Unaudited Interim Condensed Consolidated
Financial Statements
June 30, 2019
August 8 , 2019
Management’s Responsibility for Financial Reporting
The accompanying unaudited interim condensed consolidated financial statements ofIMV Inc. (the “Corporation”)are the responsibility of management and have been approved by the Board of Directors. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The consolidated financial statements include some amounts and assumptions based on management’s best estimates which have been derived with careful judgment.
In fulfilling its responsibilities, management has developed and maintains a system of internal accounting controls. These controls are designed to ensure that the financial records are reliable for preparation of the consolidated financial statements. The Audit Committee of the Board of Directors reviewed and approved the Corporation’s consolidated financial statements, and recommended their approval by the Board of Directors.
| (signed) | “Frederic Ors” | (signed) | “Pierre Labbé” |
| Chief Executive Officer | Chief Financial Officer |
| IMV Inc. |
| Unaudited Interim Condensed Consolidated Statements of Financial Position |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| June 30, | December 31, | |||
| 2019 | 2018 | |||
| $ | $ | |||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | 26,904 | 14,895 | ||
| Amounts receivable | 1,285 | 1,337 | ||
| Prepaid expenses | 4,343 | 2,699 | ||
| Investment tax credits receivable | 1,750 | 1,111 | ||
| 34,282 | 20,042 | |||
| Property and equipment | 3,063 | 2,883 | ||
| 37,345 | 22,925 | |||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | 5,733 | 7,575 | ||
| Amounts due to directors | 63 | 49 | ||
| Current portion of long-term debt (note 5) | 86 | 81 | ||
| Current portion of lease obligation | 95 | 90 | ||
| 5,977 | 7,795 | |||
| Lease obligation | 1,259 | 1,308 | ||
| Deferred share units(note 4) | 1,046 | 1,436 | ||
| Long-term debt(note 5) | 7,972 | 8,069 | ||
| 16,254 | 18,608 | |||
| Equity | 21,091 | 4,317 | ||
| 37,345 | 22,925 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
Approved on behalf of the Board of Directors
| (signed)“James W. Hall”, Director | (signed)“Wayne Pisano”, Director |
| IMV Inc. |
| Unaudited Interim Condensed Consolidated Statements of Changes in Equity |
| For the period ended June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| Share | Contributed | |||||||||
| Capital | Surplus | Warrants | Deficit | Total | ||||||
| $ | $ | $ | $ | $ | ||||||
| (note 6) | (note 7) | (note 8) | ||||||||
| Balance, December 31, 2017 | 70,113 | 6,375 | 674 | (70,819 | ) | 6,343 | ||||
Net loss and comprehensive loss for the period | – | – | – | (21,935 | ) | (21,935 | ) | |||
Issuance of shares in public offering | 14,375 | – | – | – | 14,375 | |||||
Share issuance costs | (1,480 | ) | – | – | – | (1,480 | ) | |||
Redemption of DSUs, net of applicable taxes | 220 | – | – | – | 220 | |||||
Issuance of broker warrants | – | – | 332 | – | 332 | |||||
Exercise of warrants | 5,480 | – | (591 | ) | – | 4,889 | ||||
| Employee share options: | ||||||||||
Value of services recognized | – | 1,182 | – | – | 1,182 | |||||
Exercise of options | 1,444 | (1,053 | ) | – | – | 391 | ||||
| Balance, December 31, 2018 | 90,152 | 6,504 | 415 | (92,754 | ) | 4,317 | ||||
Net loss and comprehensive loss for the period | – | – | – | (10,994 | ) | (10,994 | ) | |||
Issuance of shares in public offering | 29,456 | – | – | – | 29,456 | |||||
Share issuance costs | (2,499 | ) | – | – | – | (2,499 | ) | |||
Exercise of warrants | 82 | – | (21 | ) | – | 61 | ||||
Warrants expired | – | 62 | (62 | ) | – | – | ||||
| Employee share options: | ||||||||||
Value of services recognized | – | 694 | – | – | 694 | |||||
Exercise of options | 281 | (225 | ) | – | – | 56 | ||||
| Balance, June 30, 2019 | 117,472 | 7,035 | 332 | (103,748 | ) | 21,091 |
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
| IMV Inc. |
| Unaudited Interim Condensed Consolidated Statements of Loss and Comprehensive Loss |
| For the three and six months ended June 30, 2019 and 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| Three months ended June 30, | Six months ended June 30, | |||||||
| 2019 | 2018 | 2019 | 2018 | |||||
| $ | $ | $ | $ | |||||
Revenue | ||||||||
Subcontract revenue | 6 | 17 | 14 | 45 | ||||
Interest revenue | 180 | 112 | 254 | 181 | ||||
| 186 | 129 | 268 | 226 | |||||
Expenses | ||||||||
Research and development | 3,803 | 2,605 | 7,816 | 4,487 | ||||
General and administrative | 2,184 | 2,640 | 4,144 | 3,930 | ||||
Government assistance | (1,142 | ) | (189 | ) | (1,488 | ) | (464 | ) |
Accreted interest (note 5) | 392 | 269 | 790 | 536 | ||||
| 5,237 | 5,325 | 11,262 | 8,489 | |||||
Net loss and comprehensive loss forthe year | (5,051 | ) | (5,196 | ) | (10,994 | ) | (8,263 | ) |
Basic and diluted loss per share | (0.10 | ) | (0.12 | ) | (0.23 | ) | (0.19 | ) |
Weighted-average shares outstanding | 50,601,866 | 43,001,620 | 48,667,904 | 42,539,304 | ||||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
| IMV Inc. |
| Unaudited Interim Condensed Consolidated Statements of Cash Flows |
| For the six months ended June 30, 2019 and 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| Six months ended June 30, | ||||
| 2019 | 2018 | |||
| $ | $ | |||
| Cash provided by (used in) | ||||
| Operating activities | ||||
| Net loss and comprehensive loss for the year | (10,994 | ) | (8,263 | ) |
| Charges to operations not involving cash | ||||
Interest on lease obligation | 76 | 17 | ||
Depreciation of property and equipment | 225 | 99 | ||
Accretion of long-term debt | 790 | 536 | ||
Deferred share unit compensation | (390 | ) | 113 | |
Stock-based compensation | 694 | 496 | ||
Loss on disposal of assets | 1 | – | ||
Revaluation of long-term debt | (840 | ) | – | |
Net cash flows used by operation activities before changes in non-cash working capital items | (10,438 | ) | (7,002 | ) |
| Net change in non-cash working capital balances related to operations | ||||
Decrease (increase) in amounts receivable | 52 | (101 | ) | |
Increase in prepaid expenses | (338 | ) | (904 | ) |
Increase in investment tax credits receivable | (639 | ) | (62 | ) |
(Decrease) increase in accounts payable and accrued liabilities | (3,148 | ) | 941 | |
Increase in amounts due to directors | 14 | 1 | ||
| (14,497 | ) | (7,127 | ) | |
| Financing activities | ||||
| Proceeds from public offering | 29,456 | 14,375 | ||
| Share issuance costs in public offering | (2,499 | ) | (1,148 | ) |
| Proceeds from the exercise of stock options | 56 | 186 | ||
| Proceeds from the exercise of warrants | 61 | 4,477 | ||
| Withholdings on redemption of DSUs | – | (97 | ) | |
| Repayment of long-term debt | (42 | ) | (34 | ) |
| Repayment of lease obligation | (120 | ) | (9 | ) |
| 26,912 | 17,750 | |||
| Investing activities | ||||
| Acquisition of property and equipment | (406 | ) | (733 | ) |
| Incentive contribution from lessor | – | 349 | ||
| (406 | ) | (384 | ) | |
| Net change in cash and cash equivalents during the period | 12,009 | 10,239 | ||
| Cash and cash equivalents – Beginning of period | 14,895 | 14,909 | ||
| Cash and cash equivalents – End of period | 26,904 | 25,148 | ||
| Supplementary cash flow | ||||
| Interest received | 254 | 181 | ||
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 1 | Nature of operations |
IMV Inc. (the “Corporation”, “IMV”) is, through its 100% owned subsidiary, a clinical stage biopharmaceutical company dedicated to making immunotherapy more effective, more broadly applicable, and more widely available to people facing cancer. IMV is pioneering a new class of immunotherapies based on the Corporation’s proprietary drug delivery platform (“DPX”). This patented technology does not release the active ingredients at the site of injection but forces an active uptake and delivery of active ingredients into immune cells and lymph nodes. The Corporation’s first cancer immunotherapy uses survivin based peptides licensed from Merck KGaA, on a worldwide exclusive basis, formulated in DPX (“DPX-Survivac”). DPX-Survivac, has demonstrated the ability to induce prolonged T cell activation leading to tumour regressions in advanced ovarian cancer and is currently being used in clinical trials as a monotherapy and in combination with Merck’s KEYTRUDA® checkpoint inhibitor. The Corporation has one reportable and geographic segment. Incorporated under the Canada Business Corporations Act and domiciled in Dartmouth, Nova Scotia, the shares of the Corporation are listed on the Nasdaq Stock Market and the Toronto Stock Exchange under the symbol “IMV”. The address of its principal place of business is 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia, Canada.
| 2 | Basis of presentation |
The Corporation prepares its unaudited interim condensed consolidated financial statements in accordance with Canadian generally accepted accounting principles as set out in the Chartered Professional Accountants of Canada Handbook – Accounting Part I, which incorporates International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These unaudited interim condensed consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34, International Accounting Standards 34 “Interim Financial Reporting”. Accordingly, certain information normally included in annual audited financial statements prepared in accordance with IFRS, as issued by the IASB, have been omitted or condensed. The unaudited interim condensed consolidated financial statements should be read in conjunction with the Corporation’s annual audited consolidated financial statements for the year ended December 31, 2018.
| 3 | Significant accounting policies, judgements and estimation uncertainty |
These unaudited interim condensed consolidated financial statements have been prepared using the same policies and methods as the annual audited consolidated financial statements of the Corporation for the period ended December 31, 2018. Refer to note 4 of the Corporation’s annual audited consolidated financial statements for the year ended December 31, 2018 for more information on accounting policies and methods applied.
(2)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 4 | Deferred share units (“DSUs”) |
The maximum number of common shares which the Corporation is entitled to issue from Treasury in connection with the redemption of DSUs granted under the DSU Plan is 468,750 common shares.
DSU activity for the three months ended June 30, 2019 and the year ended December 31, 2018 are as follows:
| June 30, | December 31, | |||
| 2019 | 2018 | |||
| Number | Number | |||
| Opening balance | 223,604 | 186,330 | ||
| Granted | 63,368 | 97,072 | ||
| Redeemed | – | (59,798 | ) | |
| Closing balance | 286,972 | 223,604 |
As at June 30, 2019, there were 286,972 (2018 - 223,604) DSUs outstanding related to this Plan and the total carrying amount of the liability was $1,046 (2018 - $1,436). The compensation expense (recovery) at June 30, 2019 was ($390) (2018 - $508 expense), recognized over the vesting period. Vested DSUs cannot be redeemed until the holder is no longer a member of the Board. The redemption value of a DSU equals the market value of an IMV Inc. common share at the time of redemption. On an ongoing basis, the Corporation values the DSU obligation at the current market value of a corresponding number of IMV Inc. common shares and records any increase or decrease in the DSU obligation as an expense on the consolidated statements of loss and comprehensive loss.
(3)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 5 | Long-term debt |
| June 30, | December 31, | ||||
| 2019 | 2018 | ||||
| $ | $ | ||||
Atlantic Canada Opportunities Agency (“ACOA”) Atlantic Innovation Fund interest-free loan with a maximum contribution of $3,786. Annual repayments, commencing December 1, 2008, are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when gross revenues are less than $5,000 and 5% when gross revenues are greater than $5,000. As at June 30, 2019, the amount drawn down on the loan, net of repayments, is $3,744 (2018 - $3,744). | 1,412 | 1,202 | |||
ACOA Atlantic Innovation Fund interest-free loan with a maximum contribution of $3,000. Annual repayments, commencing December 1, 2011, are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when gross revenues are less than $5,000 and 5% when gross revenues are greater than $5,000. As at June 30, 2019, the amount drawn down on the loan is $2,995 (2018 - $2,995). | 1,276 | 1,034 | |||
ACOA Business Development Program, interest-free loan with a maximum contribution of $395, repayable in monthly payments beginning October 2015 of $3 until October 2017 and $6 until September 2022. As at June 30, 2019, the amount drawn down on the loan, net of repayments, is $218 (2018 - $251). | 209 | 238 | |||
ACOA Atlantic Innovation Fund interest-free loan with a maximum contribution of $2,944, annual repayments commencing September 1, 2014, are calculated as a percentage of gross revenue from specific product(s) for the preceding fiscal year, at 5% for the first 5 year period and 10%, thereafter. As at June 30, 2019, the amount drawn down on the loan is $2,944 (2018 - $2,944). | 1,125 | 957 | |||
TNC 120-140 Eileen Stubbs Ltd. (the “Landlord”) loan of $300,000, bearing interest at 8% annum, is repayable in monthly payments beginning upon receipt of the final installment of the loan until May 31, 2028. The loan is made available in three equal installments based on the Corporation meeting certain milestones. As at June 30, 2019, the amount drawn down on the loan is $291 (2018 - $300). | 291 | 300 | |||
Province of Nova Scotia “The Province” secured loan with a maximum contribution of $5,000, interest bearing at a rate equal to the Province’s cost of funds plus 1%, compounded semi-annually and payable monthly. The loan is repayable in monthly payments beginning January 1, 2021 of $83 plus interest until December 2025. The Corporation and its subsidiary have provided a general security agreement granting a first security interest in favour of the Province of Nova Scotia in and to all the assets of the Corporation and its subsidiary, including the intellectual property. As at June 30, 2019, the amount drawn down on the loan is $5,000 (2018 - $5,000). | 3,745 | 4,419 | |||
| 8,058 | 8,150 | ||||
Less: Current portion | 86 | 81 | |||
| 7,972 | 8,069 |
(4)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 5 | Long-term debt(continued) |
Total contributions received, less amounts that have been repaid as at June 30, 2019, is $15,192 (2018 - $15,234).
Certain ACOA loans and the Province loan require approval by ACOA or the Minister for the Province before the Corporation can pay management fees, bonuses, dividends or other distributions, before there is any change of ownership of the Corporation. The Province loan requires the Corporation to obtain the written consent of the Province prior to the sale, disposal or abandonment of possession of the intellectual property of the Corporation or its subsidiary. If during the term of the Province loan, the head office, research and development facilities, or production facilities of the Corporation are moved from the Province, the Corporation is required to repay 40% of the outstanding principal of the loan.
In June 2019, the Corporation amended its loan agreement with the Province. Previously, the maturity date of the loan was August 9, 2020. The Corporation shall now start repaying the balance of the principal amount on the first day of January 2021, by making 60 monthly principal payments of $83 plus interest from January 2021 to December 2025. The annual interest rate remains at the Province’s cost of funds plus 1%.
In accounting for this change, the Corporation determined, based on industry risk, its own credit risk and the interest rate environment, that the effective interest rate of the loan of 11% remains appropriate. The difference between the carrying value of the loan before the amendment and after the amendment of $840 has been recorded in the statement of loss and comprehensive loss as government assistance.
The Province loan requires certain early repayments if the Corporation’s subsidiary, or the Corporation on a consolidated basis, has cash flow from operations in excess of $1,500. The Province loan also requires repayment of the loan under certain circumstances, such as changes of control, sale or liquidation of the Corporation or the sale of substantially all of the assets of the Corporation.
| June 30, | December 31, | ||||
| 2019 | 2018 | ||||
| $ | $ | ||||
| Balance – Beginning of year | 8,150 | 6,537 | |||
| Borrowings, net of $nil (2018 - $nil) allocated to government assistance | – | 300 | |||
| Accreted interest | 790 | 1,385 | |||
| Revaluation of long-term debt | (840 | ) | – | ||
| Repayment of debt | (42 | ) | (72 | ) | |
| Balance – End of year | 8,058 | 8,150 | |||
| Less: Current portion | 86 | 81 | |||
| Non-current portion | 7,972 | 8,069 |
The Corporation is in compliance with its debt covenants.
(5)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 6 | Share capital |
Authorized
Unlimited number of common shares and preferred shares, issuable in series, all without par value.
| Number of | ||||
| common shares | Amount | |||
| # | $ | |||
| Issued and outstanding | ||||
| Balance – December 31, 2017 | 40,319,941 | 70,113 | ||
| Issued for cash consideration, net of issuance costs | 2,246,094 | 12,895 | ||
| Stock options exercised | 480,754 | 1,444 | ||
| DSUs redeemed | 29,713 | 220 | ||
| Warrants exercised | 2,029,899 | 5,480 | ||
| Balance – December 31, 2018 | 45,106,401 | 90,152 | ||
| Issued for cash, net of issuance costs | 5,404,855 | 26,957 | ||
| Stock options exercised | 86,446 | 281 | ||
| Warrants exercised | 14,423 | 82 | ||
| Balance – June 30, 2019 | 50,612,125 | 117,472 |
As at June 30, 2019, a total of 2,041,251 shares (2018 - 1,890,539) are reserved to meet outstanding stock options, warrants and deferred share units.
On March 6, 2019, the Corporation completed a public offering, issuing an aggregate of 4,900,000 common shares at a price of $5.45 per common share, raising gross proceeds of $26,705. On March 11, 2019, the underwriters partially exercised their option to purchase common shares, resulting in the issuance of 504,855 common shares of the Corporation at a price of $5.45 per share for additional gross proceeds of approximately $2,751. As a result of the exercise of this option, the Corporation has raised total gross proceeds of approximately $29,456 before deducting the underwriting commissions and offering expenses of $2,499.
On February 15, 2018, the Corporation completed a bought deal public offering of 2,246,094 common shares at a price of $6.40 per common share, for aggregate proceeds of $14,375. Total costs associated with the offering were $1,480, including cash costs for commissions of $863, professional fees and regulatory costs of $285, and 134,766 compensation warrants issued as commissions to the agents valued at $332. Each compensation warrant entitles the holder to acquire one common share of the Corporation at an exercise price of $6.53 for a period of 24 months, expiring on February 15, 2020.
(6)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 7 | Contributed surplus |
| Amount | |||
| $ | |||
| Contributed surplus | |||
| Balance – December 31, 2017 | 6,375 | ||
| Share-based compensation – stock options vested | 1,182 | ||
| Stock options exercised | (1,053 | ) | |
| Balance – December 31, 2018 | 6,504 | ||
| Share-based compensation – stock options vested | 694 | ||
| Stock options exercised | (225 | ) | |
| Warrants expired | 62 | ||
| Balance – June 30, 2019 | 7,035 |
Stock options
The fair values of stock options are estimated using the Black-Scholes option pricing model. In the current year, 243,100 stock options (2018 - 619,505) with a weighted average exercise price of $7.39 (2018 - $6.65) and a term of five years (2018 - five years), were granted to employees. The expected volatility of these stock options was determined using historical volatility rates and the expected life was determined using the weighted average life of past options issued. The value of these stock options has been estimated at $909 (2018 - $2,378), which is a weighted average grant date value per option of $3.74 (2018 - $3.84), using the Black-Scholes valuation model and the following weighted average assumptions:
| 2019 | 2018 | ||||
| Risk-free interest rate | 1.89% | 2.02% | |||
| Expected volatility | 64% | 77% | |||
| Expected life (years) | 4.2 | 4.2 | |||
| Forfeiture rate | 5% | 5% |
Option activity for the six months ended June 30, 2019 and the year ended December 31, 2018 was as follows:
| June 30, 2019 | December 31, 2018 | |||||||||
| Weighted | Weighted | |||||||||
| average | average | |||||||||
| Number | exercise price | Number | exercise price | |||||||
| $ | $ | |||||||||
| Outstanding – Beginning of year | 1,474,477 | 4.12 | 1,498,052 | 2.26 | ||||||
| Granted | 243,100 | 7.39 | 619,505 | 6.65 | ||||||
| Exercised | (121,127 | )1 | 2.35 | (626,875 | )1 | 2.18 | ||||
| Expired | (12,500 | ) | 2.37 | (5,569 | ) | 1.80 | ||||
| Forfeited | (7,706 | ) | 7.13 | (10,636 | ) | 4.92 | ||||
| Outstanding – End of year | 1,576,244 | 4.76 | 1,474,477 | 4.12 | ||||||
1 Of the 121,127 (2018 - 626,875) options exercised, 98,408 (2018 - 443,748) elected the cashless exercise, under which 63,727 shares (2018 - 297,626) were issued. These options would have otherwise been exercisable for proceeds of $229 (2018 - $975) on the exercise date.
(7)
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 7 | Contributed surplus(continued) |
Stock options(continued)
The weighted average exercise price of options exercisable at June 30, 2019 was $3.22 (2018 - $4.09).
The maximum number of common shares issuable under the Corporation’s stock option plan shall not exceed 4,600,000 inclusive of all shares presently reserved for issuance pursuant to previously granted stock options.
| 8 | Warrants |
Warrant activity for the period ended June 30, 2019 and the year ended December 31, 2018 was as follows:
| June 30, 2019 | December 31, 2018 | |||||||||||||||
| Weighted | Weighted | |||||||||||||||
| average | average | |||||||||||||||
| exercise | exercise | |||||||||||||||
| Number | price | Amount | Number | price | Amount | |||||||||||
| $ | $ | $ | $ | |||||||||||||
| Opening balance | 192,459 | 5.84 | 415 | 2,087,598 | 2.46 | 674 | ||||||||||
| Granted | – | – | – | 134,766 | 6.53 | 332 | ||||||||||
| Exercised | (14,423 | ) | 4.22 | (21 | ) | (2,029,905 | ) | 2.41 | (591 | ) | ||||||
| Expired | (43,269 | ) | 4.22 | (62 | ) | – | – | – | ||||||||
| Closing balance | 134,767 | 6.53 | 332 | 192,459 | 5.84 | 415 | ||||||||||
The fair values of warrants are estimated using the Black-Scholes option pricing model. There have been no warrants issued to date in 2019. The weighted average assumptions used in the Black-Scholes valuation model for the periods presented were as follows:
| 2018 | |||
Risk-free interest rate | 1.84% | ||
Expected volatility | 68% | ||
Expected dividend yield | – | ||
Expected life (years) | 2 |
| (8) |
| IMV Inc. |
| Notes to the Unaudited Interim Condensed Consolidated Financial Statements |
| As at June 30, 2019 and December 31, 2018 |
| (Expressed in thousands of Canadian dollars except for per share amounts) |
| 9 | Financial instruments |
Fair value of financial instruments
Financial instruments are defined as a contractual right or obligation to receive or deliver cash on another financial asset.
The following table sets out the approximate fair values of financial instruments as at the consolidated statements of financial position date with relevant comparatives:
| June 30, 2019 | December 31, 2018 | ||||||||||||
| Carrying | Carrying | ||||||||||||
| value | Fair value | value | Fair value | ||||||||||
| $ | $ | $ | $ | ||||||||||
| Cash and cash equivalents | 26,904 | 26,904 | 14,895 | 14,895 | |||||||||
| Amounts receivable | 1,285 | 1,285 | 780 | 780 | |||||||||
| Accounts payable and accrued liabilities | 5,720 | 5,720 | 7,557 | 7,557 | |||||||||
| Amounts due to directors | 63 | 63 | 49 | 49 | |||||||||
| Long-term debt | 7,972 | 7,972 | 8,069 | 8,069 | |||||||||
Assets and liabilities, such as commodity taxes, that are not contractual and that arise as a result of statutory requirements imposed by governments, do not meet the definition of financial assets or financial liabilities and are, therefore, excluded from amounts receivable and accounts payable.
Fair value of items, which are short-term in nature, have been deemed to approximate their carrying value. The above noted fair values, presented for information only, reflect conditions that existed only at June 30, 2019 and December 31, 2018 and do not necessarily reflect future value or amounts which the Corporation might receive if it were to sell some or all of its assets to a willing buyer in a free and open market.
The fair value of the long-term debt is estimated based on the expected interest rates for similar borrowings by the Corporation at the consolidated statements of financial position dates. At June 30, 2019, the fair value is estimated to be equal to the carrying amount.
| 10 | Related party transactions |
During the six months ended June 30, 2019, there were no related party transactions (2018 - $nil).
(9)