TIDMMTFB

RNS Number : 0006Y

Motif Bio PLC

10 May 2021

Motif Bio plc

("Motif Bio" or the "Company")

2020 Annual Report and Accounts

Notice of Final Results

Motif Bio plc (AIM: MTFB) announces that the 2020 Annual Report and Accounts are available for download from the Company's website at www.motifbio.com. Motif Bio is a Cash Shell pursuant to AIM Rule 15.

Corporate Update

Throughout 2020, the Board engaged with multiple candidates and explored numerous potential Reverse Takeover ('RTO') transactions. The Board is now working towards completing the previously announced RTO transaction with a UK based anti-body drug conjugate drug discovery and development company.

Confidential marketing has begun for a fundraising to accompany the RTO transaction. The Board expects that further details of the transaction will be announced later in May with a General Meeting and shareholder vote to follow thereafter.

In support of the transaction, the Board has agreed to forgo all previously agreed cash incentives tied to the occurrence of an RTO.

In preparation for the completion of the RTO, Jonathan Gold will step down from his role as an Executive Director and become a Non-Executive Director, with immediate effect. We thank Jonathan for his leadership and collaboration with the Board in advancing what we consider to be a compelling and value-creating RTO opportunity for Motif's shareholders. Jonathan is expected to continue as a Non-Executive Director of the enlarged group following the completion of the RTO.

Bruce Williams, Chairman of Motif Bio, said: On behalf of the Board, I wish to express our appreciation for the valued support and patience of Motif's various stakeholders as we work to complete the RTO.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

For further information please contact:

 
 
   Motif Bio plc                                   ir@motifbio.com 
 Jonathan Gold (Director) 
 
 SP Angel Corporate Finance LLP (NOMAD 
  & BROKER)                                   +44 (0) 20 3470 0470 
 David Hignell/Caroline Rowe (Corporate 
  Finance) 
 Vadim Alexandre/Abigail Wayne (Sales 
  & Broking) 
 
 Walbrook PR Ltd. (UK FINANCIAL PR 
  & IR)                                       +44 (0) 20 7933 8780 
 Paul McManus/ Lianne Cawthorne            motifbio@walbrookpr.com 
 

Forward-Looking Statements

When used in this Press Release, the words or phrases "intends," "anticipates," "expected to be" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including, but not limited to, changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, and other risks described in the Company's filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revision which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Strategic Report

The Directors present their Strategic Report for the year ended 31 December 2020.

AIM Rule 15 Cash Shell Status

Effective 28 January 2020, the Company was reclassified as an AIM Rule 15 cash shell. As such, the Company is required to make an acquisition, or acquisitions, which constitutes a reverse takeover under AIM Rule 14 to continue to be listed on the AIM Market of the London Stock Exchange. In July 2020, the London Stock Exchange suspended trading in the Company's AIM securities pursuant to AIM Rule 40. The AIM rules provide that the Company will have an additional six months from the suspension date to complete a qualifying transaction. Initially, if the Company failed to complete a qualifying transaction by 28 January 2021, the Company's shares would be delisted from the AIM market. On 27 January 2021 and 29 March 2021 Motif provided the market with updates regarding the proposed reverse takeover via RNS, in which the Company confirmed that it would remain suspended from trading while the proposed transaction was negotiated and advanced.

Financial Overview

The Company reported its former wholly owned subsidiary, Motif BioSciences Inc., as discontinued operations in its 2019 financial results. In January 2020, the Company determined that it no longer has control of Motif BioSciences Inc. in accordance with IFRS 10 Consolidated Financial Statements. As a result, the Company will not consolidate Motif BioSciences Inc. in future financial periods. These changes have been made for all periods presented.

In February 2021, the Company divested its shareholdings of Motif BioSciences Inc. ('Inc") to Orange Avenue Technologies, LLC ('Orange'), an entity controlled by John Palmer of Tamarack Associates Inc. Mr. Palmer, through Tamarack Associates Inc., was previously appointed in early 2020 as the sole Executive Officer of Motif BioSciences Under the Stock Purchase Agreement with Orange, the Company will receive 90% of the revenues received by Inc. from iclaprim, above a $250,000 threshold.

The net loss from operations for the year ended 31 December 2021 was US $0.9 million (2019: loss of US $98.7 million).

The operations had total liabilities of US $0.1 million (2019: US $0.4 million) and total assets of US $0.6 million (2019: US $0.8 million). The liabilities are primarily $0.1 million in non-cash derivative warrant obligations and minimal vendor and related obligations.

Going Concern

As of 31 December 2020, the Company had US $0.5 million in cash. As an AIM Rule 15 cash shell, the Company's ability to continue as a going concern is dependent on its ability to source an appropriate reverse takeover or qualifying transaction. The Company's shares were suspended from trading on AIM on 29 July 2020 pursuant to AIM Rule 40. On 27 January 2021 and 29 March 2021 Motif provided the market with updates regarding the proposed reverse takeover via RNS, in which the Company confirmed that it would remain suspended from trading while the proposed transaction was negotiated and advanced. If the Company is unable to complete reverse takeover transaction for re-admission of trading on AIM the listing of the Company's common shares will be cancelled.

These financial statements have been prepared under the assumption that the Company will continue as a going concern. However, as of the date these financial statements were approved, the Company can provide no assurance that an RTO transaction will be completed or additional capital will be available when required and/or on acceptable terms. Due to the Company's recurring and expected continuing operating losses, the Directors have concluded there is a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.

Section 172 statement

The Company's Section 172 statement is set out in the Corporate Governance Report on pages 7 to 10.

Jonathan E. Gold

Director

10 May 2021

Motif Bio plc

Statements of comprehensive loss

For the years ended 31 December 2020 and 2019

(Per share data in cents)

 
                                                                                  Year          Year 
                                                                                 ended         ended 
                                                                              31 December   31 December 
                                                                                  2020          2019 
                                                                        Note  US $ (000's)  US $ (000's) 
                                                                        ----  ------------  ------------ 
 
Operating expenses 
 
General and administrative 
 expenses...........................................                     4           (891)       (1,246) 
 
Loss on impairment of receivable from subsidiary 
 ......................                                                                  -      (19,125) 
                                                                              ------------  ------------ 
 
Operating loss 
 ..................................................................... 
 ...........                                                                         (891)      (20,371) 
 
Interest 
 income............................................................... 
 ...............                                                         4               1             5 
 
Net foreign exchange gains 
 (losses)..............................................                               (53)            49 
 
Gain from revaluation of derivative 
 liabilities...............................                              11            209         5,427 
 
Loss on impairment of investment in 
 subsidiary...........................                                   2               -      (83,771) 
                                                                              ------------  ------------ 
 
Loss before income 
 taxes...............................................................                (734)      (98,661) 
 
Income tax 
 expense.............................................................. 
 ..........                                                              6               -             - 
                                                                              ------------  ------------ 
 
Net loss from operations 
 ...............................................................                     (734)      (98,661) 
                                                                              ------------  ------------ 
 
Comprehensive loss from operations 
 ............................................                                        (734)      (98,661) 
                                                                              ============  ============ 
 
 
Net loss per share (in cents) - 
 basic..............................................                                     -        (0.28) 
Net loss per share (in cents) - 
 diluted...........................................                                      -        (0.28) 
                                                                              ============  ============ 
Weighted average number of ordinary shares 
............................. 
Basic................................................................ 
 ...............................                                               597,628,009   350,993,002 
Diluted.............................................................. 
 ..............................                                                597,628,009   350,993,002 
                                                                              ============  ============ 
 

Motif Bio plc

Statements of financial position

As at 31 December 2020 and 2019

(in thousands)

 
                                                                            31 December 2020  31 December 2019 
                                                                      Note    US $ (000's)      US $ (000's) 
                                                                      ----  ----------------  ---------------- 
 
ASSETS 
Current assets 
Cash and cash 
 equivalents........................................................ 
 .....                                                                 9                 457               663 
Prepaid expenses and other 
 receivables.......................................                    8                 140               145 
Total current 
 assets............................................................. 
 ..........                                                                              597               808 
                                                                            ----------------  ---------------- 
 
Total assets 
 ................................................................... 
 .................                                                                       597               808 
                                                                            ================  ================ 
 
LIABILITIES 
Trade payables and accrued 
 liabilities..........................................                 10                 48               214 
Derivative 
 liabilities........................................................ 
 ...............                                                       11                 88               227 
                                                                            ----------------  ---------------- 
Total current 
 liabilities........................................................ 
 ...........                                                                             136               441 
                                                                            ----------------  ---------------- 
 
Total liabilities 
 ................................................................... 
 ............                                                                            136               441 
                                                                            ================  ================ 
 
Net assets (liabilities) 
 ................................................................... 
 .                                                                                       461               367 
                                                                            ================  ================ 
 
EQUITY 
Share 
 capital............................................................ 
 ......................                                                13              4,798             4,777 
Share 
 premium............................................................ 
 ..................                                                                   97,809            97,003 
Accumulated 
 deficit............................................................ 
 ...........                                                                       (102,147)         (101,413) 
                                                                            ----------------  ---------------- 
 
Total Equity 
 ................................................................... 
 ................                                                                        461               367 
                                                                            ================  ================ 
 

The financial statements were approved by the Board of Directors and authorized for issue on

10 May 2021 . They were signed on its behalf by:

Director

Jonathan E. Gold

Motif Bio plc

Company statements of changes in equity

For the years ended 31 December 2020 and 2019

(in thousands)

 
 
                                                   Share         Share      Accumulated 
                                                  capital       premium       deficit         Total 
                                          Note  US $ (000's)  US $ (000's)  US $ (000's)   US $ (000's) 
                                          ----  ------------  ------------  ------------   ------------ 
 
Balance at 31 December 2018                            4,032        93,456        (2,331)        95,160 
                                                ============  ============  ============   ============ 
 
Loss for the year                                          -             -      (98,661)       (98,661) 
                                                ------------  ------------  ------------   ------------ 
Total comprehensive loss for the year                      -                    (98,661)       (98,661) 
Issue of share capital                     13            738         3,569             -          4,307 
Cost of issuance                           13              -         (317)             -          (317) 
Exercise of share options and warrants     11              7           295             -            302 
Share-based payments                       12              -             -         (424)          (424) 
                                                ------------  ------------  ------------   ------------ 
Balance at 31 December 2019                            4,777        97,003     (101,413)            367 
 
Loss for the year                                          -             -         (734)          (734) 
                                                ------------  ------------  ------------   ------------ 
Total comprehensive loss for the year                      -                       (734)          (734) 
Issue of share capital                     13             20           789             -            809 
Cost of issuance                           13              -          (40)             -           (40) 
Exercise of share options and warrants     11              1            58             -             59 
Balance at 31 December 2020                            4,798        97,809     (102,147)            461 
                                                ============  ============  ============   ============ 
 

Motif Bio plc

Statements of cash flows

For the years ended 31 December 2020 and 2019

(in thousands)

 
                                                               Year ended                Year ended 
                                                              31 December               31 December 
                                                                  2020                      2019 
                                                    Note      US $ (000's)              US $ (000's) 
                                                    ----  --------------------  ---------------------------- 
 
Operating activities 
 
Operating loss for the 
 year............................................. 
 .................                                                       (891)                      (20,371) 
Adjustments to reconcile net loss to net cash 
used in activities: 
 
Share-based 
 payments......................................... 
 ............................                        12                      -                          (32) 
Loss on impairment of receivable from 
 subsidiary.........................                 2                       -                        19,125 
Interest 
 received......................................... 
 ......................................                                      1                             4 
Changes in operating assets and liabilities: 
   Prepaid expenses and other 
    receivables................................... 
    ..                                                                       5                             9 
   Trade payables and accrued 
    liabilities................................... 
    .....                                                                (167)                            18 
                                                          --------------------  ---------------------------- 
 
Net cash used in operating 
 activities....................................... 
 ........                                                              (1,052)                       (1,247) 
 
Investing activities 
................................................. 
.......................... 
 
Capital contributions to subsidiary 
 ................................................. 
 ..                                                                          -                       (3,821) 
Due from Motif Bio Inc. 
 ................................................. 
 ...................                                                         -                           941 
                                                          --------------------  ---------------------------- 
 
Net cash used in investing activities 
 ................................................                            -                       (2,880) 
 
Financing activities 
................................................. 
......................... 
 
Proceeds from issue of share 
 capital.......................................... 
 .....                                               13                    809                         4,307 
Costs of issuance of share 
 capital.......................................... 
 ..........                                          13                   (40)                         (317) 
Proceeds from exercise of warrants and 
 options............................                 11                     59                           244 
                                                          --------------------  ---------------------------- 
 
Net cash provided by financing 
 activities....................................... 
 .                                                                         828                         4,234 
                                                          --------------------  ---------------------------- 
 
Net change in 
 cash............................................. 
 ..............................                                          (224)                           107 
Cash, beginning of the 
 year............................................. 
 .................                                                         663                           560 
Effect of foreign exchange rate 
 changes.........................................                           18                           (4) 
                                                          --------------------  ---------------------------- 
 
Cash, end of the year 
 ................................................. 
 ......................                                                    457                           663 
                                                          ====================  ============================ 
 

1. General information

Motif Bio plc (the "Company" or "Motif") is domiciled in England and Wales having originally been incorporated on November 20, 2014 as Motif Bio Limited, a private company, with company registration number 09320890. On 1 April 2015, the Company was re-registered as a public company limited by shares and changed its name to Motif Bio plc. The Company's registered office is at: 201 Temple Chambers, 3-7 Temple Avenue, London EC4Y 0DT, U.K.

The Company's ordinary shares are listed on the AIM Market ("AIM") of the London Stock Exchange plc. On 28 January 2020, the Company announced that it was reclassified as an AIM Rule 15 Cash Shell and, as such, was required to make an acquisition or acquisitions which constitute(s) a reverse takeover under AIM Rule 14 within six months to continue to have its shares traded on the AIM market. On 29 July 2020, the London Stock Exchange suspended the trading in the Company's AIM listed ordinary shares pursuant to AIM Rule 40. The AIM rules initially provided that the Company had an additional six months from the suspension date, or 28 January 2021, to complete a qualifying transaction. On 27 January 2021 and 29 March 2021 Motif provided the market with updates regarding the proposed Reverse Takeover via RNS, in which the Company confirmed that it would remain suspended from trading while the proposed transaction was negotiated and advanced. If the Company is unable to complete reverse takeover transaction for re-admission of trading on AIM the listing of the Company's common shares will be cancelled.

From November 2016 until December 2019, the Company had American Depository Shares ("ADS's") and ADS warrants that were traded on the NASDAQ Capital Market. Effective December 2019 following a voluntary delisting, the Company's ADS's and ADS warrants are no longer traded on the NASDAQ Capital Market.

The financial statements presented represent the accounts of the Company. After shareholder approval of a corporate restructuring in November 2019, the Company's former wholly owned subsidiary, Motif BioSciences Inc., an entity incorporated in U.S. State of Delaware, was reported as discontinued operations as at 31 December 2019. During the first quarter of 2020, the Company appointed John Palmer of Tamarack Associates, Inc. as the sole Executive Officer of Motif Biosciences Inc. As a result, the Company determined that it no longer had control over Motif BioSciences Inc. will no longer consolidate the financial results of the entity for financial reporting periods commencing in 2020. In February 2021, the Company divested it's the ownership of Motif BioSciences Inc., to Orange Avenue Technologies, LLC, an entity controlled by John Palmer of Tamarack Associates Inc.

The financial statements were approved by the Board of Directors on 10 May 2021.

Going concern

The Company had US $0.5 million and US $0.6 million in cash as of 31 December 2020 and 2019, respectively. The Company's Directors are focused on completing a reverse takeover over transaction for the Company. There is no assurance that the effort will be successful to complete a reverse takeover or qualifying transaction to avoid being delisted from the AIM market. Based on this condition, including recurring and expected continuing operating losses, the Directors have concluded that there is material uncertainty that may cast a significant doubt about the Company's ability to continue as a going concern and, therefore, that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

The financial statements have been prepared on the basis that the Company is a going concern, which contemplates the continuity of normal business activity, realization of assets and settlement of liabilities in the normal course of business. Should the entity not be able to continue as a going concern, it may be required to realize its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or liabilities that might be necessary should the Company not continue as a going concern.

   2.    Significant accounting policies 
   a.     Basis of preparation 

The accounting policies set out below have been applied consistently to all periods presented in this financial information.

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and with the Companies Act 2006 applicable to companies reporting under IFRS. This basis of preparation describes how the financial statements have been prepared in accordance with IFRS. The financial statements have been prepared under the historical cost convention as modified for financial instruments (including derivative instruments) at fair value through the statement of comprehensive loss. A summary of the significant accounting policies is set out below.

   2.    Significant accounting policies, continued 

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The recently adopted new standards that are potentially relevant to the Company are discussed below.

IFRS 3- Business Combination - effective date 1 January 2020 - The amendments confirm that a business must include inputs and a process and clarified that the process must be substantive, and the inputs and process must together significantly contribute to creating outputs. The amendment also narrowed the definition of a business and included tests that make it easier to conclude whether a business or group of assets was acquired. Any future impact of adopting the amendment would be primarily dependent on future acquisition transactions, if any.

   b.   Segment reporting 

The chief operating decision-maker is considered to be the Board of Directors of Motif Bio plc. The chief operating decision-maker allocates resources and assesses performance of the business and other activities at the operating segment level. In addition, they review the IFRS financial statements.

The chief operating decision-maker had determined that the Company currently has one segment-to support its strategy as an AIM 15 cash shell entity focused on sourcing a reverse-take-over candidate. In 2019 prior to the corporate restructuring approved by shareholders in November 2019, the Company had one segment to support the development and commercialization of pharmaceutical formulations.

   c.   Foreign currency translation 

(a) Functional and Presentation Currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The financial statements are presented in United States Dollars (US $), which is Motif Bio plc's functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are generally recognized in the statement of comprehensive loss.

Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of comprehensive loss.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value are recognized in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognized in other comprehensive income.

   d.   Financial assets and liabilities 

Financial assets and financial liabilities are included in the Company's statement of financial position when it becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

   e.   Fair value disclosures 

The Company's cash, prepaid expenses and other current assets and trade and other payables are stated at their respective historical carrying amounts, which approximates fair value due to their short-term nature. The Company's derivative liability is measured at fair value using Level 1 and 2 inputs (Note 11).

There were no non-recurring fair value measurements for the years ended 31 December 2020 or 2019.

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

   --      Level 1:  quoted prices (unadjusted) in active markets for identical assets or liabilities. 

-- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

-- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Cash and cash equivalents

Cash and cash equivalents include bank balances, demand deposits, and other short-term, highly liquid investments (with less than three months to maturity) that are readily convertible into a known amount of cash and are subject to an insignificant risk of fluctuations in value.

Financial liabilities and equity

The Company classifies an instrument, or its component parts, on initial recognition as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.

An instrument is classified as a financial liability when it is either (i) a contractual obligation to deliver cash or another financial asset to another entity; or (ii) a contract that will or may be settled in the Company's own equity instruments and is a non-derivative for which the Company is, or may be, obliged to deliver a variable number of the Company's own equity instruments or a derivative that will, or may be, settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company's own equity instruments. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

An equity instrument is defined as any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. An instrument is an equity instrument only if the issuer has an unconditional right to avoid settlement in cash or another financial asset.

Trade payables and accrued liabilities

Trade payables and accrued liabilities are obligations to pay for goods or services that have been acquired in the ordinary course of business from or rendered by suppliers. All are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables and accrued liabilities are initially measured at fair value, and, where applicable, are subsequently measured at amortized cost, using the effective interest rate method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received. Direct issuance costs are processed as a deduction on equity.

Derivative financial instruments

The Company does not have a policy of engaging in speculative transactions, nor does it issue or hold financial instruments for trading purposes.

The Company has entered into financing arrangements that include the issuance of warrants. These warrants may be considered derivative financial instruments based on the terms of the agreements.

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The resulting gain or loss is recognized in the consolidated statement of comprehensive loss, as the Company does not apply hedge accounting.

   f.   Impairment of financial assets 

The Company assessed at the end of each reporting period whether there was objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a "loss event") and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Prior to being classified as discontinued operations, the Company's former wholly owned subsidiary Motif BioSciences, Inc. was in proprietary drug discovery research and development. In early 2020, the Company determined that it no longer has control of Motif BioSciences Inc. in accordance with IFRS 10 Consolidated Financial Statements and, as a result, the Company will not consolidate Motif BioSciences Inc. (Note 1).

The Company evaluated the investment and intercompany receivable balances for impairment as of the 31 December 2019. Based on the operations of Motif BioSciences Inc. being discontinued, the Company determined that the probability of recovering both balances was unlikely. As a result, the Company recorded an impairment charge equal to the full amount of the respective balances as of 31 December 2019.

   g.   Share-based payment transactions 

The fair value of options and warrants granted to employees, Directors, and consultants is recognized as an expense, with a corresponding increase in equity, over the period in which the option and warrant holders become unconditionally entitled to the options and warrants unless incremental and directly attributable to an equity transaction in which case it is deducted from equity. The fair value of the options and warrants granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted.

   h .     Financial income 

Financial income comprises interest receivable on funds invested.

Interest income is recognized in the statement of comprehensive loss as they accrue, using the effective interest method.

   i .      Taxation 

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognized in the consolidated statement of comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized.

   j.    Earnings per share 

The Company presents basic and diluted earnings per share (EPS) data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shares of the Company by the weighted average number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential shares, which comprise share options and warrants granted to employees and non-employees. Refer to Note 9 for calculation of EPS for all periods presented.

   k.   Equity 

The Company classifies an instrument, or its component parts, on initial recognition as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability and an equity instrument.

An instrument is classified as a financial liability when it is either (i) a contractual obligation to deliver cash or another financial asset to another entity; or (ii) a contract that will, or may be, settled in the Company's own equity instruments and is a non-derivative for which the Company is, or may be, obliged to deliver a variable number of the Company's own equity instruments or a derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the Company's own equity instruments.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

An equity instrument is defined as any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. An instrument is an equity instrument only if the issuer has an unconditional right to avoid settlement in cash or another financial asset.

Ordinary Shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

   l.   Critical accounting estimates and judgments 

In preparing the financial information, the Directors make judgments on how to apply the Group's accounting policies and make estimates about the future. The critical judgments that have been made in arriving at the amounts recognized in the financial information and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities in the next financial year, are discussed below:

Going concern

Refer to going concern assessment described in Note 1.

Share based payments and fair value of warrants (Estimate)

The Directors have to make judgments when deciding on the variables to apply in arriving at an appropriate valuation of warrants, including appropriate factors for volatility, risk-free interest rate, and applicable future performance conditions and exercise patterns.

   3.   Financial risk management 

The Company's exposure to financial risks and how these risks could affect the Company's future financial performance is primarily limited to credit risk from a counterparty, liquidity risk and market risk.

All deposits are held with banks that have a minimum S&P rating of A or A-3 for short term deposits. At 31 December 2020, no current assets were impaired.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. See discussion in Note 1 as it relates to the Company's ability to continue as a going concern.

The Company has financed its operations to date using cash raised through the issuance equity. The Directors acknowledge that uncertainty remains over the ability of the Company to have the resources to support the Company's foreseeable operating needs as an AIM Rule 15 cash shell and complete a qualifying transaction. An inability to complete a qualifying transaction will result in the Company being delisted from the AIM Market of the London Stock Exchange.

The Company undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed by minimizing the balance of foreign currencies to cover expected cash flows during periods where there is strengthening in the value of the foreign currency. The Company holds part of its cash resources in US dollars and British pounds sterling. The valuation of the cash fluctuates along with the US dollar/sterling exchange rate. No hedging of this risk is undertaken.

The carrying amounts of foreign currency denominated monetary net assets at the reporting date are as follows:

 
                                                                           31 December 2020  31 December 2019 
     (in thousands)                                                              US $              US $ 
                                                                           ----------------  ---------------- 
    Sterling - Cash....................................................                 210               655 
 

The exchange rate between British Pound and the United States Dollar at 31 December 2020 and 2019 was 1.37 and 1.33, respectively. A change in foreign currency exchange rates may have a significant impact on the profit or losses of the Group.

   4.    Other income and expense items 

This note provides a breakdown of the items included in other income, finance income and expenses by nature for the years ended 31 December 2020 and 2019.

   a.     Breakdown of expenses by nature 
 
                                                                                     Year ended    Year ended 
                                                                                     31 Dec 2020   31 Dec 2019 
(in thousands)                                                                      US $ (000's)  US $ (000's) 
---------------------------------------------------------------------------------   ------------  ------------ 
General and administrative expenses 
Director fees, employee/consultant compensation, including share-based 
 payments................................................................                    563           258 
Legal, insurance and professional fees........................................               214           586 
Investor and public relations and related fees ..........................                     59            32 
Other 
 expenses......................................................................... 
 .......                                                                                      55           370 
                                                                                    ------------  ------------ 
                                                                                             891         1,246 
                                                                                    ------------  ------------ 
 

The Company had one male Executive Director and one male employee at 31 December 2020.

   b.    Auditors' Remuneration 
 
                                                                                        2020          2019 
(in thousands)                                                                      US $ (000's)  US $ (000's) 
---------------------------------------------------------------------------------   ------------  ------------ 
Fees paid/payable to the company's auditors and its associates for the audit of 
 the Company's 
 financial statements...............                                                          27            47 
                                                                                              27            47 
                                                                                    ------------  ------------ 
 
   c.     Finance income and cost 
 
                                                                                     Year ended    Year ended 
                                                                                     31 Dec 2020   31 Dec 2020 
(in thousands)                                                                      US $ (000's)  US $ (000's) 
                                                                                    ------------  ------------ 
Finance income 
Interest from financial 
 assets.........................................................                               1             5 
                                                                                    ------------  ------------ 
                                                                                               1             5 
                                                                                    ------------  ------------ 
Finance costs 
Interest 
expense.......................................................................... 
....                                                                                           -             - 
                                                                                    ------------  ------------ 
                                                                                               -             - 
                                                                                    ------------  ------------ 
Net finance 
 income.........................................................................               1             5 
                                                                                    ------------  ------------ 
 
   5.   Directors' remuneration 

As part of the corporate restructuring approved by the Company's shareholders on 14 November 2019 (Note 1) directors Dr. Craig Albanese, Charlotta Ginman, Zaki Hosny, Dr. Mary Lake Polan, and Andrew Powell resigned from the board and all directors forfeited all previously outstanding vested and non-vested option and waived accrued cash fees owed at that time.

The table below summarizes the director's cash remuneration for the periods presented.

 
                                                      Salaries                      2020          2019 
                                                      and fees      Bonuses        Total         Total 
                                                    US $ (000's)  US $ (000's)  US $ (000's)  US $ (000's) 
                                                    ------------  ------------  ------------  ------------ 
Executive 
Jonathan Gold(1) 
 ........................................                300,000             -       300,000       618,388 
Non-executive.................................... 
....... 
Graham Lumsden(1) 
 ..................................                      115,000             -       115,000       464,063 
Richard Morgan(3) 
 .....................................                         -             -             -        56,750 
Charlotta Ginman(3) 
 ..................................                            -             -             -        43,472 
Zaki Hosny(3) 
 ..............................................                -             -             -        32,625 
Mary Lake Polan(3) 
 ....................................                          -             -             -        30,000 
Chris Wardhaugh 
 ....................................                     10,250             -        10,250        48,625 
Bruce 
 Williams.........................................        30,000             -        30,000        48,625 
Craig T. Albanese(3) 
 ...................................                           -             -             -        35,000 
                                                    ------------  ------------  ------------  ------------ 
                                                         455,250             -       455,250     1,328,923 
                                                    ------------  ------------  ------------  ------------ 
 

(1) The compensation for Dr. Lumsden and Mr. Gold excludes US $8,400 and US $8,400 in employer provided 401k pension contribution during 2019. There was no contribution in 2020.

(2) Effective 18 March 2019, Richard Morgan resigned from the Board of Directors and his role as Chairman. Bruce Williams was appointed interim Chairman of the Board at that time.

(3) Members' resignation effective 15 November 2019 (Note 1).

The compensation for Board members continuing in 2020 is outlined below by individual.

Bruce Williams is to receive a monthly salary of US $2,500 and is entitled to receive an additional monthly salary of US $2,500 that is deferred and payable only upon the occurrence of a reverse takeover transaction or similar transaction. Mr. Williams has voluntarily agreed to waive all deferred cash compensation related to the occurrence of a reverse takeover.

Graham Lumsden, in his capacity as Non-Executive Director, is to receive a monthly salary of US $1,250 and is entitled to receive an additional monthly salary of US $2,500 that is deferred and payable only upon the occurrence of a reverse takeover transaction or similar transaction. Further, as a result of his executive service earlier to May 2020, Dr. Lumsden is entitled to an additional US $100,000 that is deferred and payable only upon the occurrence of a reverse takeover transaction or similar transaction. Dr. Lumsden has voluntarily agreed to waive all deferred cash compensation related to the occurrence of a reverse takeover.

Chris Wardhaugh, appointed as a Non-Executive Director on 4 May 2020, is to receive a monthly salary of GBP1,000 (GBP) and is entitled to receive an additional monthly salary of GBP2,000 (GBP) that is deferred and payable only upon the occurrence of a reverse takeover transaction or similar transaction. Mr. Wardhaugh has voluntarily agreed to waive all deferred cash compensation related to the occurrence of a reverse takeover.

Jonathan Gold, in his capacity as Chief Financial Officer, President and Chief Business Officer and Executive Director is to receive a monthly salary of US $25,000 and is entitled to receive an additional monthly salary of US $25,000 that is deferred and payable only upon the occurrence of a reverse takeover transaction or similar transaction. Mr. Gold has voluntarily agreed to waive all deferred cash compensation related to the occurrence of a reverse takeover.

   6.    Income tax expense 

The Company did not recognize U.K. corporate tax expense in the statement of comprehensive loss during the years ended 31 December 2020 and 2019. The main rate of U.K. corporation tax was reduced from 21% to 19% from 1 April 2015. The Company has an unrecognized net deferred tax asset of US $18 million related to net cumulative operating losses of US $107 million, which includes the impairment charges relating to the Company's operating receivable from and investment in its previously discontinued subsidiary Motif BioSciences, Inc. Net operating loss are subject to review and possible adjustment by taxing authorities and may become subject to an annual limitation, which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. There is no assurance as to the extent and timing of the Company's ability to realize the possible tax benefits derived from cumulative net operating losses.

   7.    Loss per share 

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of shares in issue during the year. Diluted EPS is computed by dividing net income (loss) by the weighted average of all potentially diluted share of common stock that were outstanding during the periods presented.

The treasury stock method is used in the calculation of diluted EPS for potentially dilutive liability classified options and warrants, which assumes that any proceeds received from the exercise of in-the-money options and warrants, would be used to purchase common shares at the average market prices for the period.

The following table shows the derivation of loss per share for continuing operations.

 
                                                                                       Year ended    Year ended 
                                                                                       31 Dec 2020   21 Dec 2019 
(Per share data in cents)                                                             US $ (000's)  US $ (000's) 
                                                                                      ------------  ------------ 
Basic 
Net 
 loss............................................................................... 
 ...............................                                                             (734)      (98,660) 
Basic weighted average shares in 
 issue.......................................................                          597,628,009   350,993,002 
                                                                                      ------------  ------------ 
Basic loss per share (in 
 cents)........................................................................                  -        (0.28) 
                                                                                      ------------  ------------ 
 
 
 
Diluted 
Net 
 gain................................................................................. 
 .............................                                                                (734)     (98,660) 
Effect of dilutive securities: liability-classified 
warrants...........................                                                               -            - 
                                                                                        -----------  ----------- 
Diluted net 
 gain/(loss).......................................................................... 
 ...........                                                                                  (734)     (98,660) 
                                                                                        -----------  ----------- 
 
Weighted average shares in issue - 
 basic....................................................                              597,628,009  350,993,002 
Incremental dilutive shares from liability-classified warrants 
treasury stock 
method).............................................................................. 
.....                                                                                             -            - 
                                                                                        -----------  ----------- 
Weighted average shares in issue - diluted 
 ...............................................                                        597,628,009  350,993,002 
                                                                                        -----------  ----------- 
Diluted net loss per share (in 
 cents).............................................................                              -       (0.28) 
                                                                                        -----------  ----------- 
 

The following potentially dilutive securities outstanding at 31 December 2020 and 2019 have been excluded from the computation of diluted weighted average shares outstanding, as they would be antidilutive.

 
                                                                                          2020         2019 
                                                                                       -----------  ---------- 
Warrants............................................................................ 
 ..................                                                                    146,614,724  54,154,709 
Share 
 options............................................................................. 
 .........                                                                                 754,425   3,778,563 
                                                                                       -----------  ---------- 
                                                                                       147,369,149  57,933,272 
                                                                                       -----------  ---------- 
 
   8.    Prepaid expenses and other receivables 
 
                                                                                Year end       Year end 
                                                                               31 Dec 2020    31 Dec 2019 
Amounts due within one year                                                    US $ (000's)   US $ (000's) 
                                                                              -------------  ------------- 
Prepayments and other receivables........................................               140            145 
                                                                              ------------- 
                                                                                        140            145 
                                                                              -------------  ------------- 
 
 

The maximum exposure to credit risk at the end of each reporting period is the fair value of each class of receivables set out above. The Company held no collateral as security. The Directors estimate that the carrying value of receivables approximated their fair value.

   9.    Cash and cash equivalents 
 
                                                                                   Year end       Year end 
                                                                                  31 Dec 2020    31 Dec 2019 
                                                                                  US $ (000's)   US $ (000's) 
                                                                                 -------------  ------------- 
Cash and cash equivalents at bank...........................................               457            663 
                                                                                 ------------- 
                                                                                           457            663 
                                                                                 -------------  ------------- 
 
 
   10.    Financial liabilities 
 
                                                                                      Year end       Year end 
                                                                                     31 Dec 2020    31 Dec 2019 
Amounts due within one year                                                          US $ (000's)   US $ (000's) 
                                                                                    -------------  ------------- 
Trade 
 payables......................................................................... 
 ....                                                                                          26            119 
Accrued 
 expenses.......................................................................               22             95 
Derivative liabilities (Note 
 15)...................................................                                        88            227 
                                                                                    -------------  ------------- 
                                                                                              136            441 
                                                                                    -------------  ------------- 
 
 

The Directors estimate that the carrying value of trade and accrued expenses approximated their fair value. Trade payables are generally payable on normal trade terms, usually 30 days.

11. Warrants

Warrant activity

The Company has issued warrants for services performed and in conjunction with various equity financings. The Company's warrants represent ordinary shares or ADS and have either a Pounds Sterling or US Dollar exercise price. The ADS warrants are exercisable to purchase ADS's, which each represent 20 ordinary shares. Depending on the terms of the warrant agreements, the ordinary share or ADS warrants are classified as either equity or a liability. Liability classified warrants are remeasured each reporting period, with changes in fair value recorded in the statements of comprehensive loss. The following is a summary of the Company's warrant activity during the year ended 31 December 2020:

 
                                                                       Weighted Average 
                                          Number of Warrants            Exercise Price 
                                      ---------------------------  ------------------------ 
                                      Ordinary shares     ADS       Ordinary shares    ADS 
                                      ---------------  ----------  -----------------  ----- 
Outstanding as of 1 January 2019          155,564,670   1,212,902     GBP      0.273  $8.02 
Granted                                             -           -                  -      - 
Cancelled                                 (1,807,089)           -     GBP      0.380      - 
Exercised                                 (7,142,857)           -     GBP      0.007      - 
                                      ---------------  ----------          ---------   ---- 
Outstanding as of 31 December 2020        146,614,724   1,212,902     GBP      0.273  $8.02 
                                      ---------------  ----------          ---------   ---- 
 

The warrants outstanding and exercisable as of 31 December 2020 were as follows:

 
Type of Warrant Outstanding   Number Outstanding and Exercisable   Exercise Price   Expiration Date 
----------------------------  ----------------------------------  ----------------  ---------------- 
Ordinary shares (2)                                   10,317,252  GBP GBP    0.322  23 November 2021 
ADS (2)(3)                                             1,202,902  US $        8.03  23 November 2021 
Ordinary shares (1)                                    8,960,431  GBP GBP     0.20   April 2, 2025 
ADS (2)(3)                                                10,000  US $        7.26   July 31, 2022 
Ordinary shares (2)(4)                               121,337,047  GBP GBP    0.004  27 January 2025 
Ordinary shares (2)(4)                                 6,000,000  GBP GBP    0.002  27 January 2025 
 

(1) Warrants are equity classified.

(2) Warrants totalling 137,654,293 of ordinary shares and 1,212,902 of ADS are liability classified.

(3) Each ADS represents 20 ordinary shares.

(4) Warrants totalling 134,479,904 of ordinary shares were issued on 27 January 2017. The accounting treatment thereof was recorded as of 31 December 2019 as an adjusting subsequent event. A total of 7,142,857 of these warrants were exercised prior to 31 December 2020.

Liability classified warrants

ADS warrants

On 23 November 2016, the Company closed an initial U.S. offering of 2,438,491 ADS and 1,219,246 ADS warrants at a price of US $6.98 per ADS/Warrant combination. Each ADS represented 20 ordinary shares. The warrants have an exercise price of US $8.03 per ADS and expire on 23 November 2021. As the Company failed to maintain the effectiveness of its Registration Statement, the warrant is only exercisable on a cashless basis. This results in variability in the number of shares issued and therefore, the warrants were designated as a financial liability carried at fair value through profit and loss. On issuance of the ADS warrants, the Company recorded a derivative liability of US $3.8 million using the Black-Scholes model.

On 1 August 2017, the Company issued to a third party a warrant to purchase up to 60,000 ADSs at an exercise price of US $7.26 per ADS. A total of 10,000 ADSs were vested and outstanding as of 30 June 2020. The remaining 50,000 ADSs were forfeited. On issuance of the ADS warrants, the Company recorded a derivative liability of $0.1 million using the Black-Scholes model.

The Company develops its own assumptions for use in the Black-Scholes option pricing model that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company's common stock, stock price volatility of comparable companies, the contractual term of the warrants, risk free interest rates and dividend yields. November 26, 2019, the Company notified NASDAQ Capital Market of its intention to delist the ADS shares and ADS warrants from trading. The ADS shares and ADS warrants were voluntarily delisted from trading in December 2019.

At 31 December 2020 and 2019, the liability classified ADS warrants had a fair value of US $ nil value using the following weighted-average assumptions in the Black-Scholes model:

 
                                                                                          31 December  31 December 
                                                                                              2020         2019 
                                                                                          -----------  ----------- 
 
Share price (US $)(1) 
 ....................................................................................... 
 ....                                                                                            0.03         0.10 
Exercise price (US 
 $)..................................................................................... 
 ....                                                                                            8.02         8.08 
Expected 
 volatility............................................................................. 
 ................                                                                               139 %         92 % 
Number of periods to 
 exercise.......................................................................                 0.90         1.90 
Risk-free 
 rate................................................................................... 
 ...................                                                                           0.16 %       1.58 % 
Expected 
 dividends.............................................................................. 
 .............                                                                                      -            - 
 
 

(1) Effective December 2019 following a voluntary delisting, the Company's ADS shares are no longer traded on the NASDAQ Capital Market. The share price utilized represent the Company's ordinary share price to reflect the conversion to ADS equivalents and conversion to the U.S. dollar.

Ordinary warrants

On 23 November 2016, the Company placed 22,863,428 ordinary shares together with 11,431,714 warrants over ordinary shares at a price of GBP0.28 per share/warrant combination. The warrants have an exercise price of GBP0.322 per warrant and expire on 23 November 2021. This results in variability in the number of shares issued and therefore, the warrants were designated as a financial liability carried at fair value through profit and loss. On issuance of the warrants, the Company recorded a derivative liability of US $1.8 million using the Black-Scholes model.

On 27 January 2020, the Company granted to Hercules Capital Inc. warrants over an aggregate of 121,337,041 ordinary shares. These warrants will expire on 27 January 2025 and have an exercise price of 0.42 pence per share. The Company also granted warrants over 6,000,000 ordinary shares to certain former board members at an exercise price of 0.24 pence per share that will expire on 27 January 2025. The issuance of these warrants was presented as an adjusting subsequent event at 31 December 2019 (Note 1).

At 31 December 2020 and 2019, the liability classified ordinary warrants had a fair value of US $0.1 million and US $0.2 million, respectively, using the following weighted-average assumption in the Black-Scholes model:

 
                                                                                          31 December  31 December 
                                                                                              2020         2019 
                                                                                          -----------  ----------- 
 
Share price 
 (GBP).................................................................................. 
 ............                                                                                   0.001        0.002 
Weighted exercise price 
 (GBP).......................................................................                   0.028        0.028 
Expected 
 volatility............................................................................. 
 ................                                                                                99 %         85 % 
Number of periods to 
 exercise.......................................................................                 3.84         4.77 
Risk-free 
 rate................................................................................... 
 ...................                                                                           0.15 %       1.68 % 
Expected 
 dividends.............................................................................. 
 .............                                                                                      -            - 
 

The following is a summary of the liability classified warrant activity, including both ADS and Ordinary warrants, during the years ended 31 December 2020 and 2019:

 
(in thousands)                                                                                          Fair value 
Liability classified warrants                                                                              US $ 
-----------------------------------------------------------------------------------------------------   ---------- 
 
Balance at 1 January 2019.............................................................................       5,789 
Issued during the 
year....................................................................................                         - 
Exercised during the 
 year..............................................................................                           (55) 
Impact of foreign exchange...........................................................................         (80) 
Gain from revaluation of derivative liabilities............................................                (5,427) 
                                                                                                        ---------- 
Balance at 31 December 2019.....................................................................               227 
Issued during the 
year....................................................................................                         - 
Exercised during the 
year..............................................................................                               - 
Impact of foreign exchange...........................................................................           70 
Gain from revaluation of derivative liabilities............................................                  (209) 
                                                                                                        ---------- 
Balance at 31 December 2020 .....................................................................               88 
                                                                                                        ---------- 
 
   12.    Share based payments 

Motif Bio plc adopted a Share Option Plan (the "New Plan") on 1 April 2015. The exercise price for each option will be established at the discretion of the Board provided that the exercise price for each option shall not be less than the nominal value of the relevant shares if the options are to be satisfied by a new issue of shares by the Company and provided that the exercise price per share for an option shall not be less than the fair market value of a share on the effective date of grant of the option. Options will be exercisable at such times or upon such events and subject to such terms, conditions and restrictions as determined by the Board on grant date. However, no option shall be exercisable after the expiration of ten years after the effective date of grant of the option.

 
                                                                                                      Weighted 
                                                                                                      average 
                                                                                                      exercise 
                                                                                       Number of       price 
                                                                                         share 
                                                                                        options         US $ 
                                                                                      ------------  ------------ 
 
Outstanding at 31 December 2018 
 ................................................................................       18,387,038      0.34 
Granted during the 
 year............................................................................... 
 ....................                                                                      100,000      0.11 
Forfeited during the 
 year............................................................................... 
 ..................                                                                   (14,549,544)      0.34 
Cancelled during the 
 year............................................................................... 
 ..................                                                                      (158,931)      0.56 
Exercised during the year                                                                        -       - 
................................................................................... 
............. 
                                                                                      ------------ 
                                                     Outstanding at 31 December 2019 
    ................................................................................     3,778,563      0.50 
Granted during the 
year............................................................................... 
....................                                                                             -       - 
Forfeited during the 
 year............................................................................... 
 ..................                                                                    (2,500,218)      0.35 
Exercised during the year                                                                                - 
................................................................................... 
.............                                                                                    - 
Expired during the 
 year............................................................................... 
 .....................                                                                   (523,920)      0.69 
                                                                                      ------------ 
                                                     Outstanding at 31 December 2020 
    ................................................................................       754,425      0.14 
                                                                                      ------------ 
Exercisable at 31 December 2020 
 ..................................................................................        754,425      0.14 
                                                                                      ------------ 
 

All options at 31 December 2020 had a per share exercise price of US $0.14 and a remaining contractual term of 2 years.

The total expense recognized for the years arising from stock-based payments are as follows:

 
                                                                                     Year ended    Year ended 
                                                                                     31 Dec 2020   31 Dec 2019 
(in thousands)                                                                      US $ (000's)  US $ (000's) 
                                                                                    ------------  ------------ 
General and administrative 
 expense..........................................................                             -         (309) 
Research and development 
 expense.........................................................                              -         (115) 
                                                                                    ------------  ------------ 
Total share-based payment (gain) 
 expense...............................................                                        -         (424) 
                                                                                    ------------  ------------ 
 

For the year ended 31 December 2019, the Company recorded a net gain of $0.4 million due to the forfeitures that occurred during the period. No gain was recorded for the forfeitures that occurred during the year ended 31 December 2020.

   13.     Share capital 

On 14 November 2019, each of the Company's ordinary shares of 1 pence par value were divided into one New Ordinary Share of 0.01 pence par value and one deferred share of 0.99 pence stated value. The deferred shares have no rights and the Company did not issue any share certificates or credit CREST accounts in respect of them. The deferred shares are not admitted to trading on AIM and have no rights to participate in the profits of the Company. In the event of a wind-down or dissolution of the Company, the deferred shares shall be entitled to participate pari-passu in the dissolution of the Company's assets that are in excess of GBP GBP 1 trillion.

The number of New Ordinary Shares in issue and held by each Shareholder at the time of the Share Capital Reorganisation, was equal to the number of existing Ordinary Shares in issue immediately prior to the Share Capital Reorganisation. Only the nominal value changed with respect to the New Ordinary Share. The New Ordinary Shares will continue to carry the same rights as those attached in the previously existing Ordinary Shares, save for the reduction in nominal value.

The net effect is that the par value for the Company's ordinary shares changed to 0.01 pence as a result of this sub-division.

 
Allotted, called up and fully paid:                                                                                 Number     US $ (000's) 
---------------------------------------------------------------------------------------------------------------   -----------  ------------ 
(in thousands, except share data) 
 
In issue at 31 December 
 2018..........................................................................................................   296,660,243         3,589 
   Issued: 
       Ordinary shares of 1p 
        each.................................................................................................... 
        .                                                                                                             830,780             9 
       Ordinary shares of 1p 
        each.................................................................................................... 
        .                                                                                                          45,000,000           433 
       Ordinary shares of 1p 
        each.................................................................................................... 
        .                                                                                                         142,857,143             1 
 
In issue at 31 December 2019(1) 
 .......................................................................................................          485,348,166         4,032 
                                                                                                                  -----------  ------------ 
    Issued: 
       Ordinary shares of .01p 
        each..................................................................................................    162,500,000            20 
       Ordinary shares of .01p 
        each..................................................................................................      7,142,857             1 
 
In issue at 31 December 
 2020..........................................................................................................   654,991,023         4,798 
                                                                                                                  -----------  ------------ 
 
Deferred shares at 31 December 2019 and 2020 (1) 
 .......................................................................                                          342,491,023             - 
                                                                                                                  -----------  ------------ 
 

(1) On 14 November 2019, each ordinary share of 1 pence were divided into one New Ordinary Share of 0.01 pence par value and one deferred share of 0.99 pence stated value, as previously described. The Deferred shares have no rights to participate in profits and losses of the Company.

D uring 2019, 830,780 ordinary shares were issued upon the exercise of warrants.

On 5 May 2020, the Company issued 162,500,000 new ordinary shares at 0.004 pence per share and received US $0.8 million of net proceeds.

On 14 May 2020, the Company issued 7,142,857 new ordinary shares upon the exercise of a warrant.

On 18 November 2019, the Company issued 142,857,143 new ordinary shares at 0.42 pence per share and received US $0.7 million of net proceeds.

On 25 March 2019, the Company placed 45,000,000 new ordinary shares at 6 pence per share and received US $3.3 million of net proceeds.

Share premium represents the excess over nominal value of the fair value consideration received for equity shares net of expenses of the share issue.

The Deferred shares were issued pursuant to a corporate restructuring and consequent capital reorganization approved by the Company's shareholders on 14 November 2019 in accordance with which each Ordinary Share of 1 penny was subdivided into one new ordinary share of 0.01 pence and one deferred share of 0.99 pence. The deferred shares have no rights to participate in the profits of the company and the Company has not issued any share certificates or credited CREST accounts in respect of them. The deferred shares were not admitted to trading on AIM.

Retained deficit represents accumulated losses and a Formation reserve that arose when Motif Bio plc re-organized and became the parent entity of Motif Biosciences, Inc.in 2015. Being a common control transaction and, therefore, outside the scope of IFRS 3, it was accounted for as a group re-organization and not a business combination.

   14.    Subsequent events 

In January 2021, the Company divested the ownership of Motif Biosciences, Inc. to Orange Avenue Technologies, LLC ('Orange'), an entity controlled by John Palmer of Tamarack Associates Inc. Mr. Palmer, through Tamarack Associates Inc., was previously appointed in early 2020 as the sole Executive Officer of Motif BioSciences. Under the Stock Purchase Agreement with Orange, the Company will receive 90% of the revenues received by Inc. from iclaprim, above a $250,000 threshold.

On 27 January 2021 and 29 March 2021 Motif provided the market with updates regarding the proposed Reverse Takeover via RNS, in which the Company confirmed that it would remain suspended from trading while the proposed transaction was negotiated and advanced. If the Company is unable to complete reverse takeover transaction for re-admission of trading on AIM the listing of the Company's common shares will be cancelled.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

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