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INVESTMENT IN ASSOCIATE
 9 Months Ended
Dec. 31, 2022
Investment In Associate  
INVESTMENT IN ASSOCIATE

NOTE 6. INVESTMENT IN ASSOCIATE

 

Details of the Company’s associate as of December 31, 2022 and March 31, 2022 are as follows:

 

            
Name  Principal Activity  Place of Incorporation and
Principal Place of Business		  Voting Rights Held as
of December 31, 2022		  Voting Rights Held as
of March 31, 2022
Associate: Stimunity S.A.  Biotechnology  Paris, France  44.0%  44.0%

 

The following table is a roll-forward of the Company’s investment in Stimunity S.A. (“Stimunity”) as of and for the nine months ended December 31, 2022 and 2021:

 

          
  

As of and for the

Nine Months Ended December 31,

(In thousands)  2022  2021
       
Balance, beginning of period  $1,673   $1,735 
Share of (loss)   (268)   (363)
Balance, end of period  $1,405   $1,372 

 

On June 1, 2020, the Company made an additional investment of €0.9 million ($1.0 million) by executing its subscription for 2,479 Class A shares upon the achievement of certain milestones, as provided in the Shareholders’ Agreement, increasing its equity share in Stimunity to 44%.

 

On July 13, 2022, the Company entered into a commitment with Stimunity to provide €600,000 under a convertible note (the “Stimunity Convertible Note”) with a maturity date of September 1, 2023 (the “Maturity Date”). The Stimunity Convertible Note provides for simple interest at 7% per annum. The Stimunity Convertible Note is automatically converted into Series A shares upon Stimunity completing a Series A round for at least €20 million. If such subscription round is completed prior to the Maturity Date, the Company will be entitled to convert the Stimunity Convertible Note into Series A shares at the subscription share price less 15%. Additionally, if Stimunity completes a financing with a new category of shares (other than Common Shares or Series A shares) for at least €5 million (the “Minimum Raise”), the Company will have the right to convert the Stimunity Convertible Note and the historical Series A shares owned into the new category of shares. In the event that Stimunity does not close a financing prior to the Maturity Date or raises less than the Minimum Raise, the Company will have the right to convert the Stimunity Convertible Note into Series A shares at €363.00 per share or the raise price less 15%, whichever is lower. The Stimunity Convertible Note was funded on September 12, 2022. See Note 17, “Commitments and Contingent Liabilities – Stimunity Convertible Note,” for a further discussion.

 

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 in Stimunity of $152,000 and $261,000 for the three months ended December 31, 2022 and 2021, respectively, and $268,000 and $363,000 for the nine months ended December 31, 2022 and 2021, respectively.

 

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, and (ii) the right to vote against any (a) issuances of additional securities that would call for Portage to waive its preferential subscription right, or (b) any dilutive issuance.