UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2021
Commission File Number:
(Translation of registrant's name into English)
| N/A |
| (Translation of Registrant's name into English) |
| British Virgin Islands |
| (Jurisdiction of incorporation or organization) |
| (Address of principal executive offices) |
c/o Portage Biotech, Inc., Ian Walters, 203.221.7376
6
Adelaide Street East, Suite 300, Toronto, Ontario, Canada M5C 1H6
(Name, telephone, e-mail and/or facsimile number and Address of Company Contact Person)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
EXHIBITS
Exhibit 99.1
Portage Biotech Inc.
Condensed Consolidated Interim Financial Statements
For the Three Months Ended June 30, 2021
(Unaudited – Prepared by Management)
(U.S. Dollars)
Portage Biotech Inc.
Condensed Consolidated Interim Financial Statements
| Index | Page | |
| Notice to Reader | F-1 | |
| Condensed Consolidated Interim Statements of Financial Position | ||
| As of June 30, 2021 (Unaudited) and March 31, 2021 | F-2 | |
| Condensed Consolidated Interim Statements of Operations and Other Comprehensive Income (Unaudited) | ||
| Three months ended June 30, 2021 and 2020 | F-3 | |
| Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity (Unaudited) | ||
| Three months ended June 30, 2021 and 2020 | F-4 | |
| Condensed Consolidated Interim Statements of Cash Flows (Unaudited) | ||
| Three months ended June 30, 2021 and 2020 | F-5 | |
| Notes to Condensed Consolidated Interim Financial Statements | F-6 to F-27 |
NOTICE TO READER OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The condensed consolidated interim financial statements for Portage Biotech Inc. are comprised of the condensed consolidated statements of financial position as of June 30, 2021 and March 31, 2021, and the condensed consolidated interim statements of operations and comprehensive loss for the three months ended June 30, 2021 and 2020 and the statements of equity and cash flows for each of the three months then ended and are the responsibility of the Company’s management.
The condensed consolidated interim financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these condensed consolidated interim financial statements in accordance with International Financial Reporting Standards.
| “signed” | “signed” |
| Allan Shaw, CFO | Ian Walters MD, Director |
| DATE: August 30, 2021 |
| F-1 |
Portage Biotech Inc.
Condensed Consolidated Interim Statements of Financial Position
(U.S. Dollars in thousands)
(Unaudited – see Notice to Reader dated August 30, 2021)
| As of, | Notes | June 30, 2021 | March 31, 2021 | |||||||
| (Audited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Prepaid expenses and other receivables | 5 | |||||||||
| Total current asset | ||||||||||
| Long-term assets | ||||||||||
| Long-term portion of other receivables | 5 | |||||||||
| Investment in associate | 7 | |||||||||
| Investments in private companies | 9 | |||||||||
| Goodwill | 10 | |||||||||
| In-process research and development | 11 | |||||||||
| Other assets | ||||||||||
| Total assets | $ | $ | ||||||||
| Liabilities and Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||||
| Warrant liability | 13 | |||||||||
| Unsecured notes payable | 12 | |||||||||
| Total current liabilities | ||||||||||
| Non-current liabilities | ||||||||||
| Deferred tax liability | 11 | |||||||||
| Total non-current liabilities | ||||||||||
| Total liabilities | ||||||||||
| Shareholders’ Equity | ||||||||||
| Capital stock | 14 | |||||||||
| Stock option reserve | 15 | |||||||||
| Accumulated other comprehensive income | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Total equity attributable to owners of the Company | ||||||||||
| Non-controlling interest | 21 | |||||||||
| Total equity | $ | $ | ||||||||
| Total liabilities and equity | $ | $ | ||||||||
| Commitments and Contingent Liabilities (Note 17) | ||||||||||
| On behalf of the Board | “Allan Shaw” | Chief Financial Officer | “Ian Walters” | Director |
| (signed) | (signed) |
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| F-2 |
Portage Biotech Inc.
Condensed Consolidated Interim Statements of Operations and Other Comprehensive (Loss)
(U.S. Dollars in thousands, except per share amounts)
(Unaudited – see Notice to Reader dated August 30, 2021)
| Note | Three Months Ended | |||||||||
| June 30, 2021 | June 30, 2020 | |||||||||
| Expenses | ||||||||||
| Research and development | $ | $ | ||||||||
| General and administrative expenses | ||||||||||
| Loss from operations | ( | ) | ( | ) | ||||||
| Change in fair value of warrant liability | 13 | |||||||||
| Share of (loss) income in associates accounted for using equity method | 7 | ( | ) | |||||||
| Interest (expense) | ( | ) | ( | ) | ||||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||||
| Income tax benefit | ||||||||||
| Net (loss) | ( | ) | ( | ) | ||||||
| Other comprehensive income (loss) | ||||||||||
| Unrealized gain on investments | 6, 9 | |||||||||
| Total comprehensive (loss) for period | $ | ( | ) | $ | ( | ) | ||||
| Net (loss) income attributable to: | ||||||||||
| Owners of the Company | $ | ( | ) | $ | ( | ) | ||||
| Non-controlling interest | 21 | ( | ) | |||||||
| Net (loss) income | $ | ( | ) | $ | ( | ) | ||||
| Comprehensive (loss) income attributable to: | ||||||||||
| Owners of the Company | $ | ( | ) | $ | ( | ) | ||||
| Non-controlling interest | 21 | ( | ) | |||||||
| Total comprehensive (loss) income for year | $ | ( | ) | $ | ( | ) | ||||
| (Loss) per share | 16 | |||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding | 16 | |||||||||
| Basic and diluted | ||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| F-3 |
Portage Biotech Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
For the Three Months Ended June 30, 2021 and 2020
(U.S. Dollars)
(Unaudited – see Notice to Reader dated August 30, 2021)
| Number of Shares | Capital Stock | Stock Option Reserve | Accumulated Other Comprehensive Income | Retained Earnings (Accumulated Deficit) | Equity Attributable to Owners of Company | Non-controlling Interest | Total Equity | |||||||||||||||||||||||||
| In ‘000’ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | |||||||||||||||||||||||||
| Balance, April 1, 2020 | ( | ) | ||||||||||||||||||||||||||||||
| Issued under private placement | ||||||||||||||||||||||||||||||||
| Share issuance costs | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Share-based compensation | – | |||||||||||||||||||||||||||||||
| Unrealized gain on investments | – | |||||||||||||||||||||||||||||||
| Net loss for period | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Balance, April 1, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Share-based compensation | – | |||||||||||||||||||||||||||||||
| Shares issued under ATM | ||||||||||||||||||||||||||||||||
| Shares issued under offering | ||||||||||||||||||||||||||||||||
| Share issuance costs | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Shares issued or accrued for services | ||||||||||||||||||||||||||||||||
| Net loss for period | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| F-4 |
Portage Biotech Inc.
Condensed Consolidated Interim Statements of Cash Flows
For the Three Months Ended June 30, 2021 and 2020
(U.S. Dollars in thousands)
(Unaudited – see Notice to Reader dated August 30, 2021)
| Three Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows provided by (used in) operating activities: | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments for non-cash items: | ||||||||
| Increase in deferred tax liability | ||||||||
| Income on fair value of warrant liability | ( | ) | ||||||
| Value of shares issued for services | ||||||||
| Amortization of debt discount | ||||||||
| Share of loss (gain) in associates | ( | ) | ||||||
| Stock-based compensation expense | ||||||||
| Changes in operating working capital: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other receivables | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Other | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows provided by (used in) investing activities: | ||||||||
| Investment in associates | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows provided by (used in) financing activities: | ||||||||
| Proceeds from shares issued under registered offering | ||||||||
| Share issuance costs | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Increase in cash and cash equivalents during period | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Increase in accounts payable for stock issuance costs | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Fair value of warrant liability for Portage warrants issued | $ | $ | ||||||
| Unrealized (loss) on investment in investments | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
| F-5 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 1. NATURE OF OPERATIONS
Portage Biotech Inc. (the "Company" or “Portage”) is incorporated in the British Virgin Islands ("BVI") with its registered office located at FH Chambers, P.O. Box 4649, Road Town, Tortola, BVI. Its Toronto agent, Portage Services Ltd., is located at 6 Adelaide Street East, Suite 300, Toronto, Ontario, M5C 1H6, Canada.
The Company is a reporting issuer with the securities commissions of the provinces of Ontario and British Columbia. Its ordinary shares were listed on the Canadian Stock Exchange (“CSE”) under the symbol “PBT.U”. On February 25, 2021, the ordinary shares of the Company began trading on the NASDAQ Capital Market (“NASDAQ”) under the symbol “PRTG”. The Company voluntarily delisted its common shares from the CSE at the market close on April 23, 2021, since the Company’s shares began trading on NASDAQ.
Portage is a clinical stage immune-oncology company focused on overcoming immune resistance and currently managing 10 immuno-oncology assets at various development stages. We source, nurture and develop the creation of early- to mid-stage, first- and best-in-class therapies for a variety of cancers, by funding, implementing viable, cost effective product development strategies, clinical counsel/trial design, shared services, financial and project management to enable efficient, turnkey execution of commercially informed development plans. Our drug development pipeline portfolio encompasses products or technologies based on biology addressing known resistance pathways/mechanisms of current check point inhibitors with established scientific rationales, including intratumoral delivery, nanoparticles, liposomes, aptamers, and virus-like particles.
On
August 13, 2018, the Company reached a definitive agreement to acquire
On June 5, 2020, the Company effected a 100:1 reverse stock split. All share and per share information included in the consolidated financial statements have been retroactively adjusted to reflect the impact of the reverse stock split. The shares of ordinary shares authorized remained at an unlimited number of ordinary shares without par value.
Portage filed a registration statement and prospectus with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b)(2) under which it may sell shares, debt securities, warrants and units that Portage may sell in one or more offerings from time to time, which became effective on March 8, 2021 (“Registration Statement” or “Prospectus”). The Registration Statement includes:
| · | a
base prospectus, which covers the offering, issuance and sales by us of up to $ |
| · | a
sales agreement supplemental prospectus covering the offer, issuance and sale by us of up
to a maximum aggregate offering price of up to $ |
| · | a prospectus supplement dated June 24, 2021, for the offer, issuance and sale by us of 1,150,000 ordinary shares for gross proceeds of approximately $26.5 million in a firm commitment underwriting with Cantor Fitzgerald. |
| F-6 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 1. NATURE OF OPERATIONS (Cont’d)
NOTE 2. LIQUIDITY
As
of June 30, 2021, the Company had cash and cash equivalents of $
The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The losses result primarily from its conduct of research and development activities.
The Company historically has funded its operations principally from proceeds from issuances of equity and debt securities and would expect to enter the capital markets if additional funding is required.
| F-7 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 2. LIQUIDITY (Cont’d)
COVID-19 Effect
Beginning in early March 2020, the COVID-19 pandemic and the measures imposed to contain this pandemic have disrupted and are expected to continue to impact the Company's business operations. The magnitude of the impact of the COVID-19 pandemic on the Company's productivity, results of operations and financial position, and its disruption to the Company's business and clinical programs and timelines, will depend, in part, on the length and severity of these restrictions and on the Company's ability to conduct business in the ordinary course.
NOTE 3. BASIS OF PRESENTATION
Statement of Compliance and Basis of Presentation
These condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), IAS 34 Interim Financial Reporting and interpretations of the International Financial Reporting Interpretations Committee. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended March 31, 2021.
These condensed consolidated interim financial statements have been prepared on an historical cost basis except for items disclosed herein at fair value (see Note ----19, Financial Instruments and Risk Management”). In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.
The Company has only one reportable operating segment.
These condensed consolidated interim financial statements were approved and authorized for issuance by the Audit Committee and Board of Directors on August 26, 2021.
Consolidation
The condensed consolidated interim financial statements include the accounts of the Company and,
(a) SalvaRx Limited (“SalvaRx”), a wholly-owned subsidiary, incorporated on May 6, 2015 in the British Virgin Islands.
(b)
iOx Therapeutics Ltd. (“iOx”), a United Kingdom based immune-oncology company, a
(c)
Saugatuck Therapeutics, Ltd. (“Saugatuck”), a
(d) Portage Developmental Services, a 100% owned subsidiary incorporated in Delaware, which provides human resources, and other services to each operating subsidiary via a shared services agreement.
| F-8 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 3. BASIS OF PRESENTATION (Cont'd)
Consolidation (Cont’d)
The following companies were disposed of on March 3, 2021 (see Note 8, “Disposition of PPL”):
| · | Portage Pharmaceuticals Ltd. (“PPL”), a wholly-owned subsidiary acquired in a merger on July 23, 2013, incorporated in the British Virgin Islands. |
| · | EyGen Limited, (“EyGen”), a wholly-owned subsidiary of PPL, incorporated on September 20, 2016, in the British Virgin Islands. |
| · | Portage
Glasgow Ltd. (“PGL”), a |
All inter-company balances and transactions have been eliminated in consolidation.
Non-controlling
interest in the equity of a subsidiary is accounted for and reported as a component of stockholders’ equity. Non-controlling interests
represent the
Functional and Presentation Currency
The Company’s functional and presentation currency is the U.S. Dollar.
Use of Estimates and Judgments
The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Significant areas where estimates are made include valuation of financial instruments, research and development costs, fair value used for acquisition and measurement of share-based compensation. Significant areas where critical judgments are applied include assessment of impairment of investments and goodwill and the determination of the accounting acquirer and acquiree in the business combination accounting.
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
| F-9 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies are set out in Note 4 to the fiscal 2021 audited consolidated financial statements. These policies have been applied consistently to all periods presented in these condensed consolidated interim financial statements.
Recent Accounting Pronouncements
Impact of Adoption of Significant New IFRS Standards in 2020
| (a) | IAS 1: Presentation of Financial Statements, and IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (Amendment) |
The amendments to IAS 1 and IAS 8 clarify the definition of material and seek to align the definition used in the Conceptual Framework with that in the standards themselves, as well as ensuring the definition of material is consistent across all IFRS. The Company adopted these amendments effective January 1, 2020. The adoption of these amendments did not have a significant impact on the Company’s annual consolidated financial statements.
| (b) | Conceptual Framework for Financial Reporting |
Together with the revised Conceptual Framework published in March 2018, the IASB also issued Amendments to References to the Conceptual Framework in IFRS Standards. The Company adopted the Revised Conceptual Framework effective January 1, 2020. The adoption of these amendments did not have a significant impact on the Company’s annual consolidated financial statements.
IFRS Pronouncements Issued But Not Yet Effective
New Accounting Standards, Interpretations and Amendments
Standards issued but not yet effective up to the date of issuance of the Company's condensed consolidated interim financial statements are listed below. This listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company intends to adopt those standards when they become effective.
| (c) | Annual Improvements to IFRS Standards 2018-2020 |
The annual improvements process addresses issues in the 2018-2020 reporting cycles including changes to IFRS 9, “Financial Instruments,” IFRS 1, “First Time Adoption of IFRS,” IFRS 16, “Leases,” and IAS 41, “Biological Assets”.
i) The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities.
ii) The amendment to IFRS 1 allows a subsidiary adopting IFRS at a later date than its parent to also measure cumulative translation differences using the amounts reported by the parent based on the parent’s date of transition to IFRS.
iii) The amendment to IFRS 16’s illustrative example 13 removes the illustration of payments from the lessor related to leasehold improvements.
These amendments will be effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
| F-10 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 4. SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
| (d) | IAS 37: Onerous Contracts - Cost of Fulfilling a Contract |
The amendment to IAS 37 clarifies the meaning of costs to fulfil a contract and that before a separate provision for an onerous contract is established, an entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract, rather than on assets dedicated to the contract. This amendment will be effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
| (e) | IAS 16: Proceeds Before Intended Use |
The amendment to IAS 16 prohibits an entity from deducting from the cost of an item of Property, plant and equipment any proceeds received from selling items produced while the entity is preparing the assets for its intended use (for example, the proceeds from selling samples produced when testing a machine to see if it is functioning properly). It also clarifies that an entity is testing whether the asset is functioning properly when it assesses the technical and physical performance of the asset. The amendment also requires certain related disclosures. This amendment will be effective for annual periods beginning on or after January 1, 2022. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
| (f) | IAS 1: Presentation of Financial Statements |
The amendment to IAS 1 clarifies how to classify debt and other liabilities as either current or non-current. The amendment will be effective for annual periods beginning on or after January 1, 2023. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
| (g) | Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and Its Associate or Joint Venture |
The amendment addresses the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognized in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognized only to the extent of unrelated investors' interests in the associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The Company is evaluating whether the adoption of the above amendment will have a material impact on its financial statements.
| F-11 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 5. PREPAID EXPENSES AND OTHER RECEIVABLES
| (In thousands) | As
of June 30, 2021 | As
of March 31, 2021 | ||||||
| Prepaid insurance | $ | $ | ||||||
| Research & development tax credits | ||||||||
| Other prepaid expenses | ||||||||
| Other receivables | ||||||||
| Total prepaid expenses and other receivables | $ | $ | ||||||
In
October 2016, the Company's wholly-owned subsidiary, PPL, agreed to a settlement, from a claim made against a supplier, to receive $
NOTE 6. INVESTMENT IN MARKETABLE EQUITY SECURITIES
As
of March 31, 2020, the Company’s investment in marketable equity securities was comprised of
In
August 2020, the Company sold the shares of Biohaven for proceeds of $resulting in a gain of $
The following table is a roll-forward of the investment in Biohaven as of June 30, 2021 and 2020:
| Three Months Ended June 30, | ||||||||
| (In thousands) | 2021 | 2020 | ||||||
| Balance, beginning of period | $ | $ | ||||||
| Unrealized gain on investment | ||||||||
| Balance, end of period | $ | $ | ||||||
NOTE 7. INVESTMENT IN ASSOCIATE
Details of the Company’s associate as of June 30, 2021 and March 31, 2021 are as follows:
| Name | Principal Activity | Place
of Incorporation and Principal Place of Business | Voting
Rights Held as of June 30, 2021 | Voting
Rights Held as of March 31, 2021 | ||||
The abovementioned associate is accounted for using the equity method in these condensed consolidated interim financial statements.
| F-12 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 7. INVESTMENT IN ASSOCIATE (Cont’d)
The following table is a roll-forward of the Company’s investment in Stimunity S.A. as of June 30, 2021 and 2020:
| Three Months Ended June 30, | ||||||||
| (In thousands) | 2021 | 2020 | ||||||
| Balance, beginning of period | $ | $ | ||||||
| Additional investment | ||||||||
| Share of (loss) income | ( | ) | ||||||
| Balance, end of period | $ | $ | ||||||
On
June 1, 2020, the Company made an additional $
The
Company accounts for its investment in Stimunity under the equity method and accordingly, records its share of Stimunity’s earnings
or loss based on its ownership percentage. The Company recorded equity in (loss) income in Stimunity of ($
Under the shareholders agreement, Portage has (i) a preferential subscription right to maintain its equity interest in Stimunity in the event of a capital increase from the issuance of new securities by Stimunity, except for issuances of new securities for stock options under a merger plan or for an acquisition, or (ii) the right to vote against any (a) issuances of additional securities that would call for the Company to waive its preferential subscription right, or (b) any dilutive issuance.
| F-13 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 8. DISPOSITION OF PPL
On
March 3, 2021, the Company disposed of
NOTE 9. INVESTMENTS IN PRIVATE COMPANIES
The following is a discussion of our investments in private companies as of June 30, 2021 and March 31, 2021.
Sentien
In
August 2015, the Company acquired shares of Series A preferred stock in Sentien
(“Preferred Stock”), a Medford, MA based private company for $700,000 of cash. The Preferred Stock is fully convertible into
an equal number of common shares. The Company’s holdings represent
Intensity
In
connection with the SalvaRx Acquisition in fiscal 2019, the Company acquired a $4.5 million interest in Intensity, a clinical stage biotechnology
company, of million shares, which represented a
On
July 11, 2019, the Company entered into an agreement with Fast Forward Innovations Limited ("Fast Forward") to purchase Intensity
Holdings Limited ("IHL"), a wholly-owned subsidiary of Fast Forward. The Company paid $
During
the year ended March 31, 2020, the Company recorded an unrealized gain of $
As
of each of June 30, 2021 and March 31, 2021, the Company owned approximately
| F-14 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 10. GOODWILL
| (In thousands) | As
of June 30, 2021 | As
of March 31, 2021 | ||||||
| Balance, beginning of period | $ | $ | ||||||
| Balance, end of period | $ | $ | 43,324 | |||||
The Company’s goodwill arose from the acquisition of SalvaRx and its portfolio of several projects and investments.
As of June 30, 2021, the Company determined that it has only one cash-generating unit (“CGU”), the consolidated Portage Biotech, Inc.
Impairment Review
On an annual basis, pursuant to IAS 36, “Impairment of Assets,” the Company assesses its long-lived assets with definite lives, which are not yet available for use, for potential indicators of impairment.
If any such indication exists, the Company estimates the recoverable amount of the asset or CGU and compares it to the carrying value.
The Company performed its annual impairment test in each of fiscal 2021 and fiscal 2020 and estimated the recoverable amount of the above-noted CGU based on its value in use, which was determined using a capitalized cash flow methodology and categorized within level 3 of the fair market value hierarchy.
| F-15 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 10. GOODWILL (Cont’d)
The recoverable amount of the CGU has been determined based on its value in use. The recoverable amount considered assumptions based on probabilities of technical, regulatory and clinical acceptances and financial support. Further, Management uses risk-adjusted cash flow projections based on financial budgets. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the carrying amount to exceed its recoverable amount. The discount rate has been determined based on the Company’s best estimate of a risk adjusted discount rate.
The key assumptions used in the calculation of the recoverable amount include forecasts of the following:
| (a) | revenues; |
| (b) | normalized operating expenses; |
| (c) | income taxes; and |
| (d) | capital expenditures. |
Discounted
cash flows are determined with reference to undiscounted risk adjusted cash flows, and the discount rate approximated
Additionally, at the end of each reporting period, the Company is required to assess whether there is any indication that an asset may be impaired. Pursuant to IAS 36, the Company reviewed its assets for any indicators of impairment and considered underlying fundamentals, execution, de-risking/advancement of assets and the value creation activities during the three months ended June 30, 2021.
As of June 30, 2021, management assessed whether any indications of impairment existed for the Company’s CGU and concluded no indicators were present. Therefore, a test for impairment was not required and no impairment was recorded for the three months ended June 30, 2021.
NOTE 11. IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY
In-process research and development (“IPR&D”) consists of the following projects (in 000’$):
| Project # | Description | Value
as of June 30, 2021 | Value
as of March 31, 2021 | |||||||
| iOx: | ||||||||||
| IMM 60 | Melanoma & Lung Cancers | $ | $ | |||||||
| IMM 65 | Ovarian/Prostate Cancers | |||||||||
| 117,210 | 117,210 | |||||||||
| Oncomer/Saugatuck | DNA Aptamers | |||||||||
| $ | $ | |||||||||
| Deferred tax liability | $ | $ | ||||||||
| F-16 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 11. IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY (Cont’d)
As of June 30, 2021, management assessed whether any indications of impairment existed for the Company’s IPR&D and concluded no indicators were present. Therefore, a test for impairment was not required and no impairment was recorded for the three months ended June 30, 2021.
Deferred
tax liability (DTL) represents iOx’s estimated tax on the difference between book and tax basis of the IPR&D which is taxable
in the United Kingdom. As of June 30, 2021, the Company recorded deferred tax expense of $
NOTE 12. UNSECURED NOTES PAYABLE
Following is a roll-forward of notes payable:
| CURRENT | CURRENT | NON-CURRENT | ||||||||||||||
| (In thousands) | PPL | iOx | SalvaRx | Total | ||||||||||||
| Balance, April 1, 2020 | $ | $ | $ | $ | ||||||||||||
| Repayment | ( | ) | ( | ) | ||||||||||||
| Amortization of debt discount | ||||||||||||||||
| Value of notes exchanged in warrant exercise | ( | ) | ( | ) | ||||||||||||
| Settlement in connection with disposition of PPL | ( | ) | ( | ) | ||||||||||||
| Loss on extinguishment of debt | ||||||||||||||||
| Proceeds from loan payable | ||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | ||||||||||||
PPL and EyGen Unsecured Notes Payable
During
the year ended March 31, 2017, the Company's subsidiaries, PPL and EyGen, completed a private placement of unsecured notes (the "PPL
Unsecured Notes"). The balance outstanding as of March 31, 2020 was $
The PPL Unsecured Notes were settled as part of the disposition of PPL in March 2021 (see Note 8, “Disposition of PPL”).
SalvaRx Unsecured Notes Payable and Warrants
In
connection with the SalvaRx Acquisition in January 2019, the Company assumed $
| F-17 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 12. UNSECURED NOTES PAYABLE (Cont’d)
During
September 2020, the Company settled the SalvaRx Notes obligations originally due in June 2021 in an aggregate principal amount of approximately
$3.7 million, plus accrued interest of $0.75 million in exchange for cash payments totaling $
The noteholders who
accepted the offer exchanged their SalvaRx warrants for an equal number of Portage shares at the same price per share.
Four
of the Company's directors, Gregory Bailey, James Mellon (former director), Steven Mintz (in trust) and Kam Shah, received, in total,
of
the warrants pursuant to this transaction. Subsequent to the exercise of the warrants in October 2020, Portage had
The
Company also recorded a loss on early extinguishment of debt of $
iOx Unsecured Notes Payable
In
connection with the SalvaRx Acquisition in January 2019, the
NOTE 13. WARRANT LIABILITY
Below is the roll-forward of warrants issued by entity (see Note 12, “Unsecured Notes Payable”):
| PBI | ||||||||||||
| Exercise Price | Warrants | Amount | ||||||||||
| In 000’ | In 000’$ | |||||||||||
| Warrants outstanding, April 1, 2021 | $ | $ | ||||||||||
| Fair value adjustment as of June 30, 2021 (1) (2) | ( | ) | ||||||||||
| Warrants outstanding, June 30, 2021 | $ | $ | ||||||||||
| (1) |
The Black Scholes assumptions used in the fair value calculation of the warrants as of June 30, 2021 were:
Risk free rate: 0.11%
Expected Dividend: $0
Expected Life: 1.28 years
Volatility: 92.6%
| (2) |
| F-18 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 14. CAPITAL STOCK
| (a) | Authorized ordinary shares: Unlimited number of common shares without par value. |
| (b) | Following is a roll-forward of ordinary shares as of June 30, 2021, and 2020: |
| Three Months Ended June 30, | ||||||||||||||||
| 2021 | 2020 | |||||||||||||||
| Ordinary Shares | Amount | Ordinary
Shares | Amount | |||||||||||||
| In 000’ | In 000’$ | In 000’ | In 000’$ | |||||||||||||
| Balance, beginning of period | $ | $ | ||||||||||||||
| Shares issued in a private placement, net of share issue costs | ||||||||||||||||
| Shares issued for services | ||||||||||||||||
| Balance, end of period | $ | $ | ||||||||||||||
| (c) | Number of ordinary shares have been retroactively adjusted to reflect the impact of 100:1 reverse stock split on June 5, 2020. |
On June 16, 2020, the Company completed a private placement of restricted ordinary shares at a price of $per share for gross proceeds of $million to accredited investors. Directors of the Company subscribed for shares, or approximately 30.8% of the private placement, for proceeds of $million. The Company incurred costs of approximately $0.25 million in connection with the offering, which was treated as contra-equity on the Company’s balance sheet.
During
the quarter ended June 30, 2021, the Company commenced an “at the market” offering, under which it sold shares generating gross proceeds of approximately
$million
($
| F-19 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
| (a) | The following table provides the activity for the Company’s stock option reserve for the three months ended June 30, 2021 and 2020: |
| Three Months Ended June 30, | ||||||||||||||||
| 2021 | 2020 | |||||||||||||||
| (In thousands) | Non-Controlling Interest | Stock Option Reserve | Non-Controlling Interest | Stock Option Reserve | ||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Share-based compensation expense | ||||||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
Stock Options
The Board of Directors of the Company (the "Board") established a stock option plan (the "2013 Option Plan") under which options to acquire ordinary shares of the Company are granted to directors, employees and consultants of the Company. The maximum number of ordinary shares issuable under the 2013 Option Plan shall not exceed 10% of the total number of issued and outstanding ordinary shares, inclusive of all shares presently reserved for issuance pursuant to previously granted stock options. If a stock option was surrendered, terminated or expired without being exercised, the ordinary shares reserved for issuance pursuant to such stock option were available for new stock options granted under the 2013 Option Plan. The options vest on a schedule determined by the Board of Directors, generally over two to four years, and expire after five years.
As
of March 31, 2019, the Board decided to discontinue the 2013 Option Plan and during the year ended March 31, 2021,
On June 25, 2020, at the annual meeting of shareholders, the Company’s new incentive stock option plan (the “2020 Stock Option Plan”) was approved, which authorized the directors to fix the option exercise price and to issue stock options under the plan as they see fit. The Company's 2020 Stock Option Plan is a 10% rolling stock option plan under which the directors are authorized to grant up to a maximum of 10% of the issued and outstanding ordinary shares on the date of grant.
Effective January 13, 2021, the Company amended and restated its 2020 Stock Option Plan to permit the grant of additional types of equity compensation securities, including restricted stock units and dividend equivalent rights (the "2021 Equity Incentive Plan"). The aggregate number of equity securities, which may be issued under the 2021 Equity Incentive Plan has not been changed. Pursuant to the 2021 Equity Incentive Plan, on January 13, 2021, the Company granted an aggregate of stock options exercisable at a price of US$per share, representing the closing price of the shares on the day immediately preceding the grant date, which expire on January 13, 2031 to various directors, officers and consultants of the Company. options granted to members of the board of directors vest 1/3 on grant date, 1/3 on the first anniversary of the grant and 1/3 on the second anniversary of the grant. options granted to consultants (one of whom is also a director) vest 1/3 on each of the first three anniversaries of the date of grant.
| F-20 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 15. STOCK OPTION RESERVE (Cont’d)
Additionally,
the Company granted
| (b) | The movements in the number of options issued were: |
PBI 2021 Equity Incentive Plan | PBI 2013 Option Plan | iOx Option Plan (Subsidiary Plan) | ||||||||||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Balance, beginning of period | ||||||||||||||||||||||||
| Granted | ||||||||||||||||||||||||
| Expired or forfeited | ||||||||||||||||||||||||
| Balance, end of period | ||||||||||||||||||||||||
| Exercisable, end of period | ||||||||||||||||||||||||
The Board discontinued the 2013 Option Plan in fiscal 2019.
| (c) | Following are the weighted average exercise price and the remaining contractual life for outstanding options by plan: |
PBI 2021 Equity Incentive Plan | PBI 2013 Option Plan | iOx Option Plan (Subsidiary Plan) | ||||||||||||||||||||||
| As of June 30, | As of June 30, | As of June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Weighted average exercise price | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Weighted average remaining contractual life (in years) | – | – | ||||||||||||||||||||||
The vested options can be exercised at any time in accordance with the applicable option agreement. The exercise price was greater than the market price on the date of the grants for all options outstanding as of June 30, 2021 and March 31, 2021.
The
Company recorded approximately $
The
Company recorded $
| F-21 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
Basic earnings per share ("EPS") is calculated by dividing the net income (loss) attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the net income (loss) attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the loss and share data used in the basic and diluted EPS calculations (dollars in thousands, except per share amounts):
| Three Months Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Numerator (in 000’$) | ||||||||
| Net loss attributable to owners of the Company | $ | ( | ) | $ | ( | ) | ||
| Denominator (in 000’) | ||||||||
| Weighted average number of shares – Basic and Diluted | ||||||||
| Basic and diluted (loss) per share (Actual) | $ | ( | ) | $ | ( | ) | ||
The inclusion of the Company's stock options, restricted stock units and share purchase warrants in the computation of diluted loss per share would have an anti-dilutive effect on loss per share and are therefore excluded from the computation. Consequently, there is no difference between basic loss per share and diluted loss per share for the three months ended June 30, 2021, and 2020. The following table reflects the outstanding securities by year that would have an anti-dilutive effect on loss per share, and accordingly, were excluded from the calculation.
| As of June 30, | ||||||||
| 2021 | 2020 | |||||||
| Stock options | ||||||||
| Restricted stock units | ||||||||
| Warrants | ||||||||
Inclusion of outstanding options or other common stock equivalents in the computation of diluted loss per share would have an anti-dilutive effect on the loss per share and are therefore excluded from the computation. Consequently, there is no difference between loss per share and diluted loss per share.
NOTE 17. COMMITMENTS AND CONTINGENT LIABILITIES
The
Company is committed to invest approximately €1.5 million ($
| F-22 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 18. RELATED PARTY TRANSACTIONS
Investments
The Company has entered into related party transactions and certain services agreements with its investees. Key management of the Company has also entered into related party transactions with investees. Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company. The Board of Directors, Chairman, Chief Executive Officer and Chief Financial Officer are key management personnel.
The following subsidiaries and associates are considered related parties:
| (a) | Stimunity. One of the three directors on the Board of Directors of Stimunity is controlled by Portage (see Note 7, “Investment in Associate”). |
| (b) | iOx. Two of the five directorships on the Board of Directors of iOx is controlled by Portage. Additionally, Portage has an observer on the Board of iOx. The CEO of the Company is also the CEO of iOx, and the management team of the Company comprise the management team of iOx. |
| (c) | Saugatuck. One of the three directorships on the Board of Directors of Saugatuck is controlled by Portage. Additionally, the CEO of the Company is also the CEO of Saugatuck and the management team of the Company comprise the management team of Saugatuck. |
| (d) | Intensity. One of the four directorships on the Board of Directors of Intensity is represented by Portage. Additionally, the CEO of the Company is an officer and employee of Intensity (see Note 9, “Investments in Private Companies”). |
| (e) | PGL. PPL holds 65% equity in PGL, committed to provide financing and also handles financial and administrative matters of PGL. The Company disposed of 100% of its interests in PPL and PGL on March 3, 2021 (see Note 8, “Disposition of PPL”). |
| (f) | Portage Development Services. A 100% owned subsidiary incorporated in Delaware, which provides human resources, and other services to each operating subsidiary via a shared services agreement. |
The following are significant related party balances and transactions other than those disclosed elsewhere in the condensed consolidated interim financial statements:
Interest
expense includes $
In
January 2020, a board member of the Company advanced the Company $
| F-23 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 18. RELATED PARTY TRANSACTIONS (Cont’d)
Transactions between the parent company and its subsidiaries, which are related parties, have been eliminated in consolidation and are not disclosed in this note.
NOTE 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company’s financial instruments recognized in the Company’s condensed consolidated interim statements of financial position consist of the following:
Fair value estimates are made at a specific point in time, based on relevant market information and information about financial instruments. These estimates are subject to and involve uncertainties and matters of significant judgment, therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The following table summarizes the Company’s financial instruments as of June 30, 2021 and March 31, 2021:
| As of June 30, 2021 | As of March 31, 2021 | |||||||||||||||
| (In thousands) | Amortized Cost | Fair
Value through Other Comprehensive Income (FVTOCI) | Amortized Cost | FVTOCI | ||||||||||||
| Financial assets | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Prepaid expenses and other receivables | $ | $ | $ | $ | ||||||||||||
| Investments | $ | $ | $ | $ | ||||||||||||
| Amortized Cost | Fair Value through Profit or Loss (FVTPL) | Amortized Cost | FVTPL | |||||||||||||
| Financial liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | $ | ||||||||||||
| Unsecured notes payable | $ | $ | $ | $ | ||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||
A summary of the Company’s risk exposures as it relates to financial instruments are reflected below.
Fair value of financial instruments
The Company’s financial assets and liabilities are comprised of cash, receivables and investments in equities and private entities, accounts payable, warrant liability and unsecured notes payable.
The Company classifies the fair value of these transactions according to the following fair value hierarchy based on the amount of observable inputs used to value the instrument:
| · | Level 1 – Values are based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date. |
| · | Level 2 – Values are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting date. |
| · | Level 3 – Values are based on prices or valuation techniques that are not based on observable market data. Investments are classified as Level 3 financial instrument. |
| F-24 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy.
Management has assessed that the fair values of cash and cash equivalents, other receivables and accounts payable approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate their fair values:
Investment in Biohaven: Fair value was based on a quoted market price of $per share as of March 31, 2020 (Level 1). The investment was sold in August 2020.
Investment in Sentien: Fair value of the asset is determined by considering strategy changes by Sentien (Level 3).
Investment in Intensity: Fair value of the asset is determined by considering other comparable equity funding transactions by Intensity with unrelated investors (Level 3).
Accrued equity issuable: The fair value is estimated based on the average of the quoted market prices for the period in which the shares were earned (Level 1).
Unsecured notes payable: The fair value is estimated using a Black Scholes model (Level 3) (see Note 12, Unsecured Notes Payable”).
Warrant Liability: The fair value is estimated using a Black Scholes model (Level 3) (see Note 13, “Warrant Liability”).
There have been no transfers between levels of the fair value hierarchy for the three months ended June 30, 2021 and the year ended March 31, 2021.
The Company’s financial instruments are exposed to certain financial risks: credit risk and liquidity risk.
Credit Risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfil its payment obligations. The credit risk is attributable to various financial instruments, as noted below. The credit risk is limited to the carrying value as reflected in the Company’s condensed consolidated interim statements of financial position.
Cash. Cash is held with major international financial institutions and therefore the risk of loss is minimal.
Other receivables. The Company was exposed to credit risk attributable to its debtor since a significant portion of this amount represents the amount agreed on a settlement of a claim by PPL (see Note 5, “Prepaid Expenses and Other Receivables”), originally payable over the next four years. The installment note was repaid in full in July 2021 (see Note 22, “Events After the Balance Sheet Date – Installment Note Receivable”).
| F-25 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due.
The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company’s reputation. The Company holds sufficient cash to satisfy obligations under accounts payable and accruals.
The Company monitors its liquidity position regularly to assess whether it has the funds necessary to meet its operating needs and needs for investing in new projects. The Company believes that it has sufficient funding to finance the committed drug development work, apart from meeting its operational needs for the foreseeable future.
However, as a biotech company at an early stage of development and without significant internally generated cash flows, there are inherent liquidity risks, including the possibility that additional financing may not be available to the Company, or that actual drug development expenditures may exceed those planned. The current uncertainty in global markets could have an impact on the Company’s future ability to access capital on terms that are acceptable to the Company. There can be no assurance that required financing will be available to the Company.
NOTE 20. CAPITAL DISCLOSURES
The
Company considers the items included in shareholders’ equity as capital. The Company had accounts payable and accrued expenses
of approximately $
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.
As of June 30, 2021, shareholders’ equity attributable to the owners of the company was approximately $127.7 million (approximately $101.4 million as of March 31, 2021).
The Company is not subject to any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital. There have been no changes to the Company’s approach to capital management during the three months ended June 30, 2021 and 2020.
| F-26 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated August 30, 2021)
NOTE 21. NON-CONTROLLING INTEREST
| (In thousands) | PGL | SalvaRx | iOx | Saugatuck | Total | |||||||||||||||
| Non-controlling interest as of April 1, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
| Net (loss) attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Non-controlling interest as of June 30, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| (In thousands) | PGL | SalvaRx | iOx | Saugatuck | Total | |||||||||||||||
| Non-controlling interest as of April 1, 2020 | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
| Net income attributable to non-controlling interest | ||||||||||||||||||||
| Non-controlling interest as of June 30, 2020 | $ | ( | ) | $ | $ | $ | $ | |||||||||||||
NOTE 22. EVENTS AFTER THE BALANCE SHEET DATE
Installment Note Receivable
The
installment note receivable of approximately $
F-27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: August 30, 2021 |
PORTAGE BIOTECH INC.
| By: | /s/ Allan Shaw | |
| Allan Shaw | ||
| Chief Financial Officer |