Exhibit 99.3
TARUS THERAPEUTICS, INC.
INDEX TO FINANCIAL STATEMENTS
Page | ||
Unaudited Financial Statements | ||
Statement of Financial Position as of June 30, 2022 | 1 | |
Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021 | 2 | |
Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 | 3 | |
Notes to the Financial Statements | 4 |
TARUS THERAPEUTICS, INC.
Statement of Financial Position
(U.S. Dollars)
(Unaudited)
Notes | June 30, 2022 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | B | $ | 377,278 | |||||
Restricted cash | B | 33,216 | ||||||
Other current assets | 15,482 | |||||||
Total current assets | 425,976 | |||||||
Total assets | $ | 425,976 | ||||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 377,278 | ||||||
Accrued expenses | 1,015,648 | |||||||
Note payable | C, F | 2,000,000 | ||||||
Total current liabilities | 3,392,926 | |||||||
Commitments and Contingencies | ||||||||
Stockholders’ Deficit | ||||||||
Common stock | D | 69 | ||||||
Additional paid-in capital | 9,958,431 | |||||||
Accumulated deficit | (12,925,450 | ) | ||||||
Total stockholders’ deficit | (2,966,950 | ) | ||||||
Total liabilities and stockholders’ deficit | $ | 425,976 |
See accompanying notes to financial statements.
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TARUS THERAPEUTICS, INC.
Statements of Comprehensive Loss
(U.S. Dollars)
(Unaudited)
Notes | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||
Expenses | ||||||||||||||||||||
General and administrative expenses | $ | 675,039 | $ | 1,594,594 | $ | 1,144,885 | $ | 2,792,382 | ||||||||||||
Research and development expenses | (55,706 | ) | 531,152 | 22,412 | 650,587 | |||||||||||||||
Loss from operations | (619,333 | ) | (2,125,746 | ) | (1,167,297 | ) | (3,442,969 | ) | ||||||||||||
Other expense | ||||||||||||||||||||
Interest expense | F | (105,963 | ) | (113,570 | ) | (149,036 | ) | (227,140 | ) | |||||||||||
Loss before provision for income taxes | (725,296 | ) | (2,239,316 | ) | (1,316,333 | ) | (3,670,109 | ) | ||||||||||||
Income tax benefit | – | – | – | – | ||||||||||||||||
Net loss | $ | (725,296 | ) | $ | (2,239,316 | ) | $ | (1,316,333 | ) | $ | (3,670,109 | ) |
See accompanying notes to financial statements.
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TARUS THERAPEUTICS, INC.
Statements of Cash Flows
(U.S. Dollars)
(Unaudited)
Notes | Six Months Ended June 30, | |||||||||
2022 | 2021 | |||||||||
Cash flows from operating activities: | ||||||||||
Net loss for the period | $ | (1,316,333 | ) | $ | (3,670,109 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||
Share-based compensation expense | D | 308,375 | 1,155,471 | |||||||
Amortization of debt issuance costs | C, F | 60,000 | – | |||||||
Interest expense | C, F | 89,036 | 52,500 | |||||||
Amortization of debt discount | C, F | – | 174,640 | |||||||
Change in operating assets and liabilities: | ||||||||||
Other current assets | (15,482 | ) | – | |||||||
Accounts payable and accrued expenses | (187,614 | ) | 1,323,709 | |||||||
Net cash used in operating activities | (1,062,018 | ) | (963,789 | ) | ||||||
Cash flows from financing activities: | ||||||||||
Proceeds from the issuance of convertible notes payable | H | 750,000 | – | |||||||
Proceeds from the exercise of common stock warrants | D | 498,302 | – | |||||||
Debt issuance costs | H | (60,000 | ) | – | ||||||
Cash paid for interest | C, F | (53,292 | ) | (52,500 | ) | |||||
Proceeds from the issuance of common stock, net | – | 1,201,240 | ||||||||
Net cash provided by financing activities | 1,135,010 | 1,148,740 | ||||||||
Net increase in cash and restricted cash | 72,992 | 184,951 | ||||||||
Cash and restricted cash at beginning of period | B | 337,502 | 724,793 | |||||||
Cash and restricted cash at end of period | $ | 410,494 | $ | 909,744 | ||||||
Non-cash activities: | ||||||||||
Conversion of notes payable and accrued interest to common stock | D, H | $ | 767,100 | $ | – |
See accompanying notes to financial statements.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE A - NATURE OF OPERATIONS
Nature of Operations
Tarus Therapeutics, Inc. (the "Company") was incorporated in the state of Delaware on January 2, 2019. The Company is a privately held biotechnology Company focused on treatment of resistant cancers. The Company’s mailing address is 6A Cove Lane N, North Bergen, NJ 07047. It has no physical office at this time.
These financial statements were authorized for issue by the Board of Directors on October 12, 2022.
Liquidity
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred losses since inception and has funded its operations primarily through the sale of common stock and the issuance of a note payable. On June 30, 2022, the Company had stockholders’ deficit of approximately $3.0 million, borrowings outstanding, not including accrued interest, of $2.0 million and a working capital deficit of approximately $3.0 million.
For the six months ended June 30, 2022 and 2021, the Company had net cash outflows from operations of approximately $1.1 million and $1.0 million, respectively. Management believes that losses and negative cash flow will continue for at least the next year, from the date these financial statements are being issued. If the Company is unable to obtain sufficient cash resources to fund its operations and repay its notes payable, it may be forced to reduce or discontinue its operations. These conditions raise significant doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise additional capital to fund its business activities, including its research and development program (see Note I(a), “Events After the Balance Sheet Date – Merger Agreement”).
COVID-19
In December 2019, a novel strain of coronavirus (“COVID-19”) was identified and has subsequently spread to other regions of the world, and has resulted in increased travel restrictions, business disruptions and emergency quarantine measures across the world including the United States. These disruptions did not have an effect on the Company's business plan.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements have been prepared in accordance with IAS 34, “Interim Financial Statements.” The financial statements have been prepared on a historical cost basis and are presented in U.S. Dollars.
These financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2021.
Use of Estimates
The preparation of financial statements in conformity with International Financial Reporting Standards ("IFRS") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the periods. The estimates affecting the financial statements that are particularly significant include the share-based compensation. Actual results could differ from those estimates.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentrations of Credit Risk
The Company periodically monitors its positions with, and the credit quality of the financial institutions with which it invests. Periodically, throughout the years, and as of June 30, 2022, the Company has maintained balances in excess of federally insured limits. The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of and during the six months ended June 30, 2022 and 2021.
Cash and Restricted Cash
Amounts included in restricted cash represent those required to be set aside to make interest payments on the outstanding note payable. The following table presents cash and restricted cash reported on the statement of financial position as of June 30, 2022, and the sums presented on the statements of cash flows as of June 30, 2022 and 2021:
As of June 30, | ||||||||
2022 | 2021 | |||||||
Cash | $ | 377,278 | $ | 839,841 | ||||
Restricted cash | 33,216 | 69,903 | ||||||
Total as presented in the statements of cash flows | $ | 410,494 | $ | 909,744 |
Research and Development
Expenditures on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, are expensed as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized only if development costs can be measured reliably, the product or process is technically, and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit. During the period of development, the asset is tested for impairment annually. Research and development expenses include all direct and indirect operating expenses supporting the products in development. For the six months ended June 30, 2022 and 2021, all research and development expenditures were categorized as research and expensed in the period incurred. See Note F, “Commitments and Contingencies – License Agreement” for a further discussion.
Deferred Finance Costs
Costs incurred with obtaining and executing debt arrangements are capitalized and amortized over the term of the related debt. Unamortized deferred costs are presented in the balance sheet as an offset to the associated debt.
Income Taxes
The Company recorded no income tax expense for the six months ended June 30, 2022 and 2021, because the estimated annual effective tax rate was zero. As of June 30, 2022, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.
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NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Share-Based Compensation
The Company calculates share-based compensation expense for option awards based on the grant/issue date fair value using the Black-Scholes-Merton option pricing model (“Black-Sholes Model”) and recognize the expense on a straight-line basis over the vesting period. The Company accounts for forfeitures as they occur. The Black-Scholes Model requires the use of a number of assumptions including volatility of the stock price, the weighted average risk-free interest rate, and the vesting period of the Share-based Award in determining the fair value of Share-based Awards. Although the Company believes the assumptions used to calculate share-based compensation expense are reasonable, these assumptions can involve complex judgments about future events, which are open to interpretation and inherent uncertainty. In addition, significant changes to the assumptions could significantly impact the amount of expense recorded in a given period.
The Company recognizes restricted stock unit expense over the period of vesting or period that services will be provided. Compensation associated with shares of Common Stock issued or to be issued to consultants and other non-employees is recognized over the expected service period beginning on the measurement date, which is generally the time the Company and the service provider enter into a commitment whereby the Company agrees to grant shares in exchange for the services to be provided.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The Company is a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
Recent Accounting Pronouncements
New IFRS standards and interpretations or changes to existing standards with future effective dates are either not applicable or not expected to have a significant impact on the financial statements of the Company.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE C - NOTE PAYABLE
The Company entered into a loan agreement on February 4, 2020 with a financial institution for a $2,000,000 promissory note bearing interest at a floating rate of 2% plus the U.S. Prime Rate, as published in The Wall Street Journal. The average daily interest rate charged to the Company during the six months ended June 30, 2021 was 5.25%, and 5.25% until March 17, 2022, when it changed to 5.62%. The average daily interest rate increased to 6.12% on May 5, 2022 and 6.87% on June 16, 2022. The note is secured by all of the Company's assets and has been guaranteed by several members of management. The note was originally due September 1, 2021 subject to a Company option to extend the term for one additional six-month period to March 1, 2022 for a fee of $10,000, which was exercised. The Company then extended the maturity date of the loan to September 1, 2022. From the initial draw on this facility, $202,500 was held as interest reserve by the Company. As of June 30, 2022, the total amount of the note outstanding, net of the interest reserve, was $2 million (see Note I(b), “Events After the Balance Sheet Date – Note Payable”). Interest expense of $37,208 and $26,250 was recognized for the three months ended June 30, 2022 and 2021, respectively, and $63,458 and $52,500 was recognized for the six months ended June 30, 2022 and 2021, respectively. See Note F, “Interest Expense.”
In connection with obtaining the note, the Company incurred costs of $30,000, issued 157,332 shares of common stock and 304,858 warrants to purchase common stock to the guarantors of the note, and issued 53,802 warrants to the holder of the note. $813,995 was recorded as a debt discount, which was fully amortized at December 31, 2021. Amortization of debt discount amounted to $87,320 and $174,640 for the three and six months ended June 30, 2021, respectively, and was included in interest expense. No such amount was recorded in the three and six months ended June 30, 2022. See Note F, “Interest Expense.”
NOTE D - STOCKHOLDERS' DEFICIT
Common Stock
(a) Authorized common shares: 10,000,000 common shares with par value of $0.00001 per share.
(b) Following is a roll-forward of ordinary shares as of June 30, 2022:
As of June 30, 2022 | ||||||||
Shares | Amount | |||||||
Balance, January 1, 2022 | 6,026,989 | $ | 61 | |||||
Shares issued for services (1) | 59,577 | 1 | ||||||
Shares issued on conversion of Convertible Notes Payable and accrued interest | 408,166 | 4 | ||||||
Shares issued on exercise of stock warrants | 170,051 | 2 | ||||||
Shares issued on exercise of options to purchase common stock, net of shares retained | 39,553 | 1 | ||||||
Other | 7 | – | ||||||
Balance, June 30, 2022 | 6,704,343 | $ | 69 |
(1) | 59,577 shares with an aggregate fair value of $160,085 were issued to four individuals for certain advisory and research and development services during the three months ended June 30, 2022. |
See Note I(a), “Events After the Balance Sheet Date – Merger Agreement” for a further discussion.
Equity Incentive Plan
On July 23, 2020, the Company established the 2020 Equity Incentive Plan (the "Plan"). The number of shares available for grant or option under the Plan shall not exceed 1,415,768 shares. The shares or options granted under this Plan may be either authorized but unissued or reacquired shares. Awards under the Plan may consist of (i) options, (ii) stock awards and (iii) restricted stock. As of June 30, 2022, there were no stock awards granted and a total of 245,448 shares of restricted stock and 1,170,320 options were granted under the Plan.
The Plan may grant restricted stock to eligible persons which entitle the participants to receive the shares underlying those awards upon vesting or upon the expiration of a designated time period following the vesting of those awards. Restricted stock may, in the discretion of the Plan Administrator, vest in one or more installments over the participant's period of service or upon the attainment of specified performance objectives. Outstanding restricted stock shall automatically terminate, and no shares of common stock shall be issued in satisfaction of those awards, if the performance goals or service requirements established for those awards are not attained or satisfied. The Plan Administrator shall have the discretionary authority to issue vested shares of common stock under one or more outstanding awards of restricted stock as to which the designated performance goals or service requirements have not been attained or satisfied.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE D - STOCKHOLDERS' DEFICIT (continued)
Options
The following is a summary of the Company's option activity:
Weighted | Weighted | |||||||||||
Average | Average | |||||||||||
Options | Exercise Price | Life | ||||||||||
Outstanding, January 1, 2021 | 1,170,320 | $ | 3.21 | 0.70 | ||||||||
Exercised | (309,606 | ) | 3.21 | – | ||||||||
Outstanding, June 30, 2022 | 860,714 | $ | 3.21 | 0.20 |
The Company recognized share-based compensation expense of $65,943 and $128,479 for the three months ended June 30, 2022 and 2021, respectively, and $148,290 and $1,155,471 for the six months ended June 30, 2022 and 2021, respectively.
In June 2022, 309,606 options to purchase common stock were exercised resulting in 39,553 net shares issued. In July 2022, in connection with the merger with Portage Biotech, Inc. (“Portage”), 860,714 options to purchase common stock expired unexercised.
Warrants
As of January 1, 2022, the Company had warrants outstanding to purchase an aggregate of 358,660 shares of Common Stock with a weighted-average contractual remaining life of approximately 9.2 years, and an exercise price of $2.79 per share.
In May 2022, warrant holders exercised 170,051 warrants for proceeds totaling of $474,442. In July 2022, in connection with the merger with Portage, 188,609 warrants expired unexercised.
The following is a summary of the Company's warrant activity:
Shares Upon | ||||||||
Exercise | ||||||||
of Warrants | Exercise Price | |||||||
Outstanding, January 1, 2022 | 358,660 | $ | 2.79 | |||||
Exercised (May 2022) | (170,051 | ) | $ | 2.79 | ||||
Outstanding, June 30, 2022 | 188,609 | $ | 2.79 |
Restricted Stock Awards
From inception through June 30, 2022, the Company granted 524,278 shares of restricted stock to board members and others, which were fully vested at the dates of grant. Of such shares, 157,332 shares with an estimated fair value of $379,169 were issued in connection with obtaining the Company's note payable and were recorded as a debt discount. 61,921 shares of restricted stock originally granted were forfeited and the balance of 462,357 shares of restricted stock granted are included in common shares issued and outstanding at June 30, 2022.
In May 2022, the Company granted 59,577 vested shares of the Company to four consultants for services provided. The fair value of the shares was $2.68 per share, which was based on a 409A independent value study of the Company’s common shares. Accordingly, the Company recorded $160,085 share-based compensation expense in the three months ended June 30, 2022.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE D - STOCKHOLDERS' DEFICIT (continued)
Below is a table reflecting share-based compensation expense incurred during the three and six months ended June 30, 2022 and 2021.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Share-based compensation expense: | ||||||||||||||||
Stock options | $ | 65,944 | $ | 128,479 | $ | 148,290 | $ | 1,155,471 | ||||||||
Restricted stock | 160,085 | – | 160,085 | – | ||||||||||||
Total share-based compensation expense | $ | 226,029 | $ | 128,479 | $ | 308,375 | $ | 1,155,471 |
The expenses above were included in general and administrative expenses in the respective statements of comprehensive loss included herein.
NOTE E - COMMITMENTS AND CONTINGENCIES
The Company utilizes third party contractors to conduct some of its clinical activities. Such commitments are generally cancellable upon short-term notice.
License Agreement
On October 29, 2019, the Company entered into an exclusive license agreement, or the License Agreement, with Impetis Biosciences Limited ("Impetis"), to grant the Company an exclusive worldwide license to develop and commercialize adenosine receptor antagonists and related assets. The Company's current Chief Science Officer is the former managing director and CEO of Impetis. The License Agreement provides that the Company pay Impetis a total of $1.75 million in connection with the execution of the License Agreement.
At any time, during the twelve-month period ending November 20, 2020, the Company had the option to obtain an exclusive sublicensable worldwide license to develop or commercialize all of the option assets under the same terms as the license agreement, for a total exercise price of $750,000. The Company exercised the option in 2020.
Under the terms of the License Agreement, the Company is required to reasonably use efforts to achieve certain delineated milestones, including specified clinical development and specified commercialization milestones. In general, upon its achievement of these milestones, the Company will be obligated, in the case of development and commercialization milestones, to make milestone payments to Impetis in specified amounts and, in the case of commercialization milestones, to specified royalties with respect to product sales. In the event the Company fails to make timely payments, payments shall accrue interest at a per annum rate of 1% above monthly LIBOR.
During 2021, the Company has achieved two milestones and is obligated to pay Impetis an aggregate amount of $1.0 million. Such amount is included in accrued liabilities at June 30, 2022. See Note I(c), “Events After the Balance Sheet Date – Impetis Payment” for a further discussion.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE F - INTEREST EXPENSE
Interest expense was comprised of the following amounts:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Debt issuance costs – Convertible Notes payable (1) | $ | 52,143 | $ | – | $ | 60,000 | $ | – | ||||||||
Interest on note payable | 37,208 | 26,250 | 63,458 | 52,500 | ||||||||||||
Interest on Convertible Notes (1) | 11,306 | – | 17,100 | – | ||||||||||||
Interest on outstanding milestone payments | 5,306 | – | 8,478 | – | ||||||||||||
Amortization of debt discount | – | 87,320 | – | 174,640 | ||||||||||||
Total interest expense | $ | 105,963 | $ | 113,570 | $ | 149,036 | $ | 227,140 |
(1) These costs are related to the Convertible Notes payable discussed in Note H, “Convertible Notes.”
NOTE G - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Chief Scientific Officer was the former Co-founder and Chief Scientific Officer of Advinus Therapeutics Ltd. during the period of 2015 through 2017. Advinus Therapeutics Ltd. is a wholly-owned subsidiary of Euronfins Advinus. The Company paid Eurofins Advinus $0 and $26,000 during the three months ended June 30, 2022 and 2021, respectively, and approximately $2,500 and $126,000 during the six months ended June 30, 2022 and 2021, respectively, related to research and development expenses. In addition, and prior to the Officer's employment with the Company, the individual served as a Director for Impetis Biosciences Limited, which was owned by the Tata group.
NOTE H - CONVERTIBLE NOTES
During February 2022, the Company issued $750,000 aggregate principal amount of convertible notes (the “Convertible Notes”) originally scheduled to mature in February 2024. The Convertible Notes carried an interest rate of 6% and contained a mandatory conversion feature of which the outstanding principal and unpaid accrued interest would be converted into conversion shares, in the event of a reverse merger or related financing transaction that occurs prior to maturity based on a formula. The Convertible Notes, plus accrued unpaid interest of $17,100, were converted to 408,166 shares in June 2022.
The Company incurred $60,000 of expenses associated with this issuance, which was fully amortized as a result of the conversion.
The Company recorded $52,143 and $60,000 amortization of debt issuance costs in the three and six months ended June 30, 2022, which was included in interest expense in the relevant statements of comprehensive loss included herein. No such amount was recorded in the prior year periods.
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TARUS THERAPEUTICS, INC.
Notes to the Financial Statements
June 30, 2022 and 2021
NOTE I - EVENTS AFTER THE BALANCE SHEET DATE
(a) | Merger Agreement |
On July 1, 2022, the Company and Portage Biotech Inc. (the “Buyer” or “Portage”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). Under the structure of the Merger Agreement, Tarus Therapeutics, Inc. was ultimately merged into a wholly-owned subsidiary of the Buyer with the surviving entity renamed Tarus Therapeutics, LLC. The Tarus merger entitles the Buyer 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 the Company and Impetis Biosciences Limited, dated October 29, 2019, and the Call Option under the License Agreement, which was exercised on November 5, 2020. |
2. | All intellectual property and related documents owned or controlled by the Company, 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 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 CRO agreements and protocol related documents for Adenosine Compounds. |
7. | All current documents related to market research, forecasting, budgets and competitive intelligence. |
8. | Rights to the use of Tarus Therapeutics name for regulatory purposes. |
As consideration for the Company, Portage issued to the Company’s shareholders an aggregate of 2,425,999 ordinary shares of Portage, calculated on the basis of $18M divided by the 60-day Volume Weighted Average Price per share in exchange for the 6,704,343 outstanding shares of the Company. The shares are unregistered and subject to lock-ups for terms ranging from six to twelve months. Additionally, milestone payments of up to $32 million in cash or Portage ordinary shares would be triggered upon achievement of future development and sales milestones. As a result of the transaction:
· | Portage also assumed $2M short-term debt held by the Company and deferred license milestones obligations ($1M plus interest). The short-term debt was repaid by Portage in July 2022. |
· | Upon enrolling the first patient in a Phase 2 clinical trial, Portage will pay an additional one-time milestone payment of $15M. Payment will be in the form of cash or PRTG stock (at the discretion of Portage). The remaining $17 million milestone is based on targeted commercial sales. |
(b) | Note Payable |
The $2,000,000 note payable, plus accrued interest and penalty totaling $33,216, was repaid on July 1, 2022 by Portage.
(c) | Impetis Payment |
The $1,000,000 milestone payment, plus interest, was repaid in August 2022 by Portage.
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