Exhibit 99.1
Condensed Consolidated Interim Financial Statements
For the Three and Nine Months Ended
(Unaudited – Prepared by Management as of February 28, 2024)
(U.S. Dollars)
Portage Biotech Inc.
Condensed Consolidated Interim Financial Statements
NOTICE TO READER OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The condensed consolidated interim financial statements of Portage Biotech Inc. are comprised of the condensed consolidated interim statement of financial position as of December 31, 2023 and the consolidated statement of financial position as of March 31, 2023, the condensed consolidated interim statements of operations and other comprehensive income (loss) for the three and nine months ended December 31, 2023 and 2022 and the condensed consolidated interim statements of changes in shareholders’ equity and the condensed consolidated interim statements of cash flows for each of the nine months ended December 31, 2023 and 2022 and are the responsibility of Portage Biotech Inc.’s management.
The condensed consolidated interim financial statements of Portage Biotech Inc. have been prepared by Portage Biotech Inc.’s 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.
| /s/ Allan Shaw | /s/ Ian Walters |
| Allan Shaw, Chief Financial Officer | Ian Walters, MD, Chairman of the Board and Chief Executive Officer |
| DATE: February 28, 2024 |
| F-1 |
Portage Biotech Inc.
Condensed Consolidated Interim Statements of Financial Position
(U.S. Dollars in thousands)
(Unaudited – see Notice to Reader dated February 28, 2024)
| Notes | December 31, 2023 | March 31, 2023 | ||||||||
| (Audited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | $ | ||||||||
| Prepaid expenses and other receivables | 5 | |||||||||
| Convertible note receivable | 6 | |||||||||
| Total current assets | ||||||||||
| Non-current assets | ||||||||||
| Investment in associate | 6 | |||||||||
| Investment in public company | 7 | |||||||||
| In-process research and development | 9,10 | |||||||||
| Deferred commitment fee, net of amortization of $ | 15 | |||||||||
| Right to use asset | 8 | |||||||||
| Other assets, including equipment, net | ||||||||||
| Total non-current assets | ||||||||||
| Total assets | $ | $ | ||||||||
| Liabilities and Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||||
| Lease liability - current, including interest | 8 | |||||||||
| Total current liabilities | ||||||||||
| Non-current liabilities | ||||||||||
| Lease liability - non-current | 8 | |||||||||
| Warrant liabilities | 11 | |||||||||
| Deferred tax liability | 10,12 | |||||||||
| Deferred purchase price payable - Tarus | 9,18 | |||||||||
| Deferred obligation - iOx milestone | 17,18 | |||||||||
| Total non-current liabilities | ||||||||||
| Total liabilities | ||||||||||
| Shareholders’ Equity | ||||||||||
| Capital stock | 13 | |||||||||
| Stock option reserve | 14 | |||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Total equity attributable to owners of the Company | ||||||||||
| Non-controlling interest | 20 | ( | ) | ( | ) | |||||
| Total equity | ||||||||||
| Total liabilities and equity | $ | $ | ||||||||
| Commitments and Contingent Liabilities (Note 16) | ||||||||||
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 Income (Loss)
(U.S. Dollars in thousands, except per share amounts)
(Unaudited – see Notice to Reader dated February 28, 2024)
| Note | Three Months Ended December 31, | Nine Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Expenses | ||||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||||
| General and administrative expenses | ||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in fair value of deferred purchase price payable - Tarus and deferred obligation - iOx milestone | 9, 17, 18 | ( | ) | ( | ) | |||||||||||||
| Loss on Registered Direct Offering | 11 | ( | ) | ( | ) | |||||||||||||
| Offering costs | 11 | ( | ) | ( | ) | |||||||||||||
| Change in fair value of warrant liability | 11 | |||||||||||||||||
| Impairment loss - iOx IPR&D | 10 | ( | ) | ( | ) | |||||||||||||
| Impairment loss - Stimunity | 6 | ( | ) | ( | ) | |||||||||||||
| Commitment fee under Committed Purchase Agreement | ( | ) | ( | ) | ||||||||||||||
| Share of loss in associate accounted for using equity method | 6 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Depreciation expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Foreign exchange transaction gain (loss) | 12 | ( | ) | |||||||||||||||
| Interest income | ||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||||||||
| Loss before benefit (expense) for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax benefit (expense) | 12 | ( | ) | |||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Net unrealized gain (loss) on investments | 6, 7 | ( | ) | ( | ) | |||||||||||||
| Total comprehensive loss for period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss attributable to: | ||||||||||||||||||
| Owners of the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Non-controlling interest | 20 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Comprehensive loss attributable to: | ||||||||||||||||||
| Owners of the Company | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Non-controlling interest | 20 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Total comprehensive loss for period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Loss per share | 15 | |||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||||
| Weighted average shares outstanding | 15 | |||||||||||||||||
| 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 Nine Months Ended December 31, 2023 and 2022
(Unaudited – see Notice to Reader dated February 28, 2024)
| Accumulated | Equity | |||||||||||||||||||||||||||||||
| Number | Stock | Other | Attributable | Non- | ||||||||||||||||||||||||||||
| of | Capital | Option | Comprehensive | (Accumulated | to Owners | Controlling | Total | |||||||||||||||||||||||||
| Shares | Stock | Reserve | (Loss) Income | Deficit) | of Company | Interest | Equity | |||||||||||||||||||||||||
| In ‘000’ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | In ‘000’$ | |||||||||||||||||||||||||
| Balance, April 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Share-based compensation expense | – | |||||||||||||||||||||||||||||||
| Shares issued under Registered Direct Offering | ||||||||||||||||||||||||||||||||
| Shares issued under ATM | ||||||||||||||||||||||||||||||||
| Share issuance costs under ATM | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Shares issued or accrued for services | ||||||||||||||||||||||||||||||||
| Net unrealized gain on investments | – | |||||||||||||||||||||||||||||||
| Net loss for period | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
| Balance, April 1, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Share-based compensation expense | – | |||||||||||||||||||||||||||||||
| Shares issued in Tarus acquisition | ||||||||||||||||||||||||||||||||
| Shares issued in iOx exchange | ( | ) | ||||||||||||||||||||||||||||||
| Deferred obligation - iOx milestone | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Excess of non-controlling interest acquired over consideration - iOx | – | ( | ) | |||||||||||||||||||||||||||||
| Shares issued to Lincoln for commitment fee under Committed Purchase Agreement | ||||||||||||||||||||||||||||||||
| Shares issued under ATM | ||||||||||||||||||||||||||||||||
| Purchase of shares issued under Committed Purchase Agreement | ||||||||||||||||||||||||||||||||
| Share issuance costs | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Shares issued or accrued for services | ||||||||||||||||||||||||||||||||
| Net unrealized loss on investments | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss for period | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||
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 Nine Months Ended December 31, 2023 and 2022
(U.S. Dollars in thousands)
(Unaudited – see Notice to Reader dated February 28, 2024)
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments for non-cash items: | ||||||||
| Share-based compensation expense | ||||||||
| Change in fair value of deferred purchase price payable – Tarus and deferred obligation – iOx milestone | ( | ) | ||||||
| Impairment loss - iOx IPR&D | ||||||||
| Impairment loss - Stimunity | ||||||||
| Loss on Registered Direct Offering | ||||||||
| Offering costs | ||||||||
| Change in fair value of warrant liability | ( | ) | ( | ) | ||||
| Commitment fee under Committed Purchase Agreement | ||||||||
| Decrease in deferred tax liability | ( | ) | ( | ) | ||||
| Share of loss in associate | ||||||||
| Fair value of shares issued for services | ||||||||
| Depreciation | ||||||||
| Foreign exchange transaction loss | ( | ) | ||||||
| Changes in operating working capital: | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other receivables | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Other | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of convertible note receivable | ( | ) | ||||||
| Purchase of equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from Registered Direct Offering | ||||||||
| Proceeds from shares issued under ATM and Committed Purchase Agreement | ||||||||
| Share issuance costs | ( | ) | ( | ) | ||||
| Repayment of lease liability | ( | ) | ||||||
| Repayment of notes payable assumed in Tarus acquisition | ( | ) | ||||||
| Repayment of milestone obligation assumed in Tarus acquisition | ( | ) | ||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Decrease 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 | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Exchange of Stimunity Convertible Note for Stimunity shares at fair value | $ | $ | ||||||
| Right to use asset acquired | $ | $ | ||||||
| Lease liability incurred | $ | $ | ||||||
| Fair value of shares issued for Tarus | $ | $ | ||||||
| Fair value of shares issued for non-controlling interest purchase of iOx | $ | $ | ||||||
| Fair value of deferred purchase price payable – Tarus | $ | $ | ||||||
| Fair value of deferred obligation – iOx milestone | $ | $ | ||||||
| Liabilities assumed in Tarus acquisition | $ | $ | ||||||
| Fair value of shares issued for commitment fees – Committed Purchase Agreement | $ | $ | ||||||
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 February 28, 2024)
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 Clarence Thomas Building, P.O. Box 4649, Road Town, Tortola, BVI. Its USA agent, Portage Development Services Inc. (“PDS”), is located at 61 Wilton Road, Westport, CT, 06880, USA.
The Company is a foreign private issuer under the Securities and Exchange Commission (the “SEC”) rules. It is also a reporting issuer under the securities legislation of the provinces of Ontario and British Columbia. Its ordinary shares were listed on the Canadian Securities 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”. As the principal market for the Company’s ordinary shares is Nasdaq, the Company voluntarily delisted from the CSE on April 23, 2021.
Portage is a clinical-stage immuno-oncology company advancing treatments the Company believes will be first-in class therapies that target known checkpoint resistance pathways to improve long-term treatment response and quality of life in patients with invasive cancers. Portage’s access to next-generation technologies coupled with a deep understanding of biological mechanisms enables the identification of clinical therapies and product development strategies that accelerate these medicines through the translational pipeline. After a review of the Company’s funding requirements and related program prioritization, the Company has shifted its focus to advancing its adenosine platform in the ADPORT-601 trial and the Company’s Board of Directors (the “Board”) has made the decision to pause further drug development in the PORT-2 invariant natural killer T-cell (“iNKT”) program. As a result, the Company will evaluate a range of potential strategic options, which may include among other things, finding a partner for its iNKT program or other corporate transactions.
On August 13, 2018, the Company reached a definitive agreement to acquire
In September 2021, the Company, through SalvaRx, exchanged certain notes,
accrued interest, warrants and receivables in exchange for shares of iOx representing % of the outstanding shares of iOx. As a result
of this exchange, the Company, through SalvaRx, increased its ownership of iOx from
NOTE 2. GOING CONCERN
As of December 31, 2023, the Company had cash and cash equivalents of
approximately $
| F-6 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 2. GOING CONCERN (Cont’d)
The Company’s cash and cash equivalents balance is decreasing, and the Company will not generate positive cash flows from operations for the fiscal year ending March 31, 2024.
The Company may have to delay, scale-back, or eliminate certain of its
activities and other aspects of its operations until such time as the Company is successful in securing additional funding. The Company
is exploring various dilutive and non-dilutive sources of funding, including equity and debt financings, strategic alliances, business
development and other sources. The future success of the Company is dependent upon its ability to obtain additional funding. There can
be no assurance, however, that the Company will be successful in obtaining such funding in sufficient amounts, on terms acceptable to
the Company, or at all. As of the date of this filing, the Company currently anticipates that current cash and cash equivalents, excluding
any potential proceeds from its “at-the-market” (“ATM”) offering program and Committed Purchase Agreement (as
defined below) with Lincoln Park Capital Fund, LLC (“Lincoln”), will be sufficient to meet its anticipated cash requirements
through the end of September 2024. Access to the Committed Purchase Agreement with Lincoln is generally limited based on, among other things,
the Company’s Nasdaq trading volume. Furthermore, under General Instruction I.B.5 to Form F-3 (the “Baby Shelf Rule”),
the amount of funds the Company can raise through primary public offerings of securities in any 12-month period using its registration
statement on Form F-3 is limited to one-third of the aggregate market value of the ordinary shares held by the Company’s non-affiliates,
which limitation may change over time based on the Company’s stock price, number of ordinary shares outstanding and the percentage
of ordinary shares held by non-affiliates. The Company is therefore limited by the Baby Shelf Rule as of the filing of this Form 6-K,
until such time as its non-affiliate public float exceeds $
The Company has incurred significant 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. The Company will require significant additional capital to make the investments it needs to execute its longer-term business plan, beyond the potential proceeds that could be reasonably generated from its ATM program and Committed Purchase Agreement with Lincoln given the Company’s current trading volume on Nasdaq. The Company’s ability to successfully raise sufficient funds through the sale of debt or equity securities when needed is subject to many risks and uncertainties and, future equity issuances would result in dilution to existing stockholders and any future debt securities may contain covenants that limit the Company's operations or ability to enter into certain transactions. See Note 13, “Capital Stock,” for a discussion of the issuance of additional shares in October 2023.
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”), International Accounting Standards (“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, 2023.
| F-7 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 3. BASIS OF PRESENTATION (Cont’d)
These condensed consolidated interim financial statements have been prepared on an historical cost basis except for items disclosed herein at fair value (see Note 18, “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 (the “Audit Committee”) of the Board on February 28, 2024.
Consolidation
The condensed consolidated interim financial statements include the accounts of the Company and:
| (a) | SalvaRx, a wholly-owned subsidiary, incorporated on May 6, 2015 in the British Virgin Islands; |
| (b) | iOx, a wholly-owned subsidiary incorporated in the U.K. on February 10, 2015. In September 2021, the Company, through SalvaRx, exchanged
certain notes, accrued interest, warrants and receivables in exchange for shares of iOx representing % of the outstanding shares
of iOx. As a result of this exchange, the Company, through SalvaRx, increased its ownership of iOx from |
| (c) | Saugatuck, a |
| (d) | PDS, a |
| (e) | SalvaRx LLC, a wholly-owned subsidiary through SalvaRx; |
| (f) | Saugatuck Rx LLC, a wholly-owned subsidiary of Saugatuck; and |
| (g) | Tarus Therapeutics, LLC (“Tarus”), a wholly-owned subsidiary of Portage. |
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. As of December 31, 2023, non-controlling interest represents
the
Functional and Presentation Currency
The Company’s functional and presentation currency is the U.S. Dollar.
| F-8 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 3. BASIS OF PRESENTATION (Cont’d)
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 (including the Stimunity Convertible Note) (as defined below), deferred tax assets and liabilities, warrant liabilities, research and development costs, fair value used for acquisition of intangible assets, contingent consideration assumed and measurement of share-based compensation. Significant areas where critical judgments are applied include assessment of impairment of investments, in-process research and development, warrant liabilities 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.
NOTE 4. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies are set out in Note 4 to the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2023 (“Fiscal 2023”). These policies have been applied consistently to all periods presented in these condensed consolidated interim financial statements.
Warrant Liabilities
On September 29, 2023, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional and accredited investor in connection with a registered direct offering (the “Registered Direct Offering”) and a concurrent private placement (the “Private Placement,” and together with the Registered Direct Offering, the “Offerings”). The Offerings closed on October 3, 2023.
Pursuant to the Purchase Agreement, in the Registered Direct Offering,
the Company sold
In the Private Placement, the Company issued to such institutional and
accredited investor unregistered warrants to purchase up to ordinary shares (the “Series A Warrants”), unregistered
warrants to purchase up to ordinary shares (the “Series B Warrants”), and unregistered warrants to purchase up to
ordinary shares (the “Series C Warrants,” together with the Series A Warrants and the Series B Warrants, the “Private
Warrants”), together exercisable for an aggregate of up to ordinary shares (the “Private Warrant Shares”).
Pursuant to the terms of the Purchase Agreement, for each ordinary share and Pre-Funded Warrant issued in the Registered Direct Offering,
an accompanying Series A Warrant, Series B Warrant and Series C Warrant were issued to such institutional and accredited investor. Each
Series A Warrant is exercisable for one Private Warrant Share at an exercise price of $
The Company filed the Resale Registration Statement (as defined below) to register for the resale of the Private Warrant Shares and the ordinary shares issuable upon the exercise of the Placement Agent Warrants, which was declared effective by the SEC on November 7, 2023. Pursuant to the terms of the Purchase Agreement, the Company is obligated to use its commercially reasonable efforts to keep the Resale Registration Statement effective at all times until such institutional and accredited investor (and its successors and assigns) no longer owns any Private Warrants or ordinary shares issuable upon exercise thereof.
| F-9 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 4. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The Company accounts for the Series B Warrants, the Series C Warrants and the Placement Agent Warrants (defined below) under IAS 9, “Financial Instruments” and IAS 32, “Financial Instruments: Presentation”. IAS 32 states a financial liability is any liability that is:
| (a) | a contractual obligation: |
| (i) | to deliver cash or another financial asset to another entity; or |
| (ii) | to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the entity; or |
| (b) | a contract that will or may be settled in the entity’s own equity instruments and is: |
| (i) | a non-derivative for which the entity is or may be obliged to deliver a variable number of the entity’s own equity instruments; or |
| (ii) | a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity’s own equity instruments. For this purpose, rights, options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. Also, for these purposes the entity’s own equity instruments do not include puttable financial instruments that are classified as equity instruments in accordance with paragraphs 16A and 16B, instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation and are classified as equity instruments in accordance with paragraphs 16C and 16D, or instruments that are contracts for the future receipt or delivery of the entity’s own equity instruments. |
As an exception, an instrument that meets the definition of a financial liability is classified as an equity instrument if it has all the features and meets the conditions in paragraphs 16A and 16B or paragraphs 16C and 16D.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
The Series B Warrants, the Series C Warrants and the Placement Agent Warrants (defined below) include the obligation, in the event of a Fundamental Transaction, as defined in such warrants, for the Company or the successor entity to purchase the warrants from the holder at the discretion of the holder and at the Black-Scholes value, as defined in the warrant agreements. As a result, management concluded that such warrants met the criteria of paragraphs 16A and 16B of IAS 32 and should be reflected as a liability on the condensed consolidated interim statement of financial position with the changes in fair value recognized in the current and future condensed consolidated interim statement of operations and other comprehensive income (loss).
Series A Warrants and Pre-Funded Warrants
The Series A Warrants and the Pre-Funded Warrants are classified as a component of equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the ordinary shares with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase such warrants, and permit the holders to receive a fixed number of ordinary shares upon exercise. In addition, the Series A Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return. See Note 13, “Capital Stock,” for a further discussion.
| F-10 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 4. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Recent Accounting Pronouncements
IFRS Pronouncements Issued
Impact of Adoption of Significant New IFRS Standards in Fiscal 2023
| (a) | 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 were effective for annual periods beginning on or after January 1, 2022. The adoption of these amendments did not have a material effect on the Company’s annual consolidated financial statements or the condensed consolidated interim financial statements for the three and nine months ended December 31, 2023.
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.
| (a) | 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 is effective for annual periods beginning on or after January 1, 2024. The Company is currently evaluating the new guidance and impacts on its consolidated financial statements.
| (b) | 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, “Consolidated Financial Statements,” and IAS 28, “Investments in Associates and Joint Ventures,” 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, “Business Combinations,” 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 consolidated financial statements.
| F-11 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 5. PREPAID EXPENSES AND OTHER RECEIVABLES
| (In thousands) | As of December 31, 2023 | As of March 31, 2023 | ||||||
| Prepaid clinical research costs | $ | $ | ||||||
| Tax deposits | ||||||||
| Prepaid insurance | ||||||||
| Other receivables | ||||||||
| Other prepaid expenses | ||||||||
| Research & development tax credits | ||||||||
| Total prepaid expenses and other receivables | $ | $ | ||||||
NOTE 6. INVESTMENT IN ASSOCIATE AND CONVERTIBLE NOTE RECEIVABLE
Details of the Company’s associate, Stimunity S.A. (“Stimunity”), as of December 31, 2023 and March 31, 2023 are as follows:
| Name | Principal Activity |
Place of Incorporation and Principal Place of Business |
Voting Rights Held as of December 31, 2023 |
Voting Rights Held as of March 31, 2023 |
|||||
The following table is a roll-forward of the Company’s investment in Stimunity as of and for the nine months ended December 31, 2023 and 2022:
| As of and for the Nine Months Ended December 31, | ||||||||
| (In thousands) | 2023 | 2022 | ||||||
| Balance, beginning of period | $ | $ | ||||||
| Share of loss | ( | ) | ( | ) | ||||
| Conversion of Stimunity Convertible Note | ||||||||
| Impairment loss | ( | ) | ||||||
| Balance, end of period | $ | $ | ||||||
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
loss in equity in Stimunity of $
Under the Shareholders’ Agreement entered into on June 1, 2020, 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.
| F-12 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 6. INVESTMENT IN ASSOCIATE AND CONVERTIBLE NOTE RECEIVABLE (Cont’d)
On September 12, 2022,
As of December 31, 2023, the Company determined that there was an indication
of impairment of the investment in Stimunity based upon the inability of Stimunity to obtain financing. The Company recorded a provision
of impairment of $
NOTE 7. INVESTMENT IN PUBLIC COMPANY
The following is a discussion of the Company’s investment in Intensity Therapeutics, Inc. (“Intensity”) as of December 31, 2023 and March 31, 2023.
Intensity Therapeutics, Inc.
In connection with the SalvaRx Acquisition in fiscal 2019, the Company
acquired 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 $
On October 28, 2021, Intensity filed a Form S-1 Registration Statement with the SEC to register shares for an IPO, which was declared effective by the SEC, but subsequently withdrawn prior to closing.
Subsequently, Intensity amended its Form S-1 Registration Statement and
continued to complete its IPO. As of both December 31, 2022 and March 31, 2023, the Company undertook an IAS 36 fair value analysis based
on the continued existence of external indications of impairment, which resulted in an aggregate $
In April 2023, Intensity completed a 1:2 reverse stock split, which reduced the Company’s holdings to shares.
| F-13 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 7. INVESTMENT IN PUBLIC COMPANY (Cont’d)
On July 5, 2023, Intensity completed an IPO of its common stock
selling
shares at a price of $
per share generating net proceeds of approximately $
The Company’s lock-up with respect to Intensity shares expired on January 2, 2024. The Board authorized and, in January 2024, began selling its shares in Intensity on Nasdaq. Accordingly, the Company will classify the investment as investment in marketable equity securities in future periods, if necessary.
NOTE 8. LEASE
The Company entered into a lease of office space, which commenced on May
1, 2023. The lease provides for an original term of two years with an option to renew the lease for an additional term of three years.
The Company has included the extension option in the lease analysis under IFRS 16, based upon management’s intentions. The Company
calculated the lease liability using its incremental borrowing rate of 13%. The Company provided a $
| Twelve Months Ended December 31, | Amount | |||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total | ||||
| Less: interest | ( | ) | ||
| Total lease liability | ||||
| Lease liability - current | ||||
| Lease liability - non-current | $ | |||
| F-14 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 9. ACQUISITION OF TARUS
On July 1, 2022, the Company, its wholly-owned subsidiary, Portage Merger Sub I, Inc., its wholly-owned subsidiary, Portage Merger Sub II, LLC and Tarus Therapeutics, Inc., a Delaware corporation advancing adenosine receptor antagonists for the treatment of solid tumors, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). Per the Merger Agreement, Tarus Therapeutics, Inc. was ultimately merged into Portage Merger Sub II, LLC, with the surviving entity renamed “Tarus Therapeutics, LLC”. The Tarus merger entitles the Company to the rights, know-how and/or ownership related to the assets developed by Tarus (the “Adenosine Compounds”), including:
| 1. | All rights and obligations related to the License Agreement between Tarus and Impetis Biosciences Limited, dated October 29, 2019 (“Tarus License Agreement”), and the call option under the Tarus License Agreement, which was exercised on November 5, 2020; |
| 2. | All intellectual property and related documents owned or controlled by Tarus, including issued or pending patents, patent applications and trade secrets. Additionally, any draft submissions and/or correspondence with patent authorities; |
| 3. | All documents and supplies related to Adenosine Compounds (as defined in the Tarus License Agreement) including inventory, reagents, data, assays, reports, vendor agreements and other information related to the preclinical development; |
| 4. | All clinical supplies, manufacturing know-how, batch records, regulatory documents pertaining to the Adenosine Compounds, certain reservations for manufacturing campaigns and any related agreements; |
| 5. | All regulatory documents and correspondence pertaining to the Adenosine Compounds; |
| 6. | All contract research organization (“CRO”) agreements and protocol related documents for Adenosine Compounds; |
| 7. | All current documents related to market research, forecasting, budgets and competitive intelligence; and |
| 8. | Rights to the use of Tarus Therapeutics’ name for regulatory purposes. |
| F-15 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 9. ACQUISITION OF TARUS (Cont’d)
As consideration for Tarus, the Company issued to former Tarus shareholders an aggregate of ordinary shares of Portage, calculated on the basis of $ million divided by the 60-day volume weighted average price per share of ordinary shares of Portage. Such ordinary shares have not been registered with the SEC and were subject to lock-up agreements for terms ranging from six to twelve months, which expired on February 1, 2023 and July 1, 2023, respectively. Additionally, the ordinary shares that were subject to a twelve-month lock-up period, are also subject to a three-month dribble-out period, which commenced July 1, 2023. During the dribble out period, each holder may not sell more than 10% of the average trading volume of the Company’s ordinary shares for the rolling three-month period prior to the date on which the holder executes a trade of the Company’s ordinary shares without its prior written consent (which the Company is permitted to withhold at its sole discretion). Additionally, milestone payments of up to $ million in cash or Portage ordinary shares (at the discretion of the Company) would be triggered upon achievement of future development and sales milestones, as described below. As a result of the transaction:
| · | The Company also assumed $ |
| · | Upon enrolling the first patient in a Phase 2 clinical trial utilizing Tarus’s adenosine receptor antagonists,
the Company will pay an additional one-time milestone payment of $ |
In connection with the acquisition of Tarus, the Company performed a fair
value analysis of the assets acquired and liabilities assumed. The Company based the analysis on its clinical plan and timing of development
events, and the probabilities of success determined primarily based upon empirical third-party data and Company experience as well as
the relevant cost of capital. In its fair value analysis, the Company used the Multi-Period Excess Earnings Method for PORT-6 and PORT-7
and the Replacement Cost Method for PORT-8 and PORT-9, determined based upon the maturity of the assets and the availability of sufficient
data to measure fair value. The Company recorded the ordinary shares issued at $ million, which represented the aggregate market value
of the ordinary shares issued on July 1, 2022. The Company followed the guidance of IAS 3 and IAS 32 and recorded a deferred purchase
price payable - Tarus of $
The following table summarizes the original purchase price allocation to the fair value of assets acquired and liabilities assumed for Tarus:
| Assets: | (In thousands) | |||
| Identifiable intangible assets | $ | |||
| Goodwill | ||||
| Total assets | $ | |||
| Consideration: | ||||
| Fair value of shares issued | $ | |||
| Liabilities assumed | ||||
| Deferred purchase consideration at fair value | ||||
| Total liabilities | $ | |||
| F-16 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 9. ACQUISITION OF TARUS (Cont’d)
Pro forma Information
Summary unaudited pro forma condensed results of operations for the nine months ended December 31, 2022, assuming the Tarus acquisition had occurred at the beginning of the earliest period presented, are as follows:
| (In thousands) | Nine Months Ended December 31, 2022 | |||
| Loss from operations | $ | ( | ) | |
| Loss before provision for income taxes | $ | ( | ) | |
| Net loss | $ | ( | ) | |
| Total comprehensive loss for period | $ | ( | ) | |
| Loss per share | $ | ( | ) | |
There are
These pro forma results are not necessarily indicative of what would have occurred if the acquisition had been in effect for the period presented, and they may not be indicative of results expected in the future.
NOTE 10. IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY
In-process research and development (“IPR&D”) consists of the following projects (in thousands):
| Value as of | ||||||||||
| Project # | Description | December 31, 2023 | March 31, 2023 | |||||||
| iOx: | ||||||||||
| PORT-2 (IMM60) | Melanoma & Lung Cancers | $ | $ | |||||||
| PORT-3 (IMM65) | Ovarian/Prostate Cancers | |||||||||
| Oncomer/Saugatuck | DNA Aptamers | |||||||||
| Tarus: | ||||||||||
| PORT-6 & PORT-7 | Adenosine Receptors | |||||||||
| PORT-8 | Adenosine Receptors | |||||||||
| PORT-9 | Adenosine Receptors | |||||||||
| In-process research and development | $ | $ | ||||||||
| Deferred tax liability | $ | $ | ||||||||
| F-17 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 10. IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY (Cont’d)
At the end of each reporting period, the Company is required to assess
whether there is any indication that an asset may be impaired. Based upon the Company’s decision to pause iNKT development (PORT-2 and PORT-3), representing the iOx IPR&D, the Company performed an IAS 36 analysis at December 31, 2023. The
Company evaluated the then-current capital markets, the increasing costs of capital, and the delays in the timing of asset
development and the likelihood of finding a partner and concluded that a $
NOTE 11. WARRANT LIABILITY
The following table summarizes the changes in the warrant liability during the nine months ended December 31, 2023:
| Exercise Price | Warrants | Fair Value Balance | ||||||||||
| In 000’$ | ||||||||||||
| Warrant liability as of April 1, 2023 | $ | $ | ||||||||||
| Fair value of warrants at issuance on October 3, 2023: | ||||||||||||
| Class B Warrants | $ | |||||||||||
| Class C Warrants | $ | |||||||||||
| Placement Agent Warrants | $ | |||||||||||
| Change in fair value of warrant liability | ( | ) | ||||||||||
| Warrant liability as of December 31, 2023 | $ | |||||||||||
On September 29, 2023, the Company entered into the Purchase Agreement with an institutional and accredited investor in connection with the Registered Direct Offering and the Private Placement. The Offerings closed on October 3, 2023.
Pursuant to the Purchase Agreement, in the Registered Direct Offering,
the Company sold (i)
| F-18 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 11. WARRANT LIABILITY (Cont’d)
In the Private Placement, the Company issued to such institutional and
accredited investor Series A Warrants to purchase up to ordinary shares, Series B Warrants to purchase up to ordinary
shares, and Series C Warrants to purchase up to ordinary shares, together exercisable for an aggregate of up to ordinary
shares. Pursuant to the terms of the Purchase Agreement, for each ordinary share and Pre-Funded Warrant issued in the Registered Direct
Offering, an accompanying Series A Warrant, Series B Warrant and Series C Warrant were issued to such institutional and accredited investor.
Each Series A Warrant is exercisable for one Private Warrant Share at an exercise price of $
Pursuant to an engagement letter, dated as of August 26, 2023, between the Company and H.C. Wainwright & Co., LLC (the “Placement Agent”), the Company paid the Placement Agent a total cash fee equal to % of the aggregate gross proceeds received in the Offerings, or $ million. The Company also paid the Placement Agent in connection with the Offerings a management fee equal to % of the aggregate gross proceeds raised in the Offerings ($ million), $ for non-accountable expenses and $ for clearing fees. In addition, the Company issued to the Placement Agent, or its designees, warrants to purchase up to ordinary shares (the “Placement Agent Warrants,” and together with the Pre-Funded Warrants and the Private Warrants, the “Warrants”), which represented % of the aggregate number of ordinary shares and Pre-Funded Warrants sold in the Registered Direct Offering. The Placement Agent Warrants have substantially the same terms as the Series B Warrants and the Series C Warrants, except that the Placement Agent Warrants have an exercise price equal to $, or 125% of the offering price per ordinary share sold in the Registered Direct Offering and will be exercisable for five years from the commencement of the sales pursuant to the Offerings. The Private Warrants, Private Warrant Shares, Placement Agent Warrants and ordinary shares underlying the Placement Agent Warrants were registered for resale under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to a registration statement on Form F-1 that was declared effective by the SEC on November 7, 2023 (the “Resale Registration Statement”).
The Series B Warrants, the Series C Warrants and the Placement Agent Warrants
include the obligation, in the event of a Fundamental Transaction, as defined in the Series B Warrants, the Series C Warrants and the
Placement Agent Warrants, for the Company or the successor entity to purchase the warrants from the holder at the discretion of the holder
and at the Black-Scholes value, as defined in the warrant agreements. As a result, management concluded that, in line with IAS 9, “Financial
Instruments” and IAS 32, “Financial Instruments: Presentation,” such warrants will be accounted for as financial liabilities
on the condensed consolidated interim statement of financial position with the changes in fair value recognized in the current and future
condensed consolidated interim statement of operations and other comprehensive income (loss). The Company allocated the net proceeds of
$
The Company filed the Resale Registration Statement to register for the resale of the Private Warrant Shares and the ordinary shares issuable upon the exercise of the Placement Agent Warrants, which was declared effective by the SEC on November 7, 2023. Pursuant to the terms of the Purchase Agreement, the Company is obligated to use its commercially reasonable efforts to keep the Resale Registration Statement effective at all times until such institutional and accredited investor (and its sucessors and assigns) no longer owns any Private Warrants or ordinary shares issuable upon exercise thereof.
The accounting for the Series A Warrants and the Pre-Funded Warrants is detailed below in Note 13, “Capital Stock.”
| F-19 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 11. WARRANT LIABILITY (Cont’d)
Series B Warrants
A fair value of $ per each Series B Warrant was identified at the issue date of October 3, 2023. A fair value of $ per each warrant has been identified as of December 31, 2023.
The inputs associated with calculating the fair value are reflected below.
| October 3, 2023 | December 31, 2023 | |||
| Exercise price | $ | $ | ||
| Share price | $ | $ | ||
| Expected life | years | years | ||
| Expected volatility | % | % | ||
| Risk-free interest rate | % | % | ||
| Dividend yield |
Series C Warrants
A fair value of $ per each Series C Warrant was identified at the issue date of October 3, 2023. A fair value of $ per each warrant has been identified as of December 31, 2023.
The inputs associated with calculating the fair value are reflected below.
| October 3, 2023 | December 31, 2023 | |||
| Exercise price | $ | $ | ||
| Share price | $ | $ | ||
| Expected life | years | years | ||
| Expected volatility | % | % | ||
| Risk-free interest rate | % | % | ||
| Dividend yield |
Placement Agent Warrants
A fair value of $ per each Placement Agent Warrant was identified at the issue date of October 3, 2023. A fair value of $ per each warrant has been identified as of December 31, 2023.
The inputs associated with calculating the fair value are reflected below.
| October 3, 2023 | December 31, 2023 | |||
| Exercise price | $ | $ | ||
| Share price | $ | $ | ||
| Expected life | years | years | ||
| Expected volatility | % | % | ||
| Risk-free interest rate | % | % | ||
| Dividend yield |
| F-20 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 12. INCOME TAXES
The Company is a BVI business company. The BVI government does not, under existing legislation, impose any income or corporate tax on corporations.
PDS is a U.S. corporation and is subject to U.S. federal, state and local income taxes, as applicable.
iOx is subject to U.K. taxes.
The (expense) benefit from income taxes consists of the following for the nine months ended December 31, 2023 and 2022 (U.S. Dollars in thousands):
| Nine Months Ended December 31, | ||||||||
| (In thousands) | 2023 | 2022 | ||||||
| Current: | ||||||||
| Federal | $ | ( | ) | $ | ( | ) | ||
| State and local | ( | ) | ||||||
| Foreign | ||||||||
| Total current | ( | ) | ( | ) | ||||
| Deferred: | ||||||||
| Federal | ||||||||
| State and local | ||||||||
| Foreign | ||||||||
| Total deferred | ||||||||
| Benefit from income taxes | $ | $ | ||||||
The following is a reconciliation of the U.S. taxes to the effective income tax rates for the nine months ended December 31, 2023 and 2022 (U.S. Dollars in thousands):
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Loss on ordinary activities before tax | $ | ( | ) | $ | ( | ) | ||
| Statutory U.S. income tax rate | % | % | ||||||
| Income tax benefit at statutory income tax rate | ||||||||
| Share-based compensation expense recognized for financial statement purposes | ( | ) | ||||||
| Other losses (unrecognized) | ( | ) | ( | ) | ||||
| Utilization of losses not previously benefitted | ||||||||
| Income tax (expense) | $ | ( | ) | $ | ( | ) | ||
| F-21 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 12. INCOME TAXES (Cont’d)
As of December 31, 2023, the Company had $
The following is a reconciliation of the U.K. taxes to the effective income tax rates for the nine months ended December 31, 2023 and 2022 (U.S. Dollars in thousands):
| Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Loss on ordinary activities before tax | $ | ( | ) | $ | ( | ) | ||
| Statutory U.K. income tax rate | % | % | ||||||
| Loss at statutory income tax rate | ||||||||
| Change from increase in deferred income tax rate | ||||||||
| Derecognition of deferred tax assets | ( | ) | ||||||
| Foreign currency effect | ||||||||
| Income tax benefit | $ | $ | ||||||
Research and development credit
receivables of $
The following is a reconciliation of financial statement income (loss) to tax basis income (loss) (in thousands):
| Nine Months Ended December 31, | ||||||||||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||||||||||
| United
States | BVI | United
Kingdom | Total | United
States | BVI | United
Kingdom | Total | |||||||||||||||||||||||||
| Pre-tax loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| Share-based compensation expense for financial statement purposes for which no benefit was taken | ||||||||||||||||||||||||||||||||
| Loss for which no benefit was taken | ||||||||||||||||||||||||||||||||
| Losses not subject to tax | ||||||||||||||||||||||||||||||||
| Utilization of losses not previously benefitted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Taxable income (loss) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||
| F-22 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 12. INCOME TAXES (Cont’d)
As of December 31, 2023 and March 31, 2023, the Company’s deferred tax assets and liabilities in the U.K. consisted of the effects of temporary differences attributable to the following (U.S. Dollars in thousands):
| As of December 31, | As of March 31, | |||||||
| 2023 | 2023 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss | $ | ( | ) | $ | ( | ) | ||
| Deferred tax asset (unrecognized) | ||||||||
| Deferred tax asset | ( | ) | ( | ) | ||||
| Deferred tax liabilities: | ||||||||
| In-process research and development | ||||||||
| Deferred tax liability | ||||||||
| Net deferred tax liability | $ | $ | ||||||
iOx generated no research and development cash credits recorded for the nine months ended December 31, 2023 and 2022.
As of December 31, 2023 and March 31, 2023, iOx had a net deferred tax
liability of nil and approximately $
There is no expiration date for accumulated tax losses in the U.K. entities.
| F-23 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 13. CAPITAL STOCK
| (a) | Authorized ordinary shares: Unlimited number of Portage ordinary shares without par value. |
| (b) | The following is a roll-forward of Portage’s ordinary shares for the nine months ended December 31, 2023 and 2022: |
| Nine Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Ordinary Shares | Amount | Ordinary Shares | Amount | |||||||||||||
| In 000’ | In 000’$ | In 000’ | In 000’$ | |||||||||||||
| Balance, beginning of period | $ | $ | ||||||||||||||
| Shares issued under Registered Direct Offering, net of issue costs | ||||||||||||||||
| Shares issued under ATM, net of issue costs | ||||||||||||||||
| Shares issued or accrued for services | ||||||||||||||||
| Shares issued in Tarus acquisition | ||||||||||||||||
| Shares issued in iOx exchange | ||||||||||||||||
| Excess of non-controlling interest acquired over consideration – iOx | ||||||||||||||||
| Shares issued to Lincoln for commitment fee under Committed Purchase Agreement | ||||||||||||||||
| Purchase of shares issued under Committed Purchase Agreement, net of issue costs | ||||||||||||||||
| Balance, end of period | $ | $ | ||||||||||||||
Portage filed a shelf registration statement with the SEC under which it may sell ordinary shares, debt securities, warrants and units in one or more offerings from time to time, which became effective on March 8, 2021 (“Registration Statement”). In connection with the Registration Statement, Portage has filed with the SEC:
| · | a base prospectus, which covers the offering, issuance and sale by Portage of up to $200 million in the aggregate of the securities identified above from time to time in one or more offerings; |
| · | a prospectus supplement, which covers the offer, issuance and sale by Portage in its ATM offering of up to a maximum aggregate offering
price of $ |
| · | a prospectus supplement dated June 24, 2021, for the offer, issuance and sale by Portage of ordinary shares for gross proceeds
of approximately $ |
| · | a prospectus supplement dated August 19, 2022, for the resale of up to $ million in ordinary shares that Portage may sell from time to time to Lincoln and an additional shares that were issued to Lincoln; and |
| · | a prospectus supplement dated September 29, 2023 for the offer, issuance and sale by Portage in a registered direct public offering
through H.C. Wainwright & Co., the placement agent, of (i) ordinary shares at a purchase price of $ |
| F-24 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 13. CAPITAL STOCK (Cont’d)
During Fiscal 2022, the Company sold
The Company has issued ordinary shares in connection with the acquisition of Tarus Therapeutics, Inc. and in connection with the Tarus Therapeutics, Inc.’s acquisition it may issue additional ordinary shares. See Note 9, “Acquisition of Tarus,” for a further discussion.
On July 18, 2022, the Company entered into the iOx Share Exchange Agreement
under which it exchanged ordinary shares of the Company for the remaining minority interest of
On July 6, 2022, the Company entered into a Purchase Agreement (the “Committed Purchase Agreement”) with Lincoln, under which it may require Lincoln to purchase ordinary shares of the Company having an aggregate value of up to $30 million (the “Purchase Shares”) over a period of 36 months. Upon execution of the Committed Purchase Agreement, the Company issued to Lincoln ordinary shares, representing a 3% commitment fee. Pursuant to the Committed Purchase Agreement, Lincoln will be obligated to purchase the Purchase Shares in three different scenarios that are based on various market criteria and share amounts. The Company has the right to terminate the Committed Purchase Agreement for any reason, effective upon one business day prior written notice to Lincoln. Lincoln has no right to terminate the Committed Purchase Agreement. The requirement that Lincoln must make a purchase will be suspended based on various criteria such as there not being an effective registration statement for Lincoln to be able to resell the ordinary shares it is committed to purchase and market criteria such as the Company continuing to be Depository Trust Company eligible, among other things. The Committed Purchase Agreement does not impose any financial or business covenants on the Company, and there are no limitations on the use of proceeds. The Company may raise capital from other sources in its sole discretion; provided, however, that the Company shall not enter into any similar agreement for the issuance of variable priced equity-like securities until the three-year anniversary of the date of the Committed Purchase Agreement, excluding, however, an ATM transaction with a registered broker-dealer, which includes any sales under the Sales Agreement with Cantor Fitzgerald.
As discussed in Note 2, “Going Concern,” the Company’s access to the ATM program and the Committed Purchase Agreement is generally limited based on the Company’s trading volume on Nasdaq. See Note 16, “Commitments and Contingent Liabilities – Committed Purchase Agreement,” for a further discussion.
| F-25 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 13. CAPITAL STOCK (Cont’d)
From April 1, 2023 through December 31, 2023, the Company sold
ordinary shares under the ATM program, generating net proceeds of approximately $
In Fiscal 2023, the Company sold ordinary shares under the ATM
program, generating net proceeds of approximately $
On September 29, 2023, the Company entered into the Purchase Agreement with an institutional and accredited investor in connection with the Registered Direct Offering and the Private Placement. The Offerings closed on October 3, 2023.
Pursuant to the Purchase Agreement, in the Registered Direct Offering,
the Company sold
In the Private Placement, the Company issued to such institutional and
accredited investor Series A Warrants to purchase up to ordinary shares, Series B Warrants to purchase up to ordinary
shares, and Series C Warrants to purchase up to ordinary shares, together exercisable for an aggregate of up to ordinary
shares. Pursuant to the terms of the Purchase Agreement, for each ordinary share and Pre-Funded Warrant issued in the Registered Direct
Offering, an accompanying Series A Warrant, Series B Warrant and Series C Warrant were issued to such institutional and accredited investor.
Each Series A Warrant is exercisable for one Private Warrant Share at an exercise price of $
Pursuant to an engagement letter, dated as of August 26, 2023, between
the Company and the “Placement Agent, the Company paid the Placement Agent a total cash fee equal to
| F-26 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 13. CAPITAL STOCK (Cont’d)
The Company filed the Resale Registration Statement to register for resale the Private Warrant Shares and the ordinary shares issuable upon the exercise of Placement Agent Warrants, which was declared effective by the SEC on November 7, 2023. Pursuant to the terms of the Purchase Agreement, the Company is obligated to use its commercially reasonable efforts to keep the Resale Registration Statement effective at all times until such institutional and accredited investor (and its successors and assigns) no longer owns any Private Warrants or ordinary shares issuable upon exercise thereof.
Pursuant to the terms of the Purchase Agreement, the Company is prohibited from issuing or entering into any agreement to issue ordinary shares or Ordinary Share Equivalents (as defined in the Purchase Agreement) involving a Variable Rate Transaction (as defined in the Purchase Agreement), which includes an equity line of credit or an at-the-market facility, for a period commencing on September 29, 2023 and expiring six months from the closing date of the Offerings.
If a Fundamental Transaction (as defined in the Warrants) occurs, then the successor entity will succeed to, and be substituted for the Company, and may exercise every right and power that the Company may exercise and will assume all of the Company’s obligations under the Warrants with the same effect as if such successor entity had been named in the Warrants themselves. If holders of ordinary shares are given a choice as to the securities, cash or property to be received in such a Fundamental Transaction, then the holders of the Warrants shall be given the same choice as to the consideration they would receive upon any exercise of the Warrants following such a Fundamental Transaction. Additionally, as more fully described in the Series B Warrants, Series C Warrants and Placement Agent Warrants, in the event of certain Fundamental Transactions, the holders of the Series B Warrants, Series C Warrants and Placement Agent Warrants will be entitled to receive cash consideration in an amount equal to the Black-Scholes value of the Series B Warrants, Series C Warrants and Placement Agent Warrants, as the case may be, upon the consummation of such Fundamental Transaction.
Series A Warrants and Pre-Funded Warrants
The Series A Warrants and the Pre-Funded Warrants are classified as a component of equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the ordinary shares with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of ordinary shares upon exercise. In addition, the Series A Warrants and the Pre-Funded Warrants do not provide any guarantee of value or return.
On the October 3, 2023 issue date, the calculated fair value of the Series
A Warrants and the Pre-Funded Warrants as of December 31, 2023 was $
Series A Warrants
The inputs associated with calculating the fair value are reflected below.
| October 3, 2023 | ||
| Exercise price | $ | |
| Share price | $ | |
| Expected life | years | |
| Expected volatility | % | |
| Risk-free interest rate | % | |
| Dividend yield |
| F-27 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
| (a) | The following table provides the activity for the Company’s stock option reserve for the nine months ended December 31, 2023 and 2022: |
| Nine Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| (In thousands) | Non-Controlling Interest | Stock Option Reserve | Non-Controlling Interest | Stock Option Reserve | ||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Share-based compensation expense | ||||||||||||||||
| Settled in iOx exchange | ( | ) | ||||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
Stock Options and Restricted Stock Units
On June 25, 2020, at the annual meeting of shareholders, the Company’s incentive stock option plan (the “2020 Stock Option Plan”) was approved, which authorized the Company’s directors to fix the option exercise price and to issue stock options under the plan as appropriate. The Company’s 2020 Stock Option Plan was a 10% rolling stock option plan under which the Company’s directors were 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 (“RSUs”) and dividend equivalent rights (the “2021 Equity Incentive Plan”).
| F-28 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 14. STOCK OPTION RESERVE (Cont’d)
Amended and Restated 2021 Equity Incentive Plan and Grants of Stock Options and Restricted Stock Units
On January 19, 2022, the Board unanimously approved the Amended and Restated 2021 Equity Incentive Plan (the “Amended and Restated 2021 Equity Incentive Plan”). The Amended and Restated 2021 Equity Incentive Plan provides for:
| (1) | An increase of aggregate number of ordinary shares available for awards to 2,001,812, which is equal to 15% of the issued and outstanding ordinary shares of the Company as of January 19, 2022 subject to discretionary annual increases (on a cumulative basis) as may be approved by the Board in future years by a number of ordinary shares not to exceed an additional 5% of the aggregate number of shares then outstanding; |
| (2) | The authorization of incentive stock options under the Amended and Restated 2021 Equity Incentive Plan; and |
| (3) | The provision of dividend equivalent rights to be issued when authorized. |
On June 8, 2022, the Company granted
On July 27, 2022, the Company granted
On March 30, 2023, the Board unanimously approved to increase the maximum number of ordinary shares reserved for issuance under the Amended and Restated 2021 Equity Incentive Plan. The aggregate number of shares reserved for awards under the Amended and Restated 2021 Equity Incentive Plan was increased by shares, which represented % of ordinary shares outstanding on March 29, 2023, to . As of December 31, 2023, of the reserved shares under the Amended and Restated 2021 Equity Incentive Plan, shares were reserved for awards previously granted and shares remained available for future awards under such plan.
| F-29 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 14. STOCK OPTION RESERVE (Cont’d)
On March 30, 2023, the Company granted an aggregate of stock options exercisable at a price of $ per share, representing the average price of the shares on the grant date, which expire on March 30, 2033, to various directors, officers and a consultant of the Company. options to purchase ordinary shares, totaling , were granted to each non-executive member of the Board and vest on the first anniversary of the grant date. A total of stock options were granted to employees (including Mr. Walters, who is Chairman of the Board of Directors), and a consultant, and such stock options vest ratably on each of the first four annual anniversaries of the grant date. The balance of stock options were also granted to a consultant, which was fully vested as of the grant date.
| (b) | The changes in the number of options issued for the nine months ended December 31, 2023 and 2022 were: |
| Nine Months Ended December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| PBI Amended and Restated 2021 Equity Incentive Plan | iOx Option Plan (Subsidiary Plan) | |||||||||||||||
| Balance, beginning of period | ||||||||||||||||
| Granted | ||||||||||||||||
| Expired or forfeited | ( | ) | ||||||||||||||
| Balance, end of period | ||||||||||||||||
| Exercisable, end of period | ||||||||||||||||
| (c) | The following is the weighted average exercise price and the remaining contractual life for outstanding options by plan as of December 31, 2023 and 2022: |
| As of December 31, | ||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| PBI Amended and Restated 2021 Equity Incentive Plan | iOx Option Plan (Subsidiary Plan) | |||||||||||||||
| 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 for all options outstanding as of December 31, 2023 and March 31, 2023, except for vested options and unvested options as of March 31, 2023.
The Company recorded approximately $ million and $ million of share-based compensation expense with respect to the Amended and Restated 2021 Equity Incentive Plan in the three months ended December 31, 2023 and 2022, respectively. The Company recorded approximately $ million and $million of share-based compensation expense with respect to the Amended and Restated 2021 Equity Incentive Plan in the nine months ended December 31, 2023 and 2022, respectively. The Company expects to record additional share-based compensation expense of approximately $ million through March 2027 with respect to the Amended and Restated 2021 Equity Incentive Plan.
As of September 30, 2022, the Company’s iOx stock option plan was fully vested. The iOx stock option plan expired on May 5, 2022 and all outstanding stock option awards issued under the iOx stock option plan expired.
| F-30 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
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 period.
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 period 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 calculation of Basic and Diluted EPS reflect the Pre Funded Warrants as outstanding shares.
The following table reflects the loss and share data used in the basic and diluted EPS calculations (U.S. Dollars in thousands, except per share amounts):
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| 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 | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
The inclusion of the Company’s share purchase warrants, stock options and RSUs 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 and nine months ended December 31, 2023 and 2022. The following table reflects the Company’s outstanding securities by year that would have an anti-dilutive effect on loss per share and, accordingly, were excluded from the calculation.
| As of December 31, | ||||||||
| 2023 | 2022 | |||||||
| Warrants | ||||||||
| Stock options | ||||||||
| Restricted stock units | ||||||||
| F-31 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 16. COMMITMENTS AND CONTINGENT LIABILITIES
Effective March 15, 2022, iOx entered into a Master Services Agreement (the “MSA”) with Parexel International (IRE) Limited (“Parexel”) under which Parexel agreed to act as clinical service provider (CRO) pursuant to a work order (“Work Order”) effective June 1, 2022. Pursuant to such Work Order, Parexel will operate a Phase 2 trial of IMM60 and pembrolizumab in advanced melanoma and non-small lung cancer. The MSA provides for a five-year term, and the Work Order provides for a term to be ended upon the completion of the services required. The budget provides for service fees and pass-through expenses and clinical sites totaling $11.5 million. During Fiscal 2023, the Company executed two change orders resulting in a $0.6 million increase in the overall estimated budgeted costs. As a result of the Company’s decision to pause the development with respect to this program, the Company provided a notice of termination under the MSA. The Company is in negotiations to settle any obligations with respect to the MSA.
On March 1, 2023, Tarus entered into a clinical service agreement with
Fortrea Inc. (formerly Labcorp Drug Development Inc.), a third-party CRO. The term of the agreement is through the earlier of August 14,
2025 or the completion of provision of services and the payment of contractual obligations. The budgeted costs for the services to be
provided is approximately $
Stimunity Convertible Note
On September 12, 2022, the Company funded €
| F-32 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 16. COMMITMENTS AND CONTINGENT LIABILITIES (Cont’d)
Committed Purchase Agreement
On July 6, 2022 (the “Signing Date”), the Company entered
into the Committed Purchase Agreement with Lincoln, pursuant to which the Company may require Lincoln to purchase ordinary shares having
an aggregate value of up to $
Upon execution of the Committed Purchase Agreement, the Company issued
to Lincoln 94,508 ordinary shares, representing a 3% commitment fee valued at $
The Committed Purchase Agreement does not impose any financial or business covenants on the Company and there are no limitations on the use of proceeds received by the Company from Lincoln. The Company may raise capital from other sources in its sole discretion; provided, however, that the Company shall not enter into any similar agreement for the issuance of variable priced equity-like securities until the three-year anniversary of the Signing Date, excluding, however, an at-the-market transaction with a registered broker-dealer.
In connection with the Committed Purchase Agreement, the Company and Lincoln entered into a Registration Rights Agreement, dated July 6, 2022 (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to file with the SEC the prospectus supplement to the Company’s shelf registration statement pursuant to Rule 424(b) for the purpose of registering for resale the ordinary shares to be issued to Lincoln under the Committed Purchase Agreement. The prospectus supplement was filed on August 19, 2022.
Access to the Committed Purchase Agreement with Lincoln is generally limited based on, among other things, the Company’s Nasdaq trading volume. Furthermore, under the Baby Shelf Rule, the amount of funds the Company can raise through primary public offerings of securities in any 12-month period using its registration statement on Form F-3 is limited to one-third of the aggregate market value of the ordinary shares held by the Company’s non-affiliates, which limitation may change over time based on the Company’s stock price, number of ordinary shares outstanding and the percentage of ordinary shares held by non-affiliates. The Company is therefore limited by the Baby Shelf Rule as of the filing of this Form 6-K, until such time as its non-affiliate public float exceeds $75 million.
The Company is obligated under the Merger Agreement and the iOx Share Exchange Agreement to pay certain third-party earnouts based on the achievement of certain milestones. See Note 9, “Acquisition of Tarus,” and Note 17, “Related Party Transactions – Share Exchange Agreement – iOx,” respectively, for further discussions.
| F-33 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS
SalvaRx Acquisition
Two of the Company’s directors are also directors of SalvaRx Group plc, a company which owns approximately 4.1% of the Company’s issued and outstanding ordinary shares as of December 31, 2023.
Investments
The Company has entered into related party transactions and certain services agreements with its investees. Key management personnel of the Company have 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, including directors and senior management of the Company.
The following subsidiaries and associates are considered related parties:
| (a) | Stimunity. The Chief Executive Officer (“CEO”) of Portage is one of three members of the board of directors of Stimunity (see Note 6, “Investment in Associate and Convertible Note Receivable,” and Note 16, “Commitments and Contingent Liabilities – Stimunity Convertible Note”). |
| (b) | iOx. Upon execution of the iOx Share Exchange on July 18, 2022, the non-Portage director resigned from the iOx board leaving two Portage insiders as directors. The CEO of Portage is also the CEO of iOx, and the management team of Portage comprises the management team of iOx. See below for a discussion of the Company’s purchase of the non-controlling interest in iOx through its wholly-owned subsidiary SalvaRx. |
| (c) | Saugatuck. One of the three directorships on the board of directors of Saugatuck is controlled by Portage. Additionally, the CEO of Portage is also the CEO of Saugatuck, and the management team of Portage comprises the management team of Saugatuck. |
| (d) | Intensity. The CEO of Portage previously served as a part-time officer of Intensity until becoming a consultant in 2023. Additionally, Intensity provided services (primarily rent) to Portage through April 2023. |
| (e) | Portage Development Services Inc. PDS provides human resources and other services to each operating subsidiary of Portage through shared services agreements. |
The following are related party balances and transactions other than those disclosed elsewhere in the condensed consolidated interim financial statements:
Transactions between the parent company and its subsidiaries, which are related parties, have been eliminated in consolidation and are not disclosed in this note.
On September 8, 2021,
| F-34 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS (Cont’d)
Share Exchange Agreement – iOx
On July 18, 2022, the Company and SalvaRx entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with each of the minority shareholders of iOx (the “Sellers”) resulting in the acquisition of the outstanding non-controlling ownership interest (approximately 22%) of iOx, which is developing the iNKT engager platform. The Company followed IFRS 3, “Business Combinations,” and IAS 27, “Separate Financial Statements,” (which substantially replaced IAS 3) to account for this transaction. The Company achieved control of iOx, as defined, on January 8, 2019 upon the completion of the SalvaRx Acquisition. Further transactions whereby the parent entity acquires further equity interests from non-controlling interests, or disposes of equity interests but without losing control, are accounted for as equity transactions (i.e., transactions with owners in their capacity as owners). As such:
| · | the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary; |
| · | any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the parent; and |
| · | there is no consequential adjustment to the carrying amount of goodwill, and no gain or loss is recognized in profit or loss. |
The Company now owns the worldwide rights to its small molecule iNKT engagers, including lead programs PORT-2 and PORT-3. Under the terms of the Share Exchange Agreement, each Seller sold to the Company, and the Company acquired from each Seller, legal and beneficial ownership of the number of iOx shares held by each Seller, free and clear of any share encumbrances, in exchange for the issuance in an aggregate of Portage ordinary shares to be allocated among the Sellers based upon their relative ownership. As a result of the Share Exchange Agreement, the Company owns 100% of the issued and outstanding shares of iOx through its wholly-owned subsidiary, SalvaRx.
As additional consideration for the sale of the iOx shares to the Company under the Share Exchange Agreement, the Sellers shall have the contingent right to receive additional shares (“Earnout Shares”) from the Company having an aggregate value equal to $25 million calculated at the Per Share Earnout Price (as defined in the Share Exchange Agreement) upon the achievement of certain milestones defined as the dosing of the first patient in a Phase 3 clinical trial for either PORT-2 (IMM60 iNKT cell activator/engager) or PORT-3 (PLGA-nanoparticle formulation of IMM60 combined with a NY-ESO-1 peptide vaccine). The Company shall have the option, in its sole and absolute discretion, to settle the Earnout Shares in cash. The Company followed IFRS 3 and IAS 32, “Financial Instruments: Presentation,” to account for the fair value of the Earnout Shares. The principal assumptions for determining the fair value include the timing of development events, the probabilities of success and the discount rate used. The fundamental principle of IAS 32 is that a financial instrument should be classified as either a financial liability or an equity instrument according to the substance of the contract, not its legal form, and the definitions of financial liability and equity instrument. A financial instrument is an equity instrument if, and only if, both conditions (a) and (b) below are met:
| (a) | the instrument includes no contractual obligation to deliver cash or another financial asset to another entity, and |
| (b) | if the instrument will or may be settled in the Company’s own equity instruments, it is either: |
| (i) | a non-derivative that includes no contractual obligation for the Company to deliver a variable number of its own equity instruments; or |
| (ii) | a derivative that will be settled only by the issuer exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments. |
| F-35 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS (Cont’d)
When a derivative financial instrument gives one party a choice over how it is settled (for instance, the Company or the holder can choose settlement net in cash or by exchanging shares for cash), it is a financial asset or a financial liability unless all of the settlement alternatives would result in it being an equity instrument. The financial instrument includes the exclusive right of the Company to settle the obligation with cash or equity and, accordingly, accounted for the fair value of the Earnout Shares as a non-current liability.
The Company recorded $5.478 million as the fair value estimate of the
Earnout Shares, which is reflected as deferred obligation - iOx milestone on the condensed consolidated interim statements of financial
position included herein. The Company will determine the fair value of the Earnout Shares at each balance sheet date. Any change to the
fair value will be recorded in the Company’s statements of operations and other comprehensive income (loss). The Company recorded
a gain from the change (decrease) in the fair value of the liability of $
Employment Agreements
PDS entered into a Services Agreement with the Company’s CEO effective
December 15, 2021 (the “CEO Services Agreement”). The CEO Services Agreement originally provided for a base salary of $
The CEO Services Agreement with PDS may be terminated by the CEO at any time for Good Reason (as defined in the CEO Services Agreement). PDS may terminate the CEO’s employment immediately upon his death, upon a period of disability or without Just Cause (as defined in the CEO Services Agreement). In the event that the CEO’s employment is terminated due to his death or Disability (as defined in the CEO Services Agreement), for Good Reason or without Just Cause, he will be entitled to accrued obligations (accrued unpaid portion of base salary, accrued unused vacation time and any unpaid expenses). Additionally, he may be entitled to Severance Benefits (as defined in the CEO Services Agreement), which include his then current base salary and the average of his annual bonus for the prior two completed performance years, paid over 12 monthly installments. The CEO will be entitled to life insurance benefits and medical and dental benefits for a period of 12 months at the same rate the CEO and PDS shared such costs during his period of employment.
Finally, all stock options (and any other unvested equity incentive award) held by the CEO relating to shares of the Company will be deemed fully vested and exercisable on the Termination Date (as defined in the CEO Services Agreement), and the exercise period for such stock options will be increased by a period of two years from the Termination Date.
| F-36 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS (Cont’d)
If the CEO’s employment by PDS is terminated by PDS or any successor entity without Just Cause (not including termination by virtue of the CEO’s death or Disability) or by the CEO for Good Reason within 12 months following the effective date of a Change in Control (as defined in the CEO Services Agreement), then, in addition to paying or providing the CEO with the Accrued Obligations (as defined in the CEO Services Agreement), the Company will provide the following Change in Control Severance Benefits (as defined in the CEO Services Agreement):
| (1) | PDS will pay the base salary continuation benefit for 18 months; |
| (2) | PDS will pay the life insurance benefit for 18 months; |
| (3) | PDS will pay an additional amount equivalent to the CEO’s target annual bonus calculated using the bonus percentage for the performance year in which the CEO’s termination occurs. This bonus will be paid in 12 equal installments commencing on the first payroll date that is more than 60 days following the date of termination of the CEO’s employment, with the remaining installments occurring on the first day of the month for the 11 months thereafter; |
| (4) | PDS will provide the CEO with continued medical and dental benefits, as described above, for 18 months; and |
| (5) | All stock options (and any other unvested equity incentive award) held by the CEO relating to shares of the Company will be deemed fully vested and exercisable on the Termination Date, as defined, and the exercise period for such stock options will be increased by a period of two years from the Termination Date. |
PDS entered into services agreements (individually, an “Executive
Service Agreement,” and collectively, the “Executive Service Agreements”) with each of the Company’s five other
members of senior management (individually, “Executive” and collectively, “Executives”), three of which are dated
as of December 1, 2021, one of which is dated December 15, 2021 and one of which is dated June 1, 2022. Each of the Executive Services
Agreements provides for an initial term of two years that is automatically renewed for one-year periods (except two of the Executive Services
Agreement, which provides for an initial term of one year and that is automatically renewed for one-year periods). The Executive Services
Agreements initially provided for annual base salaries ranging from $
On December 19, 2022, the Compensation Committee approved executive compensation
(other than for the CEO) for Fiscal Year 2024 for annual base salaries ranging from $
The Executive Services Agreements can be terminated by PDS without Just Cause, by death or Disability, or by the Executive (except one) for Good Reason (each as defined in the respective Executive Services Agreements). In such instances, the Executive Services Agreements provide for the payment of accrued obligations (accrued unpaid portion of base salary, accrued unused vacation time and any unpaid expenses). Additionally, the Executives (except two) are entitled to 50% of base salary plus 50% of average annual bonus earned over the prior two performance years, as well as prevailing life insurance benefits for a period of six months and medical and dental benefits for a period of six months at the prevailing rate PDS and the Executive were sharing such expenses.
Additionally, all stock options (and any other unvested equity incentive award) held by the Executives relating to shares of the Company will be deemed fully vested and exercisable on the Termination Date (as defined in the respective Executive Services Agreements), and the exercise period for such stock options will be increased by a period of two years from the Termination Date.
| F-37 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS (Cont’d)
If an Executive’s employment by PDS is terminated by the Company or any successor entity without Just Cause (not including termination by virtue of the Executive’s death or Disability) or by the Executive (except one) for Good Reason within 12 months following the effective date of a Change in Control (as defined in the respective Executive Services Agreements), then, in addition to paying or providing the Executive with the Accrued Obligations (as defined in the respective Executive Services Agreements), the Company will provide the following Change in Control Severance Benefits (as defined in the respective Executive Services Agreements), except in two cases in which the Executive is entitled to Item (5) and 50% of Items (1) and (3) below:
| (1) | PDS will pay the base salary continuation benefit for 12 months; |
| (2) | PDS will pay the life insurance benefit for 12 months; |
| (3) | The Company will pay an additional amount equivalent to the Executive’s target annual bonus calculated using the bonus percentage for the performance year in which the Executive’s termination occurs. This bonus will be payable in 12 equal installments commencing on the first payroll date that is more than 60 days following the date of termination of the Executive’s employment, with the remaining installments occurring on the first day of the month for the 11 months thereafter; |
| (4) | PDS will provide the Executive with continued medical and dental benefits, as described above, for 12 months; and |
| (5) | All stock options (and any other unvested equity incentive award) held by the Executive relating to shares of PDS or the Company will be deemed fully vested and exercisable on the Termination Date and the exercise period for such stock options will be increased by a period of two years from the Termination Date. |
The Executive Services Agreements also include customary confidentiality, as well as provisions relating to assignment of inventions. The Executive Services Agreements also includes non-competition and non-solicitation of employees and customers provision that run during the Executive’s employment with PDS and for a period of one year after termination of employment.
Bonuses & Board Compensation Arrangements
In December 2022, the Board approved
executive performance bonuses, as recommended by the Compensation Committee, totaling $
Effective January 1, 2022, each non-employee Board member is entitled
to receive cash Board fees of $40,000 per annum, payable quarterly in arrears. Additionally, each non-employee Board member is entitled
to an annual grant of 6,900 options to purchase Portage ordinary shares, which would vest the first annual anniversary of the grant date.
The Company incurred Board fees totaling $
| F-38 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 17. RELATED PARTY TRANSACTIONS (Cont’d)
Non-employee Board chairpersons are entitled to an annual cash fee of
$30,000, payable quarterly in arrears. In lieu of a non-executive chairperson, the lead director is entitled to an annual cash fee of
$20,000 per annum paid quarterly in arrears.
NOTE 18. 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; and therefore, these estimates cannot be determined with precision. Changes in assumptions could significantly affect these estimates.
The following table summarizes the Company’s financial instruments as of December 31, 2023 and March 31, 2023:
| As of December 31, 2023 | As of March 31, 2023 | |||||||||||||||||||||||
| Amortized Cost | FVTOCI | FVTPL | Amortized Cost | FVTOCI | FVTPL | |||||||||||||||||||
| Financial assets | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Prepaid expenses and other receivables | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Convertible note receivable, including accrued interest, net of impairment | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Investment in associate | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Investment in public company | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| As of December 31, 2023 | As of March 31, 2023 | |||||||||||||||
| Amortized Cost | FVTPL | Amortized Cost | FVTPL | |||||||||||||
| Financial liabilities | ||||||||||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | $ | ||||||||||||
| Lease liability - current | $ | $ | $ | $ | ||||||||||||
| Lease liability - non-current | $ | $ | $ | $ | ||||||||||||
| Warrant liability | $ | $ | $ | $ | ||||||||||||
| Deferred purchase price payable - Tarus | $ | $ | $ | $ | ||||||||||||
| Deferred obligation - iOx milestone | $ | $ | $ | $ | ||||||||||||
A summary of the Company’s risk exposures as it relates to financial instruments are reflected below.
| F-39 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Fair value of Financial Instruments
The Company’s financial assets and liabilities are comprised of cash and cash equivalents, receivables and investments in equities and public entities, accounts payable and accrued liabilities, lease liability, warrant liability, deferred purchase price payable and deferred obligation.
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. |
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 Associate: The fair value of the Stimunity investment
was determined based on an IAS 36 fair value analysis evaluating the likelihood of various scenarios given the then-current market conditions,
the increasing cost of capital and development delays associated with Stimunity’s lack of liquidity (Level 3). The Company recorded
a provision of impairment of $
| F-40 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Convertible Note Receivable: The fair value of the Stimunity Convertible
Note receivable denominated in euros at initial recognition is the transaction price for the instrument adjusted for the effect of the
currency translation rate on the reporting date (Level 3) (see Note 16, “Commitments and Contingent Liabilities – Stimunity
Convertible Note”). The Stimunity Convertible Note was initially recorded at $
The Stimunity Convertible Note matured on September 1, 2023 and was not settled. In December 2023, the Company completed a transfer of the investment in Stimunity and the Stimunity Convertible Note to iOx. Simultaneously, the Convertible Note was converted into Class A shares of Stimunity, which increased the Company’s interest in Stimunity to %.
Investment in Public Company: Upon Intensity’s IPO effective June 30, 2023, the fair value of the investment is determined by the quoted market price (Level 1).
Warrant Liability: The fair value is estimated using a Black-Scholes model and in certain cases, a Monte Carlo simulation (Level 3) (see Note 11, “Warrant Liability”).
Lease Liability - Current: The lease liability - current represents the present value of the lease payments due over the next twelve months discounted at the Company’s incremental borrowing rate (Level 2).
Lease Liability - Non-Current: The lease liability - non-current represents the present value of the lease payments due under the lease less the current portion of such payments discounted at the Company’s incremental borrowing rate (Level 2).
| F-41 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Deferred Purchase Price Payable - Tarus: The fair value is the
estimated value of a future contingent obligation based upon a fair value analysis performed in accordance with IFRS 3 at acquisition
date, adjusted at each reporting date for any change in fair value (Level 3) (see Note 9, “Acquisition of Tarus”). The fair
value was determined using the Income Approach and was based upon the analysis on the Tarus clinical plan, the timing of development events
and the probabilities of success determined primarily based upon empirical third-party data and Company experience, as well as the relevant
cost of capital. The Company recorded a gain from the change (decrease) in the fair value of the liability of $
Deferred Obligation - iOx Milestone: The fair value is the estimated
value of a future contingent obligation based upon a fair value analysis performed in accordance with IFRS 3 as of July 18, 2022, the
date of the Share Exchange Agreement, adjusted at each reporting date for any change in fair value (Level 3) (see Note 17, “Related
Party Transactions – Share Exchange Agreement – iOx”). The fair value was determined using the Income Approach and based
on factors including the clinical plan, the timing of development events and the probabilities of success determined primarily based upon
empirical third-party data and Company experience, as well as the relevant cost of capital. In connection with the decision by the Company
to pause its PORT-2 and PORT-3 platforms, the Company performed an impairment analysis which resulted in an impairment loss of $
Fair Value Hierarchy
The investment in public company (Intensity) was transferred from Level 3 to Level 1 of the fair value hierarchy for the nine months ended December 31, 2023 as the result of Intensity’s IPO. For Fiscal 2023, the fair value of the investment was determined based on an IAS 36 impairment analysis after determining there were external indications of impairment (Level 3). See Note 7, “Investment in Public Company,” for a further discussion.
The Company’s financial instruments are exposed to certain financial risks: Credit Risk, Liquidity Risk and Foreign Currency Risk.
| F-42 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Cont’d)
Credit Risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill 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 and cash equivalents: Cash and cash equivalents comprise cash on hand and amounts invested in underlying treasury and money market funds that are readily convertible to a known amount of cash with three months or less from date of acquisition and are subject to an insignificant risk of change in value. As of December 31, 2023 and March 31, 2023, cash equivalents was comprised of a money market account with maturities less than 90 days from the date of purchase. Cash and cash equivalents are held with major international financial institutions and therefore the risk of loss is minimal.
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 and cash equivalents to satisfy current 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.
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. See Note 2, “Going Concern,” and Note 13, “Capital Stock,” for a discussion of the Company’s share offering and Note 16, “Commitments and Contingent Liabilities – Committed Purchase Agreement,” for a further discussion.
Foreign Currency Risk
While the Company operates in various jurisdictions, substantially all of the Company’s transactions are denominated in the U.S. Dollar, except the deferred tax liability in the U.K. settleable in British pound sterling and the Stimunity Convertible Note receivable settleable in euros.
| F-43 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 19. CAPITAL DISCLOSURES
The Company considers the items included in shareholders’ equity
as capital. The Company had accounts payable and accrued liabilities 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 December 31, 2023, shareholders’ equity attributable to the owners of the company was approximately $.0 million (approximately $.0 million as of March 31, 2023).
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 nine months ended December 31, 2023 and 2022.
NOTE 20. NON-CONTROLLING INTEREST
| (In thousands) | iOx | Saugatuck and subsidiary | Total | |||||||||
| Non-controlling interest as of April 1, 2023 | $ | $ | ( | ) | $ | ( | ) | |||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ||||||||
| Non-controlling interest as of December 31, 2023 | $ | $ | ( | ) | $ | ( | ) | |||||
| (In thousands) | iOx | Saugatuck and subsidiary | Total | |||||||||
| Non-controlling interest as of April 1, 2022 | $ | $ | ( | ) | $ | |||||||
| Net income (loss) attributable to non-controlling interest | ( | ) | ( | ) | ||||||||
| Purchase of non-controlling interest pursuant to Share Exchange Agreement | ( | ) | ( | ) | ||||||||
| Non-controlling interest as of December 31, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||
On September 8, 2021, the Company, through SalvaRx, completed a settlement of loans (including interest) to and receivables from iOx for services rendered in exchange for 23,772 ordinary shares of iOx at a price of £162. On July 18, 2022, the Company completed the acquisition of the remaining non-controlling interest in iOx, by issuing 1,070,000 shares of its ordinary shares and assuming certain milestone obligations. See Note 17, “Related Party Transactions – Share Exchange Agreement – iOx,” for a discussion of the Company’s purchase of the balance of the non-controlling interest in iOx.
Saugatuck and subsidiary includes Saugatuck and its wholly-owned subsidiary, Saugatuck Rx LLC.
| F-44 |
Portage Biotech Inc.
Notes to Condensed Consolidated Interim Financial Statements
(U.S. Dollars)
(Unaudited – See Notice to Reader dated February 28, 2024)
NOTE 21. EVENTS AFTER THE BALANCE SHEET DATE
In January 2024, the Company commenced selling its shares in Intensity on Nasdaq. Through February 26, 2024, the Company had sold an aggregate shares for proceeds, net of related expenses, of $ million.
F-45