial statements do not include any adjustments that may
result from the outcome of this uncertainty.
We were not engaged to examine management's assertion about
the effectiveness of the Company's internal control over financial reporting as
at December 31, 2007 included in the accompanying 10 – KSB filing and,
accordingly, we do not express an opinion thereon.
Signed: RSM Richter LLP
Chartered Accountants
Montreal, Quebec
March 28, 2008
F-1
IntelGenx Technologies Corp.
Consolidated Balance Sheet As
At December 31, 2007 and 2006
(Expressed in U.S. Funds)
2007
2006
Assets
Current
Cash and cash equivalent
$
330,967
$
227,578
Accounts receivable
427,476
135,223
Income taxes recoverable
11,028
9,380
Prepaid expenses
23,443
72,914
Investment tax credits receivable
243,006
43,880
1,035,920
488,975
Property
    and Equipment
(note 6)
235,244
161,861
$
1,271,164
$
650,836
Liabilities
Current
Accounts payable and accrued liabilities (note
    7)
261,485
129,994
Current maturity of long-term debt
-
24,026
261,485
154,020
Long-Term
    Debt
-
82,661
Loan Payable, Shareholder
(note 8)
101,193
86,076
Convertible
    Notes,
less unamortized discount and deferred charges
of
    $1,082,366
(note
9)
417,634
-
Deferred Income Tax Liability
278,988
-
Commitment
(note 10)
Shareholders' Equity
Capital Stock
(note 11)
162
160
Additional Paid-In
    Capital
(note 12)
2,071,818
1,165,403
Accumulated Other Comprehensive Income (Loss)
58,542
(19,619)
Accumulated Deficit
(1,918,658)
(817,865)
211,864
328,079
$
1,271,164
$
650,836
See accompanying notes
Approved on Behalf of the Board
_________________________, Director
_________________________, Director
F-2
IntelGenx Technologies Corp.
Consolidated Statement of Shareholders' Equity
For the Year Ended December 31, 2006
(Expressed in U.S. Funds)
Accumulated
Additional
Other
Total
Capital Stock
Paid-In
Comprehensive
Accumulated
Shareholders'
Number
Amount
Capital
Income (Loss)
Deficit
Equity
Balance - December 31, 2005
10,000
$
77
$
-
$
4,825
$
(36,729)
$
(31,827)
March 9, 2006 - recall and cancellation of
    issued
(10,000)
(77)
-
-
-
(77)
shares
March 9, 2006 - issue of
    common shares
10,991,000
110
(33)
-
-
77
April 28, 2006 - issue of common shares
3,191,489
32
792,389
-
-
792,421
April 28, 2006 - asset
    acquired
1,825,000
18
133,232
-
-
133,250
Foreign currency translation adjustment
-
-
-
(24,444)
-
(24,444)
Warrants issued
-
-
37,699
-
-
37,699
Stock options issued
-
-
212,778
-
-
212,778
Compensation expense
    related to services not yet
rendered
-
-
(10,662)
-
-
(10,662)
Net loss
-
-
-
-
(781,136)
(781,136)
Balance - December 31, 2006
16,007,489
$
160
$
1,165,403
$
(19,619)
$
(817,865)
$
328,079
See accompanying notes
F-3
IntelGenx Technologies Corp.
Consolidated Statement of Shareholders' Equity
For the Year Ended December 31, 2007
(Expressed in U.S. Funds)
Accumulated
Additional
Other
Total
Capital Stock
Paid-In
Comprehensive
Accumulated
Shareholders'
Number
Amount
Capital
Income(Loss)
Deficit
Equity
Balance - December 31,
    2006
16,007,489
$
160
$
1,165,403
$
(19,619)
$
(817,865)
$
328,079
Foreign currency translation adjustment
-
-
-
78,161
-
78,161
Debenture conversion
149,657
2
104,757
-
-
104,759
Warrants issued, net of transaction costs of
    $121,063
-
-
452,023
-
-
452,023
Stock-based compensation
-
-
202,607
-
-
202,607
Beneficial conversion feature, net of a
    deferred income
-
-
147,028
-
-
147,028
tax liability of $343,065
Net loss
-
-
-
-
(1,100,793)
(1,100,793)
Balance - December 31, 2007
16,157,146
$
162
$
2,071,818
$
58,542
$
(1,918,658)
$
211,864
F-4
IntelGenx Technologies Corp.
Consolidated Statement of Operations and Comprehensive Loss
For the Year Ended December 31, 2007 and 2006
(Expressed in U.S. Funds)
2007
2006
Revenue
$
835,376
$
261,649
Interest
27,355
4,252
862,731
265,901
Expenses
Research and development
777,773
510,407
Research and development tax credits
(174,399)
(39,025)
Management salaries
328,513
245,637
General and administrative
166,249
84,040
Professional fees
424,817
158,925
Depreciation
42,003
33,912
Foreign exchange
113,552
(1,583)
Interest and financing fees
349,093
54,724
2,027,601
1,047,037
Loss Before Income Taxes
(1,164,870)
(781,136)
Income taxes (note 13)
(64,077)
-
Net Loss
$
(1,100,793)
$
(781,136)
Other Comprehensive
    Income (Loss)
Foreign
    currency translation adjustment
78,161
(24,444)
Comprehensive Loss
$
(1,022,632)
$
(805,580)
Basic
    Weighted Average Number of Shares Outstanding
16,042,791
14,335,000
Basic and Diluted Loss Per Common Share
$
(0.07)
$
(0.05)
See accompanying notes
F-5
IntelGenx Technologies Corp.
Consolidated Statement of Cash Flows
For the Year Ended December 31, 2007 and 2006
(Expressed in U.S. Funds)
2007
2006
Funds Provided (Used) -
Operating Activities
Net loss
$
(1,100,793)
$
(781,136)
Deferred income taxes
(64,077)
-
Depreciation
42,003
33,912
Stock issued for investor relations services
68,349
66,625
Financing fees paid in warrants
-
37,699
Employees and directors share-based
    compensation
202,607
202,116
Interest accretion and amortization of
    debenture costs
195,317
-
(656,594)
(440,784)
Changes in non-cash operating elements of
    working
capital
(312,065)
(48,867)
(968,659)
(489,651)
Financing Activities
Promissory note
-
134,689
Repayment of promissory note
-
(134,689)
Increase in long-term debt
-
53,754
Repayment of long-term debt
(107,871)
(22,632)
Issue of capital stock
-
1,341,750
Transaction costs
(229,323)
(549,329)
Convertible notes
1,500,000
-
1,162,806
823,543
Investing Activity
Additions to property and equipment
(82,961)
(97,511)
Increase in
    Cash and Cash Equivalent
111,186
236,381
Effect of Foreign
    Exchange on Cash Balance
(7,797)
(19,741)
Cash and Cash Equivalent
Beginning of Year
227,578
10,938
End of Year
$
330,967
$
227,578
See accompanying notes
F-6
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
1.
Basis of
Presentation and Reorganization of the Corporation Basis of Presentation
The Company prepares its financial
statements in accordance with accounting principles generally accepted in the
United States. This basis of accounting involves the application of accrual
accounting and consequently, revenues and gains are recognized when earned, and
expenses and losses are recognized when incurred.
The consolidated financial
statements include the accounts of the Company and its subsidiary companies. On
consolidation, all material interentity transactions and balances have been
eliminated.
The financial statements are expressed in U.S.
funds.
Reorganization of the Corporation
On April 28, 2006, Intelgenx Corp.
entered into a share exchange agreement with IntelGenx Technologies Corp.
(formerly Big Flash Corporation), an inactive public shell company, for the
acquisition by IntelGenx Technologies Corp. of all the issued and outstanding
shares of Intelgenx Corp.
Under accounting principles
generally accepted in the United States, the share exchange is considered to be
a capital transaction in substance, rather than a business combination. That is,
the share exchange is equivalent to the issuance of stock by Intelgenx Corp. for
the net monetary assets of IntelGenx Technologies Corp. accompanied by a
recapitalization, and is accounted for as a change in capital structure.
Accordingly, the accounting for the share exchange is identical to that
resulting from a reverse acquisition, except no goodwill is recorded. Under
reverse takeover accounting, the post reverse acquisition comparative historical
financial statements of the legal acquirer, IntelGenx Technologies Corp., are
those of the legal acquiree, Intelgenx Corp., which is considered to be the
accounting acquirer.
All of the Intelgenx Corp. shares,
through a series of exchanges, were exchanged for shares of IntelGenx
Technologies Corp. common shares and/or exchangeable shares of 6544361 Canada
Inc. a wholly-owned subsidiary of IntelGenx Technologies Corp. The exchangeable
shares are exchangeable for common shares of IntelGenx Technologies Corp. on a
one-for-one basis. Until such time as the holders of the exchangeable shares
wish to exchange their shares for IntelGenx Technologies Corp. shares, the
IntelGenx Technologies Corp. shares are held in trust by a trustee on behalf of
the exchangeable shareholders. The trustee shall be entitled to the voting
rights in IntelGenx Technologies Corp. stated in the terms of the exchange and
voting agreement and shall exercise these voting rights according to the
instruction of the holders of the exchangeable shares on a basis of one vote for
every exchangeable share held.
F-7
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
1.
Basis of Presentation and
Reorganization of the Corporation (Cont'd)
These financial statements reflect
the accounts of the balance sheets, the results of operations and the cash flows
of Intelgenx Corp. at their carrying amounts, since it is deemed to be the
accounting acquirer.
The results of operations, the cash
flows and the assets and liabilities of IntelGenx Technologies Corp. have been
included in these consolidated financial statements since April 28, 2006, the
acquisition date. Amounts reported for the periods prior to April 28, 2006 are
those of Intelgenx Corp.
The fair value assigned to the
asset of IntelGenx Technologies Corp. acquired on April 28, 2006, being prepaid
investor relations services, is $133,250. As part of the transaction, a
shareholder of IntelGenx Technologies Corp. forgave the amount due to
shareholder and related interest payable amounting to $23,160.
2.
Going Concern
The accompanying financial
statements have been prepared assuming the Company will continue as a going
concern. The Company has reported an accumulated deficit of $1,918,658 (2006 -
$817,865). To date, these losses have been financed principally through common
share issuance, long-term debt and debt from related parties. Additional capital
and/or borrowings will be necessary in order for the Company to continue in
existence until attaining and sustaining profitable operations.
Management has continued to develop
a strategic plan to develop a management team, maintain reporting compliance and
establish contracts with pharmaceutical companies. To date revenues consisted
primarily of research and development fee revenues from four clients and have
not been sufficient to sustain operations. In order to achieve profitability,
revenue streams will have to increase significantly and there is no assurance
that revenues can increase to such a level. The Company has raised additional
cash through the issuance of convertible debt during the year and is currently
undergoing the process of raising additional capital. Should the Company be
unable to continue as a going concern, it may be unable to realize the carrying
value of its assets and to meet its liabilities as they become due.
3.
Nature of Business
The Company specializes in the
development of pharmaceutical products in co-operation with various
pharmaceutical companies. Prior to March 31, 2006, the Company was in the
development stage and its efforts were focused on establishing contracts with
pharmaceutical companies and the research and development of pharmaceutical
products. The Company completed the development stage of its operations when the
Company commenced consistently generating revenues from its operations in April
2006.
F-8
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
4.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. The financial
statements include estimates based on currently available information and
management's judgment as to the outcome of future conditions and circumstances.
Significant estimates in these financial statements include the allowance for
doubtful accounts, useful lives and impairment of long-lived assets, stock-based
compensation costs, determination of the fair value of the warrants issued with
the convertible notes, the investments tax credits receivable and the resulting
impact on the allocation of the proceeds between the convertible notes, the
beneficial conversion feature and the warrants.
Changes in the status of certain
facts or circumstances could result in material changes to the estimates used in
the preparation of the financial statements and actual results could differ from
the estimates and assumptions.
Revenue Recognition
The Company recognizes revenue from
research and development contracts as the contracted services are performed or
when milestones are achieved, in accordance with the terms of the specific
agreements and when collection of the payment is reasonably assured. In
addition, the performance criteria for the achievement of milestones are met if
substantive effort was required to achieve the milestone and the amount of the
milestone payment appears reasonably commensurate with the effort expended.
Amounts received in advance of the recognition criteria being met, if any, are
included in deferred income.
Sales Tax
On June 28, 2006, the FASB ratified
the EITF's consensus reached on EITF 06-3, which relates to the income statement
presentation of taxes collected from customers and remitted to government
authorities. The Task Force affirmed as a consensus on this issue that the
presentation of taxes on either a gross basis or a net basis within the scope of
EITF 06-3 is an accounting policy decision that should be disclosed pursuant to
APB 22. A company should disclose the amount of those taxes that is recognized
on a gross basis in interim and annual financial statements for each period for
which an income statement is presented if those amounts are significant. The
Company adopted EITF 06-3 on January 1, 2007. While the amounts are not
material, the Company's policy is to present such taxes on a net basis in the
consolidated statements of operations.
Financial Instruments
The Company estimates the fair
value of its financial instruments based on current interest rates, market value
and pricing of financial instruments with comparable terms. Unless otherwise
indicated, the carrying value of these financial instruments approximates their
fair market value.
F-9
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements December 31, 2007 and 2006
(Expressed in U.S. Funds)
4.
Summary of
Significant Accounting Policies (Cont'd)
Cash and Cash Equivalent
Cash and cash equivalent is
comprised of cash on hand and a term deposit with an original maturity date of
less than three months.
Accounts Receivable
The Company accounts for trade
receivables at original invoice amount less an estimate made for doubtful
receivables based on a review of all outstanding amounts on a monthly basis.
Management determines the allowance for doubtful accounts by regularly
evaluating individual customer receivables and considering a customer's
financial condition, credit history and current economic conditions. The Company
writes off trade receivables when they are deemed uncollectible. The Company
records recoveries of trade receivables previously written-off when they receive
them. Management considers the reserve for doubtful accounts of $Nil (2006:
$Nil) to be adequate to cover any exposure to loss in its December 31, 2007 and
2006 accounts receivable.
Investment Tax Credits
Investment tax credits relating to
qualifying expenditures are recognized in the accounts at the time at which the
related expenditures are incurred and there is reasonable assurance of their
realization. Management has made estimates and assumptions in determining the
expenditures eligible for investment tax credits claimed.
Property and Equipment
Property and equipment are recorded
at cost. Provisions for depreciation are based on their estimated useful lives
using the methods as follows:
On the declining balance
    method -
Laboratory and office equipment
20%
Computer equipment
30%
On the straight-line method -
Leasehold improvements
5 years
Upon retirement or disposal, the
cost of the asset disposed of and the related accumulated depreciation are
removed from the accounts and any gain or loss is reflected in income.
Expenditures for repair and maintenance are expensed as incurred.
F-10
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
4.
Summary of
Significant Accounting Policies (Cont'd)
Impairment of Long-Lived Assets
Long-lived assets held and used by
the Company are reviewed for possible impairment whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of the assets to the estimated undiscounted cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the asset exceeds the fair value thereof.
Foreign Currency Translation
The Company's reporting currency is
the United States dollar. The Canadian dollar is the functional currency of the
Company's Canadian operations which is translated to the United States dollar
using the current rate method. Under this method, accounts are translated as
follows:
Assets and liabilities - at
exchange rates in effect at the balance sheet date;
Revenue and expenses - at average
exchange rates prevailing during the year.
Gains and losses arising from
foreign currency translation are included in other comprehensive income.
Income Taxes
The Company accounts for income
taxes in accordance with SFAS No. 109, "Accounting for Income Taxes". Deferred
taxes are provided on the liability method whereby deferred tax assets are
recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
In July 2006, the FASB released FIN
48, "Uncertainty in Income Taxes," which defines accounting for uncertain tax
positions and includes amendments to SFAS No. 109. The Company adopted FIN 48 on
January 1, 2007 (the first fiscal year after December 15, 2006). See Note 13 for
additional information."
F-11
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
4.
Summary of Significant Accounting Policies (Cont'd)
Share-Based
Payments
The Company accounts for
share-based payments in accordance with the provisions of FAS 123R "Share-based
payments (Revised)" and accordingly recognizes in its financial statements
share-based payments at their fair value. In addition, it will recognize in the
financial statements an expense based on the grant date fair value of stock
options granted to employees. The expense will be recognized on a straight-line
basis over the vesting period and the offsetting credit will be recorded in
additional paid-in capital. Upon exercise of options, the consideration paid
together with the amount previously recorded as additional paid-in capital will
be recognized as capital stock. The Company estimates its forfeiture rate in
order to determine its compensation expense arising from stock-based awards. The
Company uses the Black-Scholes-Merton option pricing model to determine the fair
value of the options.
Loss Per Share
Basic loss per share is calculated
based on the weighted average number of shares outstanding during the year. The
convertible debt, warrants and stock options have been excluded from the
calculation of diluted loss per share since they are anti-dilutive.
Newly Issued Accounting
Pronouncements
In February 2007, the Financial
Accounting Standards Board issued FASB Statement No. 159, the Fair Value Option
for Financial Assets and Financial Liabilities ("SFAS 159"), which includes an
amendment to FASB Statement No. 115. The statement permits entities to choose,
at specified election dates, to measure eligible financial assets and financial
liabilities at fair value (referred to as the "fair value option") and report
associated unrealized gains and losses in earnings. SFAS 159 is effective for
fiscal years beginning after November 15, 2007. No significant impact is
expected on the consolidated financial statements at the time of adoption.
In December 2007, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 141 (Revised 2007),
"Business Combinations" ("SFAS 141R"). SFAS 141R will significantly change the
accounting for business combinations. Under SFAS 141R, an acquiring entity will
be required to recognize all the assets acquired and liabilities assumed in a
transaction at the acquisition-date fair value with limited exceptions. SFAS
141R will change the accounting treatment for certain specific acquisition
related items including: (1) expensing acquisition related costs as incurred;
(2) valuing noncontrolling interests at fair value at the acquisition date; and
(3) expensing restructuring costs associated with an acquired business. SFAS
141R also includes a substantial number of new disclosure requirements. SFAS
141R is to be applied prospectively to business combinations for which the
acquisition date is on or after January 1, 2009. We expect SFAS 141R will have
an impact on our accounting for future business combinations once adopted but
the effect is dependent upon the acquisitions that are made in the future.
F-12
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
4.
Summary of Significant
Accounting Policies (Cont'd)
In December 2007, the FASB issued
SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements" ("SFAS
160"). SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary
(minority interest) is an ownership interest in the consolidated entity that
should be reported as equity in the Consolidated Financial Statements and
separate from the parent company's equity. Among other requirements, this
statement requires consolidated net income to be reported at amounts that
include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the Consolidated Statement
of Operations, of the amounts of consolidated net income attributable to the
parent and to the noncontrolling interest. We expect SFAS 160 will have an
impact on our accounting for future business combinations once adopted but the
effect is dependent upon the acquisitions that are made in the future.
5.
Adjustment to Issued Financial
Statements
Balance sheet as at December 31,
2006
The balance sheet as at December
31, 2006 has been adjusted, in this filing, to reflect the correction of an
error in the previously issued financial statements. Capital stock was not
disclosed at its par value with the excess of the proceeds in additional paid-in
capital. As a result, capital stock is reduced by $977,846 and additional
paid-in capital is increased by the same amount. This error is not material to
prior years audited statements since it is a reclassification within the
stockholders equity section and has no impact on earnings or cash flows from
operating or financing activities. The application of Staff Accounting Bulletin
108 ("SAB 108") has allowed a restatement of December 31, 2006 financial
statements during the filing of December 31, 2007 10-KSB.
Balance sheet as at June 30 and September 30, 2007
Following the release of the third
quarter financial statements, the Company corrected the calculation of the
volatility of the warrants issued in connection with the convertible notes (note
9). As a result, the volatility changed from 75% to 64%. The impact of the
change resulted in a decrease of $60,566 to the value of the warrants initially
recorded to additional paid-in capital and a decrease of $14,171 to the related
transaction costs. The beneficial conversion feature recorded to additional
paid-in capital was also decreased by $60,566 and the related deferred income
tax liability was increased by $35,211. The convertible notes value decreased by
$100,603. The only impact this change had on net loss was to increase the
interest accretion recorded for 2007 by $13,153.
F-13
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
6.
Property and Equipment
2007
2006
Accumulated
Net Carrying
Net Carrying
Cost
Depreciation
Amount
Amount
Laboratory and office
    equipment
$
281,485
$
96,412
$
185,073
$
112,968
Computer equipment
26,447
10,362
16,085
9,184
Leasehold improvements
62,987
28,901
34,086
39,709
$
370,919
$
135,675
$
235,244
$
161,861
7.
Accounts
Payable and Accrued Liabilities
Included in accounts payable and
accrued liabilities is approximately $71,651 (2006 - $22,500) payable to
shareholders, who are also officers of the Company.
8.
Loan Payable,
Shareholder
The loan payable, shareholder, who
is also an officer of the Company, is unsecured, bears interest at 6% per annum
and is not repayable prior to January 1, 2009. Interest incurred during the year
amounted to approximately $5,636 (2006 - $5,300) which is measured at the
exchange amount.
9.
Convertible
Notes
On May 22, 2007 the Company entered
into convertible note agreements with certain institutional and accredited
investors for amounts totalling $1,500,000. The convertible notes bear interest
at the rate of 8% per annum and are repayable on September 22, 2009. Interest is
payable quarterly and payments commenced on July 1, 2007. The notes are
convertible into common stock of the Company, at the option of the holders, at a
rate of $0.70 per share. The Company also issued to the holders 2,142,857 stock
purchase warrants exercisable at $1.02 per share before May 22, 2012.
The Company paid approximately
$229,323 in cash consideration for and issued warrants with a fair value of
$82,993 in consideration for transaction costs as explained in note 12. These
transaction costs were allocated between the convertible debt and the warrants
based on their relative fair value.
F-14
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
9.
Convertible
Notes (Cont'd)
The Company may, at its option,
elect to pay the interest by the issuance of shares of common stock. The number
of shares is to be determined by dividing the amount of the interest payment by
the number which is 85% of the average market price of the Company's common
shares for the 20 trading days immediately prior to the interest payment date
assuming the average market price is equal or greater than $0.70 as adjusted for
reverse and forward share split, recapitalizations and the like that occur after
the date of the Securities Purchase Agreements.
In accordance with EITF Issue 98-5
"Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios", the Company recognized the value of
the embedded beneficial conversion feature of $490,093 as additional paid-in
capital and an equivalent discount which will be expensed over the term of the
convertible notes. In addition, in accordance with EITF Issue 00-27 "Application
of Issue No.98-5 to Certain Convertible Instruments", the Company has allocated
the proceeds of issuance between the convertible notes and the detachable
warrants based on their relative fair value. Accordingly, the Company recognized
the fair value of the detachable warrants of $490,093 as additional paid-in
capital and an equivalent discount against the convertible notes. The difference
between the face amount of the convertible notes and their carrying value is
amortized over the life of the convertible notes. As long as any portion of the
convertible notes remains outstanding, the Company shall not pay any cash
dividends or distributions on any equity securities of the Company without prior
written consent from the holders of the convertible note.
The Black-Scholes Model was used to
calculate the fair value of the warrants. The underlying assumptions included in
the Black-Scholes Model were as follows:
Expected volatility
64%
Contractual life
5 years
Risk-free interest rate
4.39%
Dividend
    yield
Nil
Substantially all of the assets of
the Company have been pledged as security of the convertible notes. As at
December 31, 2007, $66,180 of interest has been paid, and $195,317 of interest
has been accreted. During the year, $104,759 of convertible notes were exchanged
for 149,657 shares of common stock.
F-15
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
10.
Commitment
The Company has entered into an
agreement to lease premises up to August 2009. The future minimum lease payments
over the next two years are approximately as follows:
2008
$ 15,900
2009
10,800
11.
Capital Stock
2007
2006
Authorized -
100,000,000 common shares of $0.00001 par
    value
20,000,000 preferred shares
Issued -
16,157,146 (2006 – 16,007,489) common shares
$
162
$
160
On March 9, 2006, the Company
recalled and cancelled its 10,000 issued and outstanding common shares and
issued in exchange 10,991,000 common shares.
On April 28, 2006, the Company
issued 3,191,489 common shares for cash consideration of $1,341,750. The
transaction costs related to the share issuance amounted to $549,329.
On the same date, the Company
completed a share exchange transaction with IntelGenx Technologies Corp. in
which it acquired prepaid investor relations services amounting to $133,250.
On April 10, 2007, the Board of
Directors of the Corporation approved an amendment, subject to shareholder
approval, to the Corporation's Certificate of Incorporation, to increase the
number of authorized common shares from 20,000,000 to 100,000,000 and to
authorize the creation of 20,000,000 shares of "blank check" preferred shares.
On April 10, 2007, the majority stockholder of the Corporation approved the same
resolution as the Board of Directors.
During the year, the Company issued
149,657 common shares in exchange for $104,759 of convertible notes.
F-16
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
12.
Additional Paid-In Capital
Warrants
During the year ended December 31,
2006, the Company issued 190,691 stock purchase warrants exercisable into common
shares at $0.41 per share which expire on April 28, 2008 and November 13, 2008.
The stock purchase warrants were issued in payment of financing fees. The stock
purchase warrants were accounted for at their fair value, as determined by the
Black-Scholes-Merton valuation model, of $37,699, using the following
assumptions:
Expected volatility
85% and 88%
Expected life
2 years
Risk-free interest rate
3.91% and
    4.78%
Dividend
    yield
Nil
On May 22, 2007, IntelGenx
Technologies Corp. issued 214,286 stock purchase warrants exercisable into
common shares at $0.70 per share which expire on May 22, 2011. The Stock
purchase warrants were issued as part of the transaction costs in connection
with the convertible notes described in note 9. The stock purchase warrants were
accounted for at their fair value, as determined by the Black-Scholes valuation
model, of $82,993, using the following assumptions:
Expected volatility
64%
Expected life
4 years
Risk-free interest rate
4.39%
Dividend
    yield
Nil
As at December 31, 2007, no stock purchase warrants
have been exercised.
F-17
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
12.
Additional Paid-In Capital
(Cont'd)
Information with respect to
warrant activity for 2006 and 2007 is as follows:
Weighted average
Number of warrants
exercise price
$
Outstanding – January 1, 2006
-
-
Granted
190,691
0.41
Outstanding – December 31, 2006
190,691
0.41
Warrants attached to convertible notes (note
    9)
2,142,857
1.02
Warrants issued as part of
    transaction costs
(note 12)
214,286
1.02
Outstanding
    – December 31, 2007
2,547,834
0.97
Stock Options
In November 2006, the Company
adopted the 2006 Stock Incentive Plan ("Plan") for the purpose of issuing both
Incentive Options and Nonqualified Options to officers, employees, directors and
eligible consultants of the Company. A total of 1,600,749 shares of common stock
are reserved for issuance under this plan. Options may be granted under the Plan
on terms and at prices as determined by the Board of Directors except that the
options cannot be granted at less than 100%, of the fair market value of the
common stock on the date of the grant. Each option will be exercisable after the
period or periods specified in the option agreement, but no option may be
exercised after the expiration of 10 years from the date of grant. All options
granted to individuals other than non-employee directors will have a total
vesting period of 24 months from the date of grant, with one quarter of the
total options granted vesting and becoming exercisable every six months. Options
granted to non-employees will vest and become 100% fully exercisable immediately
upon grant.
On September 26, 2006, the Company
granted 225,000 stock options to certain of its directors to purchase common
shares. The stock options are immediately exercisable at $0.41 per share and
expire in five years.
On October 1, 2006, the Company
granted to a consultant for investor relations services 69,000 stock options to
purchase common shares. The stock options are immediately exercisable at $0.41
per share and expire in ten years.
F-18
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
12.
Additional
Paid-In Capital (Cont'd)
On November 9, 2006, the Company
granted 450,000 stock options to certain of its employees to purchase common
shares. The stock options are immediately exercisable at $0.41 per share and
expire in ten years.
On November 13, 2006, the Company
granted to a consultant for services provided in connection with the transaction
on April 28, 2006, 250,000 stock options to purchase common shares. The stock
options are immediately exercisable at $0.41 per share and expire in ten years.
On November 16, 2006, the Company
granted 100,000 stock options to certain of its employees to purchase common
shares. On the same date, the Company also granted 25,000 stock options to
purchase common shares to an R&D consultant. The stock options are immediately
exercisable at $0.41 per share and expire in ten years.
On August 9, 2007, the Company
granted 257,500 stock options to employees and directors to purchase common
shares. The stock options are exercisable at $1.15 per share and have a term of
10 years with vesting provisions ranging from immediate to vesting in equal
increments over two years.
The fair values of all options
granted during 2007 and 2006 were estimated as of the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions:
2007
2006
Expected option life
5.00 -
    5.75 years
2.50 - 5.75
    years
Volatility
71 %
88%
Risk-free interest rate
4.58%
4.78%
Dividend
    yield
Nil
Nil
The weighted average grant-date fair values for
stock options granted during 2007 and 2006 were $0.74 and $0.33 per option,
respectively.
F-19
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
12.
Additional Paid-In Capital
(Cont'd)
Information with respect to stock option activity
for 2006 and 2007 is as follows:
Weighted average
Number of options
exercise price
$
Outstanding – January 1, 2006
-
-
Granted
1,119,000
0.41
Forfeited
-
-
Expired
-
-
Exercised
-
-
Outstanding – December 31, 2006
1,119,000
0.41
Granted
257,500
1.15
Forfeited
-
-
Expired
-
-
Exercised
-
-
Outstanding – December 31, 2007
1,376,500
0.55
Details of stock options outstanding as at December
31, 2007 are as follows:
Outstanding options
Exercisable options
Weighted
Weighted
Weighted
average
average
average
Exercise
Number of
remaining
exercise
Aggregate
Number
exercise
Aggregate
prices
options
contractual life
price
intrinsic value
of options
price
intrinsic value
$
(years)
$
$
$
$
0.41
1,119,000
7.84
0.41
1,064,312
0.41
1.15
257,500
9.58
1.15
138,750
1.15
1,376,500
8.16
0.55
436,410
1,203,062
0.60
415,082
Stock-based compensation expense
recognized in 2007 in regards to the stock options was $202,607 (2006 -
$212,778). As of December 31, 2007, total unrecognized compensation expense
related to unvested stock options was $97,381. This amount is expected to be
recognized as expense over a period of two years. A change in control of the
Company due to acquisition would cause the vesting of these stock options to
accelerate and would result in this amount being charged to stock-based
compensation expense.
F-20
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
13.
Income Taxes
Income taxes reported differ
from the amount computed by applying the statutory rates to losses. The reasons
are as follows:
2007
2006
Statutory income taxes
$
(352,000)
$
(242,000)
Net operating losses for which
      no tax benefits have been recorded
140,000
76,000
Excess of
      amortization over capital cost allowance
14,000
11,000
Non-deductible expenses
147,000
98,000
Undeducted
      research and development expenses
143,000
105,000
Tax deductible portion of
      transaction costs
(36,000)
(34,000)
Investment
      tax credit
(56,000)
(14,000)
Lower effective tax rate
      resulting from deferred income taxes
drawdowns
(64,000)
-
$
(64,000)
$
-
The major
      components of the deferred tax assets classified by the source of
      temporary differences are as follows:
2007
2006
Property and equipment
$
(15,000)
$
(2,000)
Net operating losses
      carryforward (expiring 2015-2016)
264,000
109,000
Undeducted
      research and development expenses
206,000
105,000
Non-refundable tax credits
      carryforward
23,000
93,000
Transaction costs to be deducted in future years
108,000
136,000
586,000
441,000
Valuation allowance
(586,000)
(441,000)
$
-
$
-
There were Canadian and provincial
net operating losses of approximately $794,000 (2006 - $350,000) and $908,000
(2006 - $387,000) respectively, that may be applied against earnings of future
years. Utilization of the net operating losses is subject to significant
limitations imposed by the change in control provisions. A portion of the net
operating losses may expire before they can be utilized.
As at December 31, 2007, the
Company had non-refundable tax credits of $24,000 (2006 -$93,000) expiring in
2017 and undeducted research and development expenses of $670,000 (2006 -
$340,000) with no expiration date.
F-21
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
13.
Income Taxes
(Cont'd)
Due to the reorganization of the
corporation, there were $549,000 of transaction costs of which $113,000 was
deductible in the current year (2006- $109,000). The remaining transaction costs
are deductible for income tax purposes in equal amounts over the next three
years.
The deferred tax benefit of these
items was not recognized in the accounts.
Deferred Income Taxes
The balance of deferred income
taxes as at December 31, 2007 represents the tax effect of the convertible debt
arising from the difference between the convertible debt's basis for accounting
purposes and that for income tax purposes and it has been charged to additional
paid-in capital. As the convertible debt is repaid, the deferred tax liability
will be charged to expenses.
Unrecognized Tax Benefits
On January 1, 2007, the Company
adopted the provisions for FIN 48, which is an interpretation of SFAS No. 109.
FIN 48 prescribes a recognition threshold that a tax position is required to
meet before being recognized in the financial statements and provides guidance
on de-recognition, measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition issues. FIN 48 contains
a two-step approach to recognizing and measuring uncertain tax positions
accounted for in accordance with SFAS No. 109. The first step is to evaluate the
tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained
upon ultimate settlement with a taxing authority, including resolution of
related appeals or litigation processes, if any. The second step is to measure
the tax benefit as the largest amount that is more than 50% likely of being
realized upon ultimate settlement. Prior to January 1, 2007 and the
implementation of FIN 48, the Company recorded tax contingencies when the
exposure item became probable and reasonably estimable, in accordance with SFAS
No. 5,
Accounting for Contingencies
.
The adoption of FIN 48 has not had
a material effect on our financial position or results of operations for 2007.
The Company does not expect its
unrecognized tax benefits to change significantly over the next twelve months.
Classification of Interest and
Penalties
Additionally, FIN 48 requires the
Company to accrue interest and related penalties, if applicable, on all tax
positions for which reserves have been established consistent with
jurisdictional tax laws
.
The Company's policy to include
interest and penalties related to unrecognized tax benefits within the provision
for income taxes did not change as a result of adopting FIN 48.
The interest and penalties as of
December 31, 2007 and for the years ended December 31, 2007, 2006 and 2005 were
zero.
F-22
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
13.
Income Taxes (Cont'd)
Tax Years and Examination
The Company files tax returns in
each jurisdiction in which it is registered to do business. For each
jurisdiction a statute of limitations period exists. After a statute of
limitations period expires, the respective tax authorities may no longer assess
additional income tax for the expired period. Similarly, the Company is no
longer eligible to file claims for refund for any tax that it may have overpaid.
The following table summarizes the Company's major tax jurisdictions and the tax
years that remain subject to examination by these jurisdictions as of December
31, 2007:
Tax Jurisdictions
Tax Years
Federal - Canada
2003 and onward
Quebec - Canada
2003 and onward
14.
Statement of Cash Flows
Information
2007
2006
Accounts receivable
$
(292,253)
$
(132,948)
Prepaid expenses
49,471
(6,721)
Investment tax credits
    receivable
(200,774)
26,258
Accounts
    payable and accrued liabilities
131,491
64,544
Changes in non-cash operating elements of working capital
$
(312,065)
$
(48,867)
Additional
    Cash Flow Information:
Interest paid
$
81,194
$
35,000
F-23
I
ntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
15.
Related Party Transactions
During the year the Company
incurred expenses of approximately $18,606 (2006 - $17,850) for laboratory
equipment leased from a shareholder and $5,636 (2006 - $5,300) for interest on
the loan payable shareholder.
Included in professional fees are
approximately $18,104 (2006 - $Nil) paid to a non-employee director of the
Company.
In 2007, the Company amortized
interest and financing fees of approximately $79,477 (2006 - $Nil) for share
based compensation to a former officer and director of the Company in connection
with the private placement closed on April 28, 2006.
Included in management salaries are
$76,733 for options granted to non-employee directors and $10,609 for options
granted to the CFO.
In December 2007, the Company
purchased $60,000 in laboratory equipment from a shareholder who is also an
officer. The Company has had the use of the equipment since 2005.
The above related party
transactions have been measured at the exchange amount which is the amount of
the consideration established and agreed to by the related parties.
16.
Comparative Figures
Certain reclassifications of 2006 amounts have been
made to facilitate comparison with the current year.
17.
Subsequent Event
On March 27, 2008, as part of a
private placement, the Company issued 4,001,000 units for gross proceeds of
$2,800,000. Each unit consists of one common share of the Company and one common
share purchase warrant. Each warrant entitles the holder to purchase one common
share at an exercise price of $1.02 per common share. and expires 24 months
after the date of issuance.
The Company paid an agent a cash
commission in the amount of $196,000, which is equal to 7% of the gross proceeds
of the offering and issued an agent option entitling the agent to acquire
320,080 units at $0.70 per unit, which expires 24 months after the date of
issuance. Each warrant entitles the holder to purchase one common share at an
exercise price of $1.02 per common share and expires 24 months after the date of
issuance of the unit.
The cash consideration paid to the
agent and the fair value of the agent option will be reflected as a reduction to
the additional paid-in capital.
F-24
IntelGenx Technologies Corp.
Notes to Consolidated Financial Statements
December 31, 2007 and 2006
(Expressed in U.S. Funds)
17.
Subsequent Event (Cont'd)
Pursuant to the terms of the
private placement, the Company is obliged to use its best effort to (i) have the
common shares listed on the TSX Venture Exchange, and (ii) prepare and file
with, and have declared effective, by the U.S. Securities and Exchange
Commission, a resale registration statement in respect of the common shares and
the warrants issued to subscribers as well as those issuable upon exercise of
the agents warrants, all prior to 4 months after March 27, 2008. In the event
that these provisions are not satisfied within 4 months, the exercise price of
the warrants shall be reduced to $0.93. In addition, if the Company is not
listed on the TSX Venture Exchange within 2 months of the private placement, the
Company shall: (i) pay to each subscriber under this private placement a cash
penalty in the amount of 5% of the aggregate subscription price paid by the
subscriber and an additional 1% of the aggregate subscribtion price for every
subsequent calendar month thereafter that the listing is not effected, to a
maximum of 3 months; and (ii) reduce the exercise price of the agent's option by
5% with an additional 1% for every subsequent calendar month thereafter that the
listing is not effected. Pursuant to EITF 00-19-2 "Accounting In Registration
Payment Arrangements", the Company concluded that at inception, payments under
these commitments are not probable.
F-25