On March 2, 2021 Portage Biotech Inc. reported Condensed Consolidated Interim Financial Statements (U.S. Dollars) (Unaudited – See Notice to Reader dated November 30, 2020) (Press release, Portage Biotech, MAR 2, 2021, View Source [SID1234575982])
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NOTE 1. NATURE OF OPERATIONS Portage Biotech Inc. (the "Company") is incorporated in the British Virgin Islands ("BVI") with its registered office located at FH Chambers, P.O. Box 4649, Road Town, Tortola, BVI. Its Toronto agent, Portage Services Ltd., is located at 6 Adelaide Street East, Suite 300, Toronto, Ontario, M5C 1H6, Canada. The Company is a reporting issuer with the Ontario Securities Commission on the Canadian Stock Exchange under the symbol PBT-U and U.S. Securities and Exchange Commission on the OTC market under the symbol PTGEF. The Company is engaged in the business of researching and developing pharmaceutical and biotechnology products through to clinical "proof of concept" with an initial focus on unmet clinical needs. Following proof of concept, the Company intends to seek to sell or license the products to large pharmaceutical companies for further development and commercialization.
On June 5, 2020, the Company effected a 100:1 reverse stock split. All share and per share information included in the condensed consolidated interim financial statements have been retroactively adjusted to reflect the impact of the reverse stock split. The shares of ordinary shares authorized remained at an unlimited number of ordinary shares without par value. The Company’s existing subsidiaries are in the pre-clinical stage, and as such no revenue has been generated from their operations. Liquidity and Capital Resources The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The losses result primarily from its conduct of research and development activities.
As of September 30, 2020, the Company had cash balances totaling approximately $4.4 million and working capital of approximately $0.025 million (approximately $4.3 million adjusted for accrued equity issuable and warrant liability settleable on a non-cash basis), as compared to approximately $3.2 million and approximately $1.2 million, respectively, as of March 31, 2020. On June 16, 2020, in a private placement, the Company issued 698,145 restricted ordinary shares for gross proceeds of $6.98 million. The Company incurred costs of approximately $0.25 million in connection with the offering, which were recorded as a reduction of the offering proceeds. 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 longerterm business plan. 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. The Company’s believes its current cash will be sufficient to fund operations for at least 12 months from the date of issuance of the financial statements contained herein. However, the Company believes it will need to raise additional funding through strategic relationships, public or private equity or debt financings, grants or other arrangements in order to advance the Company’s existing and new product candidates through development and regulatory processes. If such funding is not available or not available on terms acceptable to the Company, the Company’s current development plan and plans for expansion of its general and administrative infrastructure may be modified or even curtailed. F-5 Portage Biotech Inc. Notes to Condensed Consolidated Interim Financial Statements (U.S. Dollars) (Unaudited – See Notice to Reader dated November 30, 2020)
NOTE 1. NATURE OF OPERATIONS (Cont’d) COVID-19 Effect Beginning in early March 2020, the COVID-19 pandemic and the measures imposed to contain this pandemic have disrupted and are expected to continue to impact the Company’s business operations. The magnitude of the impact of the COVID-19 pandemic on the Company’s productivity, results of operations and financial position, and its disruption to the Company’s business and clinical programs and timelines, will depend, in part, on the length and severity of these restrictions and on the Company’s ability to conduct business in the ordinary course.
NOTE 2. BASIS OF PRESENTATION Statement of Compliance and Basis of Presentation These condensed consolidated interim financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"), IAS 34 Interim Financial Reporting and interpretations of the International Financial Reporting Interpretations Committee.
These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited consolidated financial statements of the Company for the year ended March 31, 2020. These condensed consolidated interim financial statements have been prepared on an historical cost basis except for items disclosed herein at fair value. 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 material operating segment. These condensed consolidated interim financial statements were approved and authorized for issue by the Audit Committee and Board of Directors on November 30, 2020.
Consolidation The condensed consolidated interim financial statements include the accounts of the Company and,
(a) Portage Services Ltd., a wholly owned subsidiary incorporated in Ontario on January 31, 2011.
(b) Portage Pharmaceuticals Ltd. ("PPL") a wholly owned subsidiary acquired in a merger on July 23, 2013, incorporated in the British Virgin Islands.
(c) EyGen Limited, ("EyGen"), a wholly owned subsidiary of PPL, incorporated on September 20, 2016, in the British Virgin Islands.
(d) SalvaRx Limited ("SalvaRx"), a wholly owned subsidiary, incorporated on May 6, 2015 in the British Virgin Islands.
(e) Portage Glasgow Ltd ("PGL"), a 65% subsidiary of PPL, incorporated in Glasgow, Scotland.
(f) iOx Therapeutics Ltd ("iOx"), a United Kingdom based immune-oncology company, a 60.49% subsidiary, incorporated in the United Kingdom on February 10, 2015.
(g) Saugatuck, a 70% owned subsidiary incorporated in the British Virgin Islands. F-6 Portage Biotech Inc. Notes to Condensed Consolidated Interim Financial Statements (U.S. Dollars) (Unaudited – See Notice to Reader dated November 30, 2020)
NOTE 2. BASIS OF PRESENTATION (Cont’d) Consolidation (Cont’d)
(h) Portage Developmental Services, a 100% owned subsidiary incorporated in Delaware. All inter-company balances and transactions have been eliminated on consolidation. Non-controlling interest in the equity of a subsidiary is accounted for and reported as a component of stockholders’ equity. Non-controlling interests represent the 39.51% shareholder ownership interest in iOx and the 30% shareholder ownership interest in Saugatuck, and the 35% shareholder ownership interest in PGL, which are consolidated by the Company. Functional and Presentation Currency The Company’s functional and presentation currency is U.S. Dollar. Use of Estimates and Judgments The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant areas where estimates are made include valuation of financial instruments, research and development costs, fair value used for acquisition and measurement of share-based compensation. Significant areas where critical judgments are applied include assessment of impairment of investments and goodwill and the determination of the accounting acquirer and acquiree in the business combination accounting. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
NOTE 3. SIGNIFICANT ACCOUNTING POLICIES The accounting policies are set out in Note 3 to the fiscal 2020 audited consolidated financial statements. These policies have been applied consistently to all periods presented in these condensed consolidated interim financial statements. 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.