UNITED STATES
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X
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission file number: 0-30314
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Portage Biotech Inc.
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(Exact name of Registrant as specified in its charter)
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Inapplicable
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Page No.
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Forward-looking statements
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1
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Foreign Private Issuer Status and Reporting currency
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2
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Part I
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Item 1.
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Identity of Directors, Senior Management and Advisors
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2
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Item 2.
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Offer Statistics and Expected Timetable
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2
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Item 3.
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Key Information
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2
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Item 4.
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Information on the Company
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9
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Item 5.
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Operating and Financial Review and Prospects
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14
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Item 6.
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Directors, Senior Management and Employees
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19
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Item 7.
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Major Shareholders and Related Party Transactions
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24
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Item 8.
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Financial Information
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25
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Item 9.
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The Offer and Listing
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26
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Item 10.
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Additional Information
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27
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Item 11.
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Quantitative and Qualitative Disclosures about Market Risk
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39
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Item 12.
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Description of Securities Other than Equity Securities
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40
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Part II
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Item 13.
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Defaults, Dividend Arrearages and Delinquencies
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40
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Item 14.
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Material Modifications to the Rights of Security Holders and Use of Proceeds
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40
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Item 15.
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Controls and Procedures
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41
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Item 16.
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Audit Committee, Code of Ethics, and Principal Accountant’s Fees and Services
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42
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Part III
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Item 17.
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Financial Statements
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42
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Item 18.
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Financial Statements
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43
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Item 19.
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Exhibits
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43
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·
our plans and ability to develop and commercialize product candidates and the timing of these development programs;
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·
clinical development of our product candidates, including the results of current and future clinical trials;
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·
the benefits and risks of our product candidates as compared to others;
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·
our maintenance and establishment of intellectual property rights in our product candidates;
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·
our need for additional financing and our estimates regarding our capital requirements and future revenues and profitability;
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·
our estimates of the size of the potential markets for our product candidates;
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·
our selection and licensing of product candidates;
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Year ended March 31, 2014
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Period from May 23, 2012 to March 31, 2013
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Revenue
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-
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-
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Loss before non-controlling interests
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$(6,626,630)
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$(29,486)
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Non-controlling interests
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$(321,683)
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$ -
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Net Loss attributable to shareholders
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$(6,304,947)
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$(29,486)
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Net loss per share (1)
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($0.04)
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($0.00)
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Working capital
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$2,067,319
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$474,009
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Total assets
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$5,263,413
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$486,401
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Capital stock
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$7,256,715
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$503,495
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Warrants
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$1,108,402
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$ -
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Stock option reserve
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$362,440
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$ -
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Shareholders' equity
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$2,393,124
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$474,009
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Weighted average number of shares outstanding
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161,977,171
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81,759,076
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2014
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June
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May
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April
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March
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February
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January
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High for period
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$0.94
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$0.92
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$0.92
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$0.91
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$0.91
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$.94
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Low for period
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$0.91
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$0.91
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$0.90
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$0.89
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$0.89
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$0.89
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Year Ended March 31,
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2014
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2013
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2012
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2011
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2010
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Average for the year
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0.95
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1.00
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1.01
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0.98
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0.92
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·
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our inability to manufacture or obtain sufficient quantities of materials for use in clinical trials;
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·
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delays arising from our collaborative partnerships;
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·
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delays in obtaining regulatory approvals to commence a study, or government intervention to suspend or terminate a study;
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delays, suspension, or termination of the clinical trials due to the institutional review board or independent ethics board responsible for overseeing the study to protect research subjects at a particular study site;
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delays in identifying and reaching agreement on acceptable terms with prospective clinical trial sites;
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slower than expected rates of patient recruitment and enrollment;
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uncertain dosing issues;
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inability or unwillingness of medical investigators to follow our clinical protocols;
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variability in the number and types of subjects available for each study and resulting difficulties in identifying and enrolling subjects who meet trial eligibility criteria;
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scheduling conflicts with participating clinicians and clinical institutions;
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difficulty in maintaining contact with subjects after treatment, which results in incomplete data;
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unforeseen safety issues or side effects;
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lack of efficacy during the clinical trials;
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our reliance on clinical research organizations to conduct clinical trials, which may not conduct those trials with good clinical or laboratory practices; or
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other regulatory delays.
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•
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we experience scientific progress sooner than expected in our future discovery, research and development projects, if we expand the magnitude and scope of these activities, or if we modify our focus as a result of our discoveries;
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we experience setbacks in our progress with pre-clinical studies and clinical trials are delayed;
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we experience delays or unexpected increased costs in connection with obtaining regulatory approvals;
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we are required to perform additional pre-clinical studies and clinical trials;
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we experience unexpected or increased costs relating to preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; or
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•
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we elect to develop, acquire or license new technologies and products.
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to recognize or enforce against us judgments of U.S. courts based on certain civil liability provisions of U.S. securities laws; and
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·
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to impose liabilities against us, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
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(A)
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HISTORY AND DEVELOPMENT OF THE COMPANY
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Has more than 30 years’ experience in the global pharmaceutical industry.
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He joined Pfizer in 1982, where he held a number of senior positions in R&D in the USA, UK and Japan. He retired from Pfizer in 2007 as the Senior VP Head of World Development. Subsequently
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Was interim CEO and CMO at Amarin.
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Holds visiting professorships at Glasgow, Kitasato (Tokyo) and Cork Universities . He received his Medical degree from Glasgow University.
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Senior financial executive with over 25 years of corporate finance,
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Was senior manager with two of the largest accounting firms, Ernst & Young and Price Waterhouse Coopers
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Worked in industry under various roles from an office manager to CEO, CFO of public companies.
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Gregory Bailey M.D. – Chairman
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Former director and financier of Medivation Inc. (MDVN: NASDAQ).
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Co-founder, of Ascent Healthcare Solutions: VirnetX Inc internet security (VHC: AMEX) and Duramedic Inc. a medical products company.
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Has Medical Doctorate from the University of Western Ontario.
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Jim Mellon – Director
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Director of multiple public companies: In the biopharma sector Miraculins, Plethora Solutions, and the Summit Corporation.
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Chairman of AIM listed Port Erin Biopharma Investments, a fund specialising in biopharma investments
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The author of the best-selling book “Cracking the Code.
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Other listed company directorships include chairman of Manx Financial Group and Speymill, co-chairman of both Regent Pacific Group and West African Mining Corporation, and a board member of Brazilian Gold Corporation, Charlemagne Capital and Condor Resources.
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Bruce H. Littman,
MD – CEO
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Former Pfizer VP Global Translational Medicine
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Over 30 years pharmaceutical company and academic research experience
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Frank W. Marcoux
, Ph.D. - CSO
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Former Pfizer VP Quantitative and Innovative Medicine WW Development and former VP Biology Discipline WW Discovery
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Over 25 years pharmaceutical company and academic research
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Vlad Coric, MD
– Director
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Has over 14 years of clinical trial experience as the Chief of Inpatient Services at the Yale Clinical Neuroscience Research Unit.
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An Associate Clinical Professor of Psychiatry at the Yale
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A co-inventor of Yale intellectual property related to the use of glutamate modulating agents
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Earned his medical degree at Wake Forest University School of Medicine, and received his BS from University of Connecticut in Physiology and Neurobiology.
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Has over 45 peer-reviewed journal and book publications.
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Robert Berman , MD -
CMO
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Almost 30 years of neuroscience research
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13 years of clinical development experience (Pfizer and Bristol-Myers Squibb)
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Professor of Psychiatry (Adjunct), Yale School of Medicine
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Over 60 peer-reviewed publications – including first clinical trial with ketamine in patients with depression and leading the registrational program to obtain the first indication for a neuroleptic in the adjunctive treatment of major depressive disorder
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BA, Molecular Biophysics and Biochemistry, Yale University
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M.D., Mount Sinai School of Medicine
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Chairman of Psychiatry and Professor, Yale School of Medicine.
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Expert in the areas of psychopharmacology, glutamatergic neurotransmission, alcoholism, schizophrenia, and post-traumatic stress disorders.
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Professor of Psychiatry and Director of the Yale Depression Research Clinic
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Expert in elucidating the pathophysiological mechanisms associated with mood and other neuropsychiatric disorders.
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Director, MGH Clinical Research Program (CRP), Executive Vice Chair for the MGH Department of Psychiatry, Executive Director, MGH Clinical Trials Network and Institute, Director, and Slater Family Professor of Psychiatry at Harvard Medical School
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Expert in affective disorders and clinical trial design – with over 600 original articles
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(D) PROPERTY PLANTS AND EQUIPMENT
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Year ended
March 31,2014
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May 23, 2012 to
March 31, 2013
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in 000' US $
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in 000' US $
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Expenses
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(6,627)
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(29)
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(6,627)
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(29)
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Non-controlling interests
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(322)
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-
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Net loss attributable to shareholders
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(6,305)
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(29)
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Deficit at end of year
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(6,334)
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(29)
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a.
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The assets and liabilities of PPL at their pre-acquisition carrying amounts as at March 31, 2014 and expenses for the year ended on that date
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b.
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The assets and liabilities of Bontan as at March 31, 2014 and expenses from June 4, 2013 to March 31, 2014.
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c.
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Share capital representing the total number of shares issued by the Company.
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d.
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Value of the share capital was computed by adding to the value of the share capital of PPL on the date of acquisition, June 4, 2013, the fair value of Bontan as allocated to shares issued on the date of acquisition, and adjusted to any exercise or issuance of shares, warrants and options during the year ended March 31, 2014.
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e.
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Comparative figures are those of PPL.
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Cash
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$3,006,593
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Office equipment and furniture
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5,286
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Other assets
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153,963
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Liabilities
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(296,027)
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Fair value of consideration
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2,869,815
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Year ended March 31, 2014
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May 23, 2012 to March 31, 2013
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Acquisition related costs
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3,839
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-
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Consulting fees
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1,162
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-
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Research & development
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$ 1,136
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$ 27
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Professional fees
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336
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-
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Other costs
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154
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2
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$ 6,627
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$ 29
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Year ended March 31, 2014
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May 23, 2012 to March 31, 2013
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in 000$
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licenses fee
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26
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patent registration (a)
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29
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Consulting fee ( c)
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365
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27
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fee paid by Biohaven under a service contract (b)
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500
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Other outside services - lab tseting, peptide production etc.
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215
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$ 1,135
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$ 27
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(a)
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Company’s subsidiary PPL paid the license fee to a non related entity in respect of ANTP license under License Agreement dated January 25, 2013.
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(b)
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Biohaven has signed a Master Service Agreement on January 31, 2014, as subsequently amended in April 2014, with Biohaven Pharmaceuticals Inc, a private Delaware incorporated research and development company (“BPI”). BPI is owned by non-controlling shareholders of Biohaven and is engaged by Biohaven to conduct, on behalf of Biohaven, research and development services relating to identification and development of clinical stage neuroscience compounds targeting the glutamatergic system.
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(c)
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Consulting fee includes fees totaling to approximately $306,000 paid to the CEO and CSO of PPL . Fee includes value of the vested options of approximately $57,000 and balance in cash.
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Working Capital
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Operating cash flow
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Investing cash flows
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Financing cash flows
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(a)
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Cargo Peptides and Uses for Antennapedia Homeodomain-based Protein Biological Drugs – new provisional patent for Antennapedia structures and indications.
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(b)
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Structure, Manufacturing and uses of Human-derived Cell-Permeable Peptides Conjugated with Special Biologically Active Cargo Peptides – Converted 2013 provisional patent into an international patent for our own proprietary human-derived cell permeable peptides to maintain June 11, 2013 priority date with addition of more specific examples with supporting animal data, new specific structures, indications and manufacturing details.
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(1)
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Neither age nor date of birth of directors or executive officers is required to be reported in our home country nor otherwise publicly disclosed.
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(2)
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Member of the Audit and Compensation Committee. Mr. Jim Mellon is the Chair of this Committee.
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(3)
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Independent directors
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ANNUAL COMPENSATION
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LONG-TERM COMPENSATION
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||||||||
Awards
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Payouts
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||||||||
Name and principal position
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Year
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Fee (3)
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Bonus
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Other annual compensation(6)
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Securities under options/SARs Granted (1) & (4)
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Shares or units subject to resale restrictions (4)
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LTIP (2) payouts
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all other compensation (5)
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Total compensation
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($)
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($)
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($)
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$
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($)
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($)
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($)
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($)
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Declan Doogan
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CEO
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2014
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135,743
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270,000
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405,743
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CEO
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2013
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-
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-
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-
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-
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Kam Shah
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CFO
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2014
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253,458
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67,871
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-
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321,329
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Gregory Bailey
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Chairman/Business development
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2014
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135,743
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270,000
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405,743
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Chairman/business development
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2013
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-
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-
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-
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James Mellon
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Independent director
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2014
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-
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54,297
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54,297
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|||||
1.
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“SAR” means stock appreciation rights. The Company never issued any SARs
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2.
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“LTIP” means long term incentive plan.
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3.
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Fee includes issuance of 1 million shares to Mr. Shah valued at $151,000.
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4.
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Consists of 1.5 million restricted shares each to Dr. Doogan and Dr. Bailey valued at $270,000 each for services rendered. Restrictive legend can only be removed by either filing a registration statement or seeking exemption under Rule 144 of the Securities Act.
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5.
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Total of 2.9 million options were issued to the four key executives. One million each to Dr. Doogan and Dr. Bailey, 500,000 to Mr. Shah and 400,000 to Mr. Mellon.
.
These options are valid for five years and are convertible into equal number of common shares of the Company at an exercise price of $0.20 per common share. The Options were registered with the US Securities and Exchange Commission on December 19, 2013 and will vest in equal instalment over the twelve months ending December 31, 2014.
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·
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reviewing the quarterly and annual consolidated financial statements and management discussion and analyses;
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·
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meeting at least annually with our external auditor;
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·
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reviewing the adequacy of the system of internal controls in consultation with the chief executive and financial officer;
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·
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reviewing any relevant accounting and financial matters including reviewing our public disclosure of information extracted or derived from our financial statements;
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·
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establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
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·
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pre-approving all non-audit services and recommending the appointment of external auditors; and
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·
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reviewing and approving our hiring policies regarding personnel of our present and former external auditor
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·
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Reviewing and approving all employee and consultants contracts, bonuses and other compensation matters
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Common Shares
Beneficially Owned
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Options and Warrants Exercisable
for Common Shares
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|||||||||
Name
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Number
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Percentage *
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Number
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Exercise price - in US$
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Expiry date(s)
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|||||
Kam Shah
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2,359,131
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1.31%
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200,000
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O
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0.35
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18-Aug-15
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||||
500,000
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O
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0.20
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12-Dec-18
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|||||||
Declan Doogan
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27,711,068
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15.33%
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22,908,149
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W
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0.29
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06- June- 15
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1,000,000
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O
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0.20
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12-Dec-18
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|||||||
Greg Bailey
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27,711,068
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15.33%
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22,908,149
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W
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0.29
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06- June- 15
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||||
1,000,000
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O
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0.20
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12-Dec-18
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|||||||
James Mellon
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26,211,068
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14.50%
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22,908,149
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0.29
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06- June- 15
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|||||
400,000
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O
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0.20
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12-Dec-18
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Name of Beneficial Owner
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No. of Shares
|
Percentage of Shares
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Declan Doogan
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51,202,548 (1)
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20%
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Greg Bailey
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51,202,548 (1)
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20%
|
James Mellon
|
49,352,548 (2)
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20%
|
(1)
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Includes 23,491,480 shares issuable upon exercise of warrants and vested options
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(2)
|
Includes 23,141,480 shares issuable upon exercise of warrants and vested options
|
Fiscal year ended March 31
2014
|
High
(US$)
0.42
|
Low
(US$)
0.06
|
2013
|
0.16
|
0.01
|
2012
|
0.18
|
0.02
|
2011
2010
|
0.40
0.45
|
0.07
0.06
|
Fiscal Quarter ended
|
High
|
Low
|
In US$
|
In US$
|
|
June 30, 2014
|
0.12
|
0.09
|
March 31, 2014
|
0.23
|
0.08
|
December 31, 2013
|
0.30
|
0.16
|
September 30, 2013
|
0.38
|
0.22
|
June 30, 2013
|
0.42
|
0.15
|
March 31, 2013
|
0.16
|
0.07
|
December 31, 2012
|
0.11
|
0.04
|
September 31, 2012
|
0.06
|
0.01
|
June 30, 2012
|
0.04
|
0.02
|
Month
|
High
|
Low
|
In US$
|
In US$
|
|
June 2014
|
0.11
|
0.09
|
May 2014
|
0.11
|
0.09
|
April 2014
|
0.
12
|
0.
09
|
March 2014
|
0.17
|
0.
06
|
February 2014
|
0.19
|
0.13
|
January 2014
|
0.
24
|
0.
13
|
·
|
all checks, not being less than three in total number, for any sums payable in cash to the holder of such shares have remained uncashed for a period of 12 years;
|
·
|
we have not during that time or before the expiry of the three-month period referred to in the following point received any indication of the existence of the shareholder or person entitled to such shares by death, bankruptcy or operation of law; and
|
·
|
upon expiration of the twelve-year period, we have caused an advertisement to be published in newspapers, giving notice of our intention to sell these shares, and a period of three months or such shorter period has elapsed since the date of such advertisement.
|
o
|
consolidate and divide all or any of our unissued authorized shares into shares of a larger amount than our existing shares;
|
o
|
sub-divide our existing ordinary shares, or any of them into shares of smaller amount than is fixed by our memorandum of association, subject nevertheless to the provisions of the BVI Act;
|
o
|
•cancel any ordinary shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person; or
|
o
|
create new classes of shares with preferences to be determined by the board of directors at the time of authorization, although any such new classes of shares may only be created with prior shareholder approval.
|
•
|
vote on a matter relating to the transaction;
|
•
|
attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and
|
•
|
sign a document on behalf of the company, or do any other thing in his capacity as a director, that relates to the transaction.
|
•
|
banks and other financial institutions;
|
•
|
insurance companies;
|
•
|
regulated investment companies;
|
•
|
real estate investment trusts;
|
•
|
dealers and traders in securities that use mark-to-market accounting for U.S. federal income tax purposes;
|
•
|
U.S. Holders holding Class A ordinary shares as part of a hedging transaction, straddle, conversion transaction or other integrated transaction;
|
•
|
U.S. Holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
|
•
|
U.S. Holders liable for the alternative minimum tax;
|
•
|
tax-exempt organizations or entities, including an "individual retirement account" or "Roth IRA" as defined in Section 408 or 408A of the Code, respectively;
|
•
|
U.S. Holders that received the Class A ordinary shares as compensation for the performance of services;
|
•
|
U.S. Holders holding Class A ordinary shares that own or are deemed to own 10% or more of the voting shares of the Company; or
|
•
|
former citizens and residents of the United States subject to tax as expatriates.
|
•
|
a citizen or individual resident of the United States;
|
•
|
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
|
•
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
|
•
|
a trust that (1) is subject to the primary supervision of a U.S. court and one or more U.S. persons that have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
|
•
|
at least 75% of its gross income is "passive income"; or
|
•
|
at least 50% of the average quarterly value of its total gross assets (which may be determined, in part, by the market value of our ordinary shares, which is subject to change) is attributable to assets that produce "passive income" or are held for the production of passive income.
|
a)
|
Fair value of financial instruments
|
|
.
|
b)
|
Credit risk
|
a.
|
Cash– Cash is held with a major international financial institution in Canada and a major law firm in the USA and therefore the risk of loss is minimal.
|
b.
|
Other receivable – The Company is not exposed to major credit risk attributable to customers. A significant portion of this amount is prepaid to BPI under a master service agreement.
|
c)
|
Liquidity risk
|
March 31,
|
2014
|
2013
|
Audit fee
|
$45,000
|
-
|
Other services
|
2,413
|
-
|
(a)
|
Financial Statements
|
Description of Document
|
Page No.
|
Cover Sheet
|
|
Index
|
F1
|
Report of Independent Registered Public Accounting Firm
|
F2
|
Consolidated Statements of Financial Position
|
F3
|
Consolidated Statements of Operations and Comprehensive Loss
|
F4
|
Consolidated Statement of Shareholders Equity
Consolidated Statements of Cash Flows
|
F5-6
F7
|
Notes to Consolidated Financial Statements
|
F8-21
|
|
1.1
|
Certificate of Continuance -
Incorporated herein by reference
to Exhibit 3.1 to Form 6-K filed on August 1, 2013.
|
|
1.2
|
Memorandum and Articles of Association -
Incorporated herein by reference
to Exhibit 99.2 to Form 6-K filed on August 1, 2013.
|
|
4(c)1
|
Consulting Agreement dated April 1, 2005 with Kam Shah
Incorporated herein by reference
to Exhibit 4 (c) 1 to the Company’s Annual Report on Form 20-F for fiscal 2005 filed on September 28, 2005.
|
|
4(c) 2
|
Letter of April 1, 2010 extending consulting Agreement of Mr. Kam Shah to March 31, 2015.
Incorporated herein by reference
to Exhibit 4 (c) 2 to the Company’s registration statement on Form F-1 Amendment No. 2 filed on June 17, 2010.
|
|
4(c) (iv).1
|
2011 Consultant stock compensation plan -
Incorporated herein by reference
to Form S-8 filed on April 21, 2011.
|
|
4(c) (iv).2
|
2013 Stock option plan -
Incorporated herein by reference
to Form S-8 filed on December 19, 2013.
|
|
11.1
|
Charter of audit and compensation committee regarding compensation matters
|
|
11.2
|
Charter of audit and compensation committee regarding audit matters
|
|
11.3
|
Code of conduct
|
|
12.1
|
Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
12.2
|
Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
|
|
13.1
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
13.2
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
Index
|
|
Independent Auditor’s Report of Registered Public Accounting Firm
|
2-3
|
Consolidated Statements of Financial Position
|
4
|
Consolidated Statements of Operations and Comprehensive Loss
|
5
|
Consolidated Statements of Changes in Shareholders’ Equity
|
6
|
Consolidated Statements of Cash Flows
|
7
|
Notes to Consolidated Financial Statements
|
8-25
|
As at March 31,
|
Note
|
2014
|
2013* (Note 2)
|
|||||||||
Assets
|
||||||||||||
Current
|
||||||||||||
Cash
|
5 | $ | 2,032,058 | $ | 190,960 | |||||||
Advances and other receivable
|
227,233 | 295,441 | ||||||||||
$ | 2,259,291 | $ | 486,401 | |||||||||
Long-term assets
|
||||||||||||
Goodwill and Intangible assets
|
2(ii)
|
3,000,000 | ||||||||||
Office equipment and furniture
|
4,122 | - | ||||||||||
Total assets
|
$ | 5,263,413 | $ | 486,401 | ||||||||
Liabilities and Shareholders' equity
|
||||||||||||
Current liabilities
|
||||||||||||
Accounts payable and accrued liabilities
|
7 | (d) | 191,972 | 12,392 | ||||||||
$ | 191,972 | $ | 12,392 | |||||||||
Shareholders' Equity
|
||||||||||||
Capital stock
|
6 | 7,256,715 | 503,495 | |||||||||
Stock option reserve
|
7 | (a) | 362,440 | |||||||||
Warrants
|
8 | (i) | 1,108,402 | |||||||||
Deficit
|
(6,334,433 | ) | (29,486 | ) | ||||||||
Total Shareholders' equity
|
$ | 2,393,124 | $ | 474,009 | ||||||||
Non-controlling interests
|
2(ii)
|
$ | 2,678,317 | |||||||||
Total equity
|
5,071,441 | 474,009 | ||||||||||
Total liabilities and Shareholders' equity
|
$ | 5,263,413 | $ | 486,401 | ||||||||
Commitments and Contingent Liabilities (Note 10)
|
||||||||||||
Related Party Transactions (Note 12)
|
Note
|
Year ended March 31, 2014
|
May 23, 2012 to March 31, 2013 * (Note 2)
|
|
Expenses
|
|||
Acquisition related costs
|
2(i) & 6
|
3,839,398
|
|
Consulting fees
|
10(a) & (b) and 11
|
1,162,362
|
|
Research and development
|
7(d) and 10((c) to( h) )
|
1,135,779
|
26,976
|
Professional fees
|
335,692
|
||
Office and general
|
39,501
|
||
Payroll
|
39,348
|
||
Shareholders' information
|
29,835
|
||
Rent
|
17,009
|
||
Travel, meals and promotions
|
12 (i)
|
14,357
|
2,470
|
Transfer agents fees
|
11,329
|
||
Bank charges and interest
|
3,351
|
40
|
|
Communication
|
3,070
|
||
Amortization
|
1,164
|
||
Exchange gain
|
(5,565)
|
||
$6,626,630
|
$29,486
|
||
Net loss and comprehensive loss for year
|
$(6,626,630)
|
$(29,486)
|
|
Net loss and comprehensive loss attributable to :
|
|||
Owners of the Company
|
(6,304,947)
|
(29,486)
|
|
Non-controlling interest
|
(321,683)
|
-
|
|
$(6,626,630)
|
$(29,486)
|
||
Basic and diluted loss per share
|
|||
Net Loss per share
|
9
|
$(0.04)
|
$(0.00)
|
Number of Shares
|
Capital Stock
|
Stock Option Reserve
|
Warrants
|
Accumulated Deficit
|
Non-controlling interest
|
Total Equity
|
|||
Balance, May 23, 2012
|
81,759,076
|
$ 503,495
|
503,495
|
||||||
Net loss for period
|
(29,486)
|
(29,486)
|
|||||||
Balance, March 31, 2013
|
81,759,076
|
$ 503,495
|
$ -
|
$ -
|
$ (29,486)
|
$ -
|
$ 474,009
|
||
Balance, April 1, 2013
|
81,759,076
|
$ 503,495
|
$ -
|
$ -
|
$ (29,486)
|
$ -
|
$ 474,009
|
||
Issued on reverse acquisition (Note 2)
|
81,759,076
|
1,761,413
|
1,108,402
|
2,869,815
|
|||||
Issued for financial advisory services relating to the acquisition transaction
|
9,811,091
|
3,826,325
|
3,826,325
|
||||||
Exercise of warrants
|
1,450,000
|
175,000
|
175,000
|
||||||
Exercise of options
|
1,996,547
|
299,482
|
299,482
|
||||||
Value of shares issued as compensation
|
4,000,000
|
691,000
|
691,000
|
||||||
Value of options issued
|
362,440
|
362,440
|
|||||||
Acquisition of Biohaven (Note 2)
|
3,000,000
|
3,000,000
|
|||||||
Net loss for year
|
(6,304,947)
|
(321,683)
|
(6,626,630)
|
||||||
Balance, March 31, 2014
|
180,775,790
|
$ 7,256,715
|
$ 362,440
|
$ 1,108,402
|
$ (6,334,433)
|
$ 2,678,317
|
$ 5,071,441
|
Year ended March 31, 2014
|
May 23, 2012 to March 31, 2013
|
||
Cash flows from operating activities
|
|||
Net loss for period
|
$ (6,626,630)
|
$ (29,486)
|
|
Adjustments for non-cash items:
|
|||
Amortization of office equipment and furniture
|
1,164
|
-
|
|
Value of shares and options expensed as consulting fee
|
1,053,440
|
||
Acquisition related costs
|
3,826,325
|
-
|
|
Net change in working capital components
|
|||
Other receivables
|
(73,270)
|
||
Accounts payable and accrued liabilities
|
(116,447)
|
12,392
|
|
$ (1,935,418)
|
$ (17,094)
|
||
Cash flows from financing activities
|
|||
Cash received on reverse acquisition (Note 2)
|
3,006,593
|
-
|
|
Options and warrants excercised
|
474,482
|
||
Capital contribution
|
295,441
|
208,054
|
|
$ 3,776,516
|
$ 208,054
|
||
Increase in cash during year
|
1,841,098
|
190,960
|
|
Cash at beginning of year
|
190,960
|
-
|
|
Cash at end of year
|
$ 2,032,058
|
$ 190,960
|
|
Supplemental disclosures
|
|||
Non-cash investing activities
|
|||
Value of shares and warrants issued on acquisition
|
(2,869,815)
|
-
|
|
(2,869,815)
|
-
|
2.
|
ACQUISITIONS
|
|
(i)
|
Reverse Acquisition Transaction
|
|
On June 4, 2013, the Company completed an acquisition with PPL pursuant to which a wholly owned subsidiary of the Company, Portage Acquisition Inc. and PPL amalgamated, resulting in the Company owning all of the issued and outstanding shares of the amalgamated entity.
|
|
Pursuant to a Share Exchange Agreement, Bontan issued 81,759,076 common shares and 71,456,420 warrants to PPL shareholders in exchange for PPL shareholders transferring all their shares in favour of Portage Acquisition Inc. Warrants can be exercised within two years at an exercise price of US$0.29 to acquire an equal number of common shares of the Company. In addition, Bontan also issued 9,811,091 shares to a company as compensation for financial advisory services rendered in connection with the transaction. The fair value of these shares of $ 3,826,325 was expensed.
|
|
Although the transaction resulted in PPL becoming a wholly owned subsidiary of the Company, the transaction constitutes a reverse acquisition in as much as the shareholders of PPL own a substantial majority of the outstanding common shares of the Company and three out of four members of the Board of Directors of the Company are PPL shareholders. As a result, PPL controls the Company.
|
|
a.
|
The assets and liabilities of PPL at their pre-acquisition carrying amounts as at March 31, 2014 and expenses for the year ended on that date
|
|
b.
|
The assets and liabilities of Bontan as at March 31, 2014 and expenses from June 4, 2013 to March 31, 2014.
|
|
c.
|
Share capital representing the total number of shares issued by the Company.
|
|
d.
|
Value of the share capital was computed by adding to the value of the share capital of PPL on the date of acquisition, June 4, 2013, the fair value of Bontan as allocated to shares issued on the date of acquisition, and adjusted to any exercise or issuance of shares, warrants and options during the year ended March 31, 2014.
|
|
e.
|
Comparative figures are those of PPL, before the transaction.
|
Cash
|
$ | 3,006,593 | ||
Office equipment and furniture
|
5,286 | |||
Other assets
|
153,963 | |||
Liabilities
|
(296,027 | ) | ||
Fair value of net assets
|
2,869,815 |
The fair value of the consideration was allocated:
|
||||
To shares issued
|
$ | 1,761,413 | ||
To warrants issued
|
$ | 1,108,402 |
(a)
|
Statement of Compliance and Basis of presentation
|
|
a.
|
Portage Services Ltd. (previously 1843343 Ontario Inc.), a wholly owned subsidiary incorporated in Ontario on January 31, 2011. 1843343 Ontario Inc. changed its name to Portage Services Ltd. effective July 11, 2013.
|
|
b.
|
Portage Pharmaceuticals Ltd. (previously Portage Acquisition Inc.), a wholly owned subsidiary incorporated on April 5, 2013 under the laws of the BVI, as a BVI business company. On July 23, 2013, Portage Pharma Limited merged with Portage Acquisition Inc. and the merged entity was known as Portage Acquisition Inc., which changed its name on August 27, 2013.
|
|
c.
|
Biohaven Pharmaceutical Holding Company Limited (“Biohaven”). ( Note 2(ii))
|
4.
|
SIGNIFICANT ACCOUNTING POLICIES
|
Foreign currency translation
|
|
Share-based payments
|
|
The Company accounts for share-based payments granted to directors, officers, employees and consultants using the Black-Scholes option-pricing model to determine the fair value of the plan at the grant date. Share-based payments to employees, officers and directors are recorded
and reflected as an expense over the vesting period with a corresponding amount reflected in stock option reserve. On exercise, the associated amounts previously recorded in the stock option reserve are transferred to the common share capital.
|
|
The quoted market price of the Company’s shares on the date of issuance under any share- based plan is considered as fair value of the shares issued.
|
|
Share-based payments to non-employees are recognized and measured at the date the services are received based on the fair value of the services received unless if the fair value of the services cannot be reliably measured in which case it is based on the fair value of equity instruments issued using the Black-Scholes option pricing model.
|
|
(i)
|
Research and development
|
|
(ii)
|
Subsequent expenditure
|
|
(iii)
|
Clinical trial expenses:
|
|
A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not within the control of the Corporation; or a present obligation that arises from past events (and therefore exists), but is not recognized because it is not probable that a transfer or use of assets, provision of services or any other transfer of economic benefits will be required to settle the obligation; or the amount of the obligation cannot be estimated reliably.
|
|
Determination of fair value
|
|
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
|
|
No deferred tax asset has been recognized for losses incurred as the entities in which the losses arose are in the British Virgin Islands.
|
|
(b)
|
Issued
|
Common
|
||
Shares
|
Amount
|
|
Balance at May 23, 2012
|
81,759,076
|
$ 503,495
|
Balance at March 31, 2013
|
81,759,076
|
$ 503,495
|
Issued on acquisition of PPL (Note 2)
|
81,759,076
|
1,761,413
|
Issued for financial advisory services in connection with the acquisition of PPL (Note 2)
|
9,811,091
|
3,826,325
|
Exercise of warrants
|
1,450,000
|
175,000
|
Exercise of options
|
1,996,547
|
299,482
|
Shares issued as compensation ( c)
|
4,000,000
|
691,000
|
Balance at March 31, 2014
|
180,775,790
|
$ 7,256,715
|
|
(c)
|
On December 12, 2013, the Chairman and CEO were issued one and a half million shares each, as restricted shares and on December 16, 2013, the CFO was issued one million shares under the 2011 Consultants Compensation Plan in lieu of cash fee for services provided and to be provided. The shares were valued at $691,000 based on the market price of the Company’s common shares prevailing on the dates of their issuance. Since the shares were issued without any conditions of forfeiture or cancellation, entire value was expensed during the year ended March 31, 2014 as consulting fee (note 11).
|
|
(e)
|
As at March 31, 2014, the Company had the following active Consultant Stock Compensation Plan:
|
|
Date of registration*
|
Registered shares under Plan
|
Issued to March 31, 2012
|
As at April 1, 2013
|
( see (c ) above)
|
Cancelled (i)
|
Balance at March 31, 2014
|
|
2011 Plan
|
11-Apr-11
|
6,000,000
|
(938,333)
|
5,061,667
|
(1,000,000)
|
-
|
4,061,667
|
|
*
|
Registered with the Securities and Exchange Commission of the United States of America (SEC) as required under the Securities Act of 1933.
|
|
(f)
|
As required under listing requirements by Canadian Securities Exchange, the Company signed, on October 25, 2013, an escrow agreement with TMX Equity Transfer Services to have 89,941,793 of its common shares and 69,524,447 of its warrants issued to four insiders under an escrow arrangement. The escrowed shares and warrants will be released in agreed tranches over the period of three years.
|
(a)
|
Stock option reserve:
|
|
On December 17, 2013, the Company issued total of 4,450,000 options to 10 consultants including 2.9 million options to the four directors under 2013 Option Plan. These options are valid for five years and are convertible into equal number of common shares of the Company at an exercise price of $0.20 per common share. The Options were registered with the US Securities and Exchange Commission on December 19, 2013 and will vest as follows:
|
|
The fair value of these options has been estimated using a Black-Scholes option pricingmodel with the following assumptions:
|
Risk free interest rate
|
1%
|
Expected dividend
|
Nil
|
Expected volatility
|
105.27%
|
Expected life
|
1826 days
|
Market price
|
US$0.18
|
|
The fair value of the options as per the Black-Scholes option pricing model amounted to $604,055, of which options valued at $362,440 vested as at March 31, 2014 were accounted for as option reserve and expensed as consulting fee (note 11). The value of options not vested as at March 31, 2014 will be accounted upon vesting of the related options as per the accounting policy.
|
|
(b)
|
The following is a summary of all active Stock Option Plans as at March 31, 2014:
|
Stock Option Plan
|
1999
|
2003
|
The Robinson
|
2005
|
Total
|
|
Plan
|
1999 Stock Option Plan
|
2003 Stock Option Plan
|
Robinson Plan
|
2005 Stock Option Plan
|
2013 Option Plan
|
|
Date of Registration
|
April 30, 2003
|
July 22, 2004
|
Dec. 5, 2005
|
Dec. 5, 2005
|
Dec 19, 2013
|
Total
|
number of options
|
||||||
Registered *
|
3,000,000
|
2,500,000
|
1,100,000
|
1,000,000
|
4,450,000
|
12,050,000
|
Issued
|
3,000,000
|
2,500,000
|
1,100,000
|
1,000,000
|
4,450,000
|
12,050,000
|
Outstanding, April 1, 2013
|
1,730,000
|
1,945,000
|
1,100,000
|
610,000
|
-
|
5,385,000
|
Issued
|
4,450,000
|
4,450,000
|
||||
Exercised
|
(482,100)
|
(1,514,447)
|
(1,996,547)
|
|||
Expired
|
(1,247,900)
|
(430,553)
|
(1,100,000)
|
(50,000)
|
(2,828,453)
|
|
Outstanding, March 31, 2014
|
-
|
-
|
-
|
560,000
|
4,450,000
|
5,010,000
|
Options fully vested - March 31, 2014
|
560,000
|
1,262,490
|
1,822,490
|
|||
Options not yet vested as at March 31, 2014
|
-
|
3,187,510
|
3,187,510
|
|||
560,000
|
4,450,000
|
5,010,000
|
|
* Registered with the Securities and Exchange Commission of the United States of America (SEC) as required under the Securities Act of 1933.
|
(c)
|
The weighted average exercise price of the outstanding stock options was US$0.22 as at March 31, 2014 and weighted average remaining contractual life was approximately 4.33 years.
|
|
(d)
|
The Company’s wholly owned subsidiary, PPL granted 33,542 options to its two consultants to acquire equal number of shares in PPL at an exercise price of $1.10 per PPL share. The options are to be vested over two years by March 31, 2016 and are valid for five years from the date of grant. None of the options have so far been exercised. The options were valued at their intrinsic value of $173,412, based on the value offered to PPL for its shares under the reverse take-over transaction explained in Note 2(i). This is treated as cash-settled share-based payment transaction as per IFRS 2. $ 57,226 of the total representing the value of options vested as at March 31, 2014 was therefore expensed as consulting fee and included as part of research and development
expenses and related liability included in accounts payable and accrued liabilities.
|
8.
|
WARRANTS
|
|
(i)
|
The movements during the year ended March 31, 2014 were as follows:
|
# of warrants
|
Weighted average exercise price
|
Fair value
|
|
Issued and outstanding, April 1, 2012
|
68,071,420
|
$ 0.30
|
-
|
Cancelled
|
(2,000,000)
|
$ 0.35
|
-
|
Issued and outstanding, March 31, 2013
|
66,071,420
|
$ 0.29
|
|
Issued on acquisition ( Note 2 and 8(ii))
|
71,456,420
|
$ 0.29
|
$ 1,108,402
|
Exercised
|
(1,450,000)
|
$ (0.12)
|
|
Expired
|
(21,796,420)
|
$ (0.19)
|
|
Issued and outstanding, March 31, 2014
|
114,281,420
|
$ 0.31
|
$ 1,108,402
|
|
(ii)
|
The Company issued 71.4 million warrants to nine shareholders of PPL as per the terms of the Share Exchange Agreement as explained in Note 2(i). These warrants are convertible into equal number of common shares at an exercise price of $0.29 per warrant and expire within two years of their issuance.
|
|
The fair value of these warrants has been estimated using a Black-Scholes option pricingmodel with the following assumptions:
|
Risk free interest rate
|
1%
|
Expected dividend
|
Nil
|
Expected volatility
|
137.71%
|
Expected life
|
730 days
|
Market price
|
US$0.39
|
|
Using the relative fair value method, an amount of $1,108,402 for warrants issued hasbeen accounted for as the value of warrants.
|
|
(iii)
|
Details of weighted average remaining life of the warrants granted and outstanding are as follows:
|
March 31,
|
2014
|
2013
|
||
Warrants outstanding & exercisable
|
Warrants outstanding & exercisable
|
|||
Exercise price in US$
|
Number
|
Weighted average remaining contractual life (years)
|
Number
|
Weighted average remaining contractual life (years)
|
0.10
|
-
|
-
|
10,400,000
|
1.00
|
0.25
|
-
|
-
|
12,846,420
|
1.00
|
0.29
|
71,456,420
|
1.18
|
-
|
-
|
0.35
|
42,825,000
|
0.92
|
42,825,000
|
1.90
|
114,281,420
|
1.08
|
66,071,420
|
1.59
|
|
(a)
|
The Company entered into a consulting contract with Mr. Kam Shah, the Chief Financial Officer on April 1, 2005 for a five-year term. This term was extended by another five years to March 31, 2015 by the audit committee on April 1, 2010. Mr Shah’s monthly fee is $15,000 plus taxes. Further, the contract provides for a lump sum compensation of US$250,000 for early termination of the contract without cause. The contract also provides for entitlement to stock compensation and stock options under appropriate plans as may be decided by the board of directors from time to time. For the year ending December 31, 2014, Mr. Shah accepted one million common shares in lieu of his compensation for that year (Note 6(c)).
|
|
(b)
|
PPL has signed a contract with an independent contract research and manufacturing organization to manufacture certain proprietary peptides for a total costs currently estimated at between $ 169,000 and $272,000 of which $ 107,711 has already been incurred and paid for as at March 31, 2014.
|
|
(c)
|
Under the terms of the License Agreement dated January 25, 2013, PPL is required to reimburse to the Licensor, Trojan Technologies Limited, 50% of all maintenance costs of the US Patent # 7,968,512 and to pay royalties of 3% on Net Receipts from sales of the Licensed Product and 5% on Net Receipts from third parties in respect of development or other exploitation of Licensed Intellectual Property and/or Licensed Products up to a maximum of $ 30 million. Total amount that may be payable in future under the terms of the Agreement cannot be reasonably estimated at this time.
|
|
(d)
|
PPL has signed consulting contracts with its Chief Executive Officer and Chief Scientific Officer expiring in or around March 2015 and carrying a total monthly commitment of $21,250.Early termination without cause would require a lump sum compensation of $ 75,000 to be paid to the two consultants.
|
|
(e)
|
Under a Securities Purchase Agreement signed on January 6, 2014 with Biohaven, the Company agreed to pay $ 3.5 million for 54% equity in Biohaven of which $ 1,750,000 was paid on January 6, 2014. Of the balance, $ 750,000 will be payable on August 1, 2014, $ 500,000 will be payable on December 3, 2014 and the balance $ 500,000 will be payable on February 4, 2014. Failure to pay will result in the Company forfeiting its equity in Biohaven proportionate to the unpaid amount.
|
|
(f)
|
Biohaven has signed a Master Service Agreement on January 31, 2014, as subsequently amended in April 2014, with Biohaven Pharmaceuticals Inc, a private Delaware incorporated research and development company (“BPI”). BPI is owned by non-controlling shareholders of Biohaven and is engaged by Biohaven to conduct, on behalf of Biohaven, research and development services relating to identification and development of clinical stage neuroscience compounds targeting the glutamatergic system. The agreement expires on December 31, 2018 and will automatically renew on a year to year basis. Either party can terminate the agreement upon ninety days prior notice. Agreed fee for the period up to June 30, 2015 is $ 3 million payable in quarterly instalment commencing from March 1,
2014.
|
|
(g)
|
On March 3, 2014, Biohaven signed a contract with an independent contract research and manufacturing organization to investigate technical feasibility of developing a new formulation for Bio haven using nanosuspension and emulsion formulation approaches. The contract is approximately for fifty five weeks involving several agreed milestones for a total price of approximately $ 345,000.
|
|
(h)
|
Under the terms of the License Agreement dated September 16, 2013 signed with Yale University, Biohaven is required to pay to the Licensor a milestone royalty of $ 2 million within six months of receiving approval of an NDA ( New Drug Application) and pay earned royalty at 3% on worldwide annual net sales of the licensed products, subject to minimum royalty payment of $ 300,000 in the year one, $ 600,000 in year two, $ 750,000 in year three and $ 1 million from year four onwards subject to reduction ranging from 33% to 95% depending on sales of generic exceeding an agreed market share on a country by country basis and further reduction by 50% is licensee is required to pay third party royalties. Total amount that may be payable in future under the terms of the Agreement cannot be reasonably
estimated at this time. Licensor also has right to purchase in cash up to 10% of any securities offered in future financing.
|
11.
|
CONSULTING FEE
|
Notes
|
Year ended March 31, 2014
|
May 23, 2012to March 31, 2013
|
|
Cash fee
|
$ 108,921
|
-
|
|
Shares issued to key management
|
6 ( c)
|
691,000
|
-
|
Options issued to key management
|
7 (a)
|
231,838
|
-
|
Options issued to others
|
7 (a)
|
130,603
|
-
|
$ 1,162,362
|
$ -
|
|
(i)
|
Business expenses of $12,786 were reimbursed to directors of the Company.
|
|
(ii)
|
Consulting fees include cash fee paid to key management for services of $102,458.
|
March 31, 2014
|
March 31, 2013
|
|||
Carrying value
|
Fair value
|
Carrying value
|
Fair value
|
|
Financial assets
|
||||
Cash
|
2,032,058
|
2,032,058
|
190,960
|
190,960
|
Advances and other receivable
|
227,233
|
227,233
|
295,441
|
295,441
|
Financial liabilities
|
||||
Accounts payable and accrued liabilities
|
191,972
|
191,972
|
12,392
|
12,392
|
|
a)
|
Fair value of financial instruments
|
|
•
|
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.
|
|
b)
|
Credit risk
|
|
a.
|
Cash– Cash is held with a major international financial institution in Canada and a major law firm in the USA and therefore the risk of loss is minimal.
|
|
b.
|
Other receivable – The Company is not exposed to major credit risk attributable to customers. A significant portion of this amount is prepaid to BPI under a master service agreement.
|
|
c)
|
Liquidity risk
|
1.
|
Establish and review the overall compensation philosophy of the Corporation.
|
2.
|
Based upon input from the other directors regarding the performance of the Chief Executive Officer, Chief Financial Officer and other executive officers,(“the executive officers”) review and approve the annual fee, salary, bonus, stock options and other benefits, direct and indirect, of the executive officers.
|
3.
|
In connection with executive compensation programs:
|
(i)
|
Review and recommend to the full Board, or approve, new executive compensation programs;
|
(ii)
|
Review on a periodic basis the operations of the Corporation’s executive compensation programs to determine whether they are properly coordinated and achieving their intended purpose(s), including whether the Corporation’s compensation programs encourage excessive risk-taking and discuss, at least annually, the relationship between risk management policies and practices and compensation, and evaluate compensation policies and practices that could mitigate any such risk;
|
(iii)
|
Review on a periodic basis the aggregate amount of compensation paid or potentially payable to the executive officers through the use of tally sheets or such other method as the Committee may determine; and
|
(iv)
|
Take steps to modify any executive compensation program that yields payments and benefits that are not reasonably related to executive and corporate performance.
|
(v)
|
The Committee shall consider the results of shareholder advisory votes regarding named executive officer compensation when evaluating and determining executive compensation (and shall recommend the frequency with which the Corporation shall conduct future shareholder advisory votes regarding executive compensation).
|
4.
|
Review and recommend to the full Board compensation of directors.
|
5.
|
Review and make recommendations to the full Board, or approve, any contracts or other transactions with executive officers of the Corporation, including consulting arrangements, employment contracts and severance or termination arrangements, or any revisions thereto. Notwithstanding any other provision of this Charter, the Committee shall review and make recommendations to the Board for approval of any consulting arrangement, employment contract, severance or termination arrangement with the Chief Executive Officer and Chief Financial Officer, or any revision thereto.
|
6.
|
Review and approve annual performance goals for performance-based compensation and determine whether the performance goals and objectives are attained.
|
7.
|
Review the Corporation’s executive compensation plans, including incentive-compensation and equity-based plans, in light of the goals and objectives of these plans, and amend, or recommend that the Board amend, these plans if the Committee deems it appropriate.
|
8.
|
Administer any short-term incentive plan covering executive officers of the Corporation; determine whether performance targets have been met and determine the amounts and terms of any awards.
|
9.
|
Review and recommend for Board approval all equity compensation plans to be submitted for shareholder approval under the relevant regulatory standards and BVI Corporate laws provided, however, that any equity compensation plan that satisfies an exception to this requirement shall not be required to be approved by the Corporation’s shareholders.
|
10.
|
Review and make recommendations to the Board, or approve, all awards of shares, share options or other awards pursuant to the Corporation’s equity-based plans; provided that the authority to issue such awards to employees who are not executive officers may be delegated as above described
|
11.
|
Review and discuss with management the Corporation’s compensation discussion and analysis (“CD&A”), and based on that review and discussion, recommend to the Board that the CD&A be included in the Corporation’s annual proxy statement or annual report on Form F-20.
|
12.
|
Report regularly to the Board (i) following meetings of the Committee, (ii) with respect to such other matters as are relevant to the Committee’s discharge of its responsibilities and (iii) with respect to such recommendations as the Committee may deem appropriate. The report to the Board may take the form of an oral report by the Chair or any other member of the Committee designated by the Committee to make such report.
|
13.
|
Maintain minutes or other records of meetings and activities of the Committee.
|
|
Advisors
|
14.
|
The Committee has the sole authority to select, oversee and terminate compensation consultants, legal counsel or other advisors to advise the Committee, and to approve the terms of any such engagement and the fees of any such compensation consultant, legal counsel or other advisor. In selecting a compensation consultant, legal counsel or other advisor, the Committee shall take into account factors (including factors related to the independence of such compensation consultant, legal counsel or other advisor) it considers appropriate or as may be required by applicable law or listing standards. The Committee shall receive appropriate funding from the Corporation for the payment of compensation to the compensation consultants,
legal counsel or other advisors retained by the Committee pursuant to the provisions of this Charter.
|
(i)
|
The quality and integrity of the Corporation's financial statements;
|
(ii)
|
The Corporation's compliance with legal and regulatory requirements;
|
(iii)
|
The independent auditor's qualifications and independence;
|
(iv)
|
The performance of the Corporation's independent auditors; and
|
(v)
|
The implementation and effectiveness of the Corporation's ethics and compliance program.
|
1.
|
Meet with management and the independent auditors to review and discuss, prior to public dissemination, the Corporation's annual audited financial statements and quarterly financial statements, including the Corporation's specific disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations"
|
2.
|
Report to the Board whether, based on its discussions with management and the independent auditor, it recommends to the Board that the most recent year's audited financial statements be included in the Corporation's annual report on Form 20-F to be filed with the SEC.
|
3.
|
Review and discuss with management and the independent auditors the Corporation's earnings press releases (paying particular attention to the use of any "pro forma" or "adjusted" non-GAAP information).
|
4.
|
Review and discuss with management and the independent auditors financial information and earnings guidance provided to analysts and rating agencies. The Committee's discussion in this regard may be general in nature (i.e., discussion of the types of information to be disclosed and the type of presentation to be made) and need not take place in advance of each instance in which the Corporation may provide earnings guidance.
|
5.
|
The Committee shall have the direct responsibility and authority to appoint, retain, compensate, evaluate, oversee and, where appropriate, replace the independent auditors. The Committee shall inform the independent auditors that such firm shall report directly to the Committee. The Committee shall resolve disagreements between management and the independent auditor regarding financial reporting.
|
6.
|
Review the independent auditors' audit plan and areas of audit focus. Review the fees and other significant compensation to be paid to the independent auditors.
|
7.
|
Approve in advance any audit or non-audit engagement or relationship between the Corporation and any independent auditor engaged to prepare or issue an audit report or perform other audit, review or attest services, other than prohibited non-auditing services, as specified in the rules and regulations of the SEC/OSC or any rules of the Public Company Accounting Oversight Board promulgated thereunder. The Committee shall not approve any "prohibited non-auditing services" without obtaining a prior exemption from the Public Company Accounting Oversight Board. Audit and non-audit engagements must be approved either (a) explicitly in advance or (b) pursuant to a pre-approval policy established by the Committee.
The Committee may delegate to one or more members of the Committee the authority to grant such pre-approvals. The delegatee's decisions regarding approval of services shall be reported by such delegatee to the full Committee at each regular Committee meeting.
|
8.
|
Review and assess, at least annually, the qualifications, performance and independence of the independent auditors, including a review and evaluation of the lead partner. In conducting its review and evaluation, the Committee should:
|
(a)
|
Review the written report of the independent auditor that delineates all relationships between the independent auditor and the Corporation that the auditors believe may impact their independence and objectivity, which report should be submitted to the Committee at least annually, and discuss with the independent auditor and management the scope of any such disclosed relationship and their actual or potential impact on the independent auditor's independence and objectivity;
|
(b)
|
Obtain and review a report by the Corporation's independent auditor describing: (i) the auditor's internal quality-control procedures; and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the auditor or by any inquiry or investigation by governmental or professional authorities within the preceding five years, respecting one or more independent audits carried out by the auditor, and any steps taken to deal with any such issues; and
|
(c)
|
Take into account the opinions of management.
|
9.
|
In consultation with the independent auditors and management, review the integrity of the Corporation’s financial reporting processes, both internal and external. In connection therewith, the Committee should obtain and discuss with management and the independent auditor reports from management and the independent auditor regarding: (i) all critical accounting policies and practices to be used by the Corporation; (ii) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with the Corporation’s management, the ramifications of the use of the alternative disclosures and treatments and the treatment preferred by the independent auditor; (iii) effects of changes in accounting standards that may materially affect the Corporation’s financial reporting practices; (iv) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Corporation’s selection or application of accounting principles; (v) the integrity of the Corporation’s financial reporting practices and the adequacy and effectiveness of internal controls, including a review of significant findings identified by the independent auditors and internal audit, management’s responsiveness to such recommendations and any specific audit steps adopted in light
of material control deficiencies and (vi) any other material written communications between the independent auditor and the Corporation’s management.
|
10.
|
The Committee will receive and review any disclosure from the Corporation's Chief Executive Officer and Chief Financial Officer made in connection with the certification of the Corporation's quarterly and annual reports filed with the SEC/OSC of: (i) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Corporation’s ability to record, process, summarize, and report financial data; and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal controls.
|
11.
|
Review periodically the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Corporation.
|
12.
|
Review with the independent auditor (i) any audit problems or other difficulties encountered by the auditor in the course of the audit process, including any restrictions on the scope of the independent auditor's activities or on access to requested information and any significant disagreements with management and (ii) management's responses to such matters. Without excluding other possibilities, the Committee may wish to review with the independent auditor (i) any accounting adjustments that were noted or proposed by the auditor but were "passed" (as immaterial or otherwise), (ii) any communications between the audit team and the audit firm's national office respecting auditing or accounting issues presented by the
engagement and (iii) any "management" or "internal control" letter issued or proposed to be issued by the independent auditor to the Corporation. The review should also include discussion of the responsibilities, budget and staffing of the corporation's internal audit function.
|
13.
|
Review periodically, with the Corporation's chief financial officer, any legal matter that could have a significant impact on the Corporation's financial statements and any material inquiries or reports received from regulatory or governmental agencies.
|
14.
|
Review periodically the content and operation of the Corporation's ethics and compliance program and the Code of Business Ethics.
|
15.
|
Discuss with management and the independent auditors at least annually the Corporation's guidelines and policies with respect to risk assessment and risk management. The Committee should discuss the Corporation's major financial risk exposures and the overall steps management has taken to monitor and control such exposures; however, the Committee is not responsible for detailed review of financial risk exposure and management, which responsibility has been delegated to another committee of the Board.
|
16.
|
Establish, and review periodically, procedures for: (i) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
|
17.
|
Review and approve the Committee's report required to be included in the Corporation's annual proxy statement, pursuant to and in accordance with applicable rules and regulations of the SEC/OSC.
|
18.
|
Report regularly to the full Board including:
|
(i)
|
with respect to any issues that arise with respect to the quality or integrity of the Corporation's financial statements, the Corporation's compliance with legal or regulatory requirements, the performance and independence of the Corporation's independent auditors or the performance of the internal audit function;
|
(ii)
|
following all meetings of the Committee; and
|
(iii)
|
with respect to such other matters as are relevant to the Committee's discharge of its responsibilities.
|
19.
|
Maintain minutes or other records of meetings and activities of the Committee.
|
20.
|
The Committee shall receive appropriate funding from the Corporation for the payment of compensation to the independent auditors and to other advisors retained by the Committee pursuant to the provisions of this Charter.
|
1.
|
I have reviewed this annual report on Form 20-F of Portage Biotech Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4.
|
The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
Declan Doogan
Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 20-F of Portage Biotech Inc.;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
|
|
4
|
The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
|
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
|
Kam Shah
Chief Financial Officer
|