The private equity sector company FastForward Innovations (FFWD), disruptive high growth businesses with near-term re-rating potential, has reported annual results to 31 March 2020. The net assets of the company were 8.8p, as at 31 March 2020, which represented a (25.3%) decline over the year.
Highlights from FFWD’s investment portfolio
- Leap Gaming (gaming) delivered a 95% year-on-year increase in revenues for January to May 2020 compared to the same period in 2019 and secured 30 new customers and/or partnerships
- Juvenescence (biotech/healthcare) announced the formation of Juvenomics Limited, a joint venture with G3 Therapeutics, a trailblazer biotechnology company leveraging biological big data for drug discovery and development
- EMMAC (biotech/healthcare) announced the signing of a non-binding letter of intent relating to a business combination with Andina Acquisition Corp., pursuant to which EMMAC would become a publicly traded company on the NASDAQ Stock Market
- Yooma (media and content) announced that Globalive Technology Inc. had signed a binding letter of intent to acquire Yooma subject to various conditions
- Portage (biotech/healthcare) announced a 100:1 share consolidation effective on 3 June 2020 and the raising of an additional $6.98 million by a share issuance of 698,145 shares
- Vemo (edtech)doubled its school count to over 60 colleges and public universities on its platform and has helped its partners process over $100 million in ISAs in 2019
- Diabetic Boot Company (biotech/healthcare) insoles and footwear products are now on the FP10 NHS prescription system for one hospital, with three other hospitals ready to come on board post-COVID and the expectation of further adoption
Review of the year from chairman Ian Burns
“During the last 12 months, several of our eight investee companies have been active, with a number of them showing particular promise.
Our investments within the medical cannabis space have been particularly exciting. At the end of the year under review, EMMAC Life Sciences (EMMAC) announced that it has secured pharmaceutical wholesaler and narcotics handling permits for Germany, enabling it to generate immediate revenues from this major medical cannabis market, which ranks No.1 in Europe and No.3 worldwide. Post year-end, on 19 May 2020, EMMAC announced that Medalchemy, its GMP certified manufacturing site in Alicante, Spain, had secured approval from the Spanish Health Authorities to manufacture medical cannabis extracts as active pharmaceutical ingredients. The GMP license extension allows Medalchemy to manufacture medical cannabis APIs with delta 9-tetrahydrocannabinol for commercial purposes, establishing EMMAC as the first European cannabis company to do so.
The momentum behind EMMAC continues to build. In July 2020, EMMAC announced the signing of a non-binding letter of intent relating to a business combination with Andina Acquisition Corp., pursuant to which EMMAC would become a publicly traded company on the NASDAQ Stock Market. On successful completion, this would enhance the liquidity of FastForward’s holding in EMMAC and provide a robust platform for the growth of the business. I look forward to providing further updates as this progresses.
Our investments in the biotechnology sector are also progressing well. Notably, Portage Biotech Inc. (Portage) has been particularly active since 15 April 2020, when trading of the company’s common shares resumed on the Canadian Stock Exchange (CSE). This enabled Portage to focus on delivering on its goal to facilitate the delivery of the critical funding needed to enable turnkey execution of commercially-informed development plans. In line with this, Portage has since made noteworthy further investments in two of its portfolio companies after significant development milestones were reached. Post year-end, Portage announced a 100:1 share consolidation effective on 3 June 2020 and the raising of an additional $6.98m via a share issuance of 698,145 shares as announced on 26 June 2020, the proceeds of which allowed Portage to accelerate its programmes and take advantage of new value-creating opportunities.
On a note of caution, it would be remiss not to refer to the ongoing COVID-19 pandemic. Until there is greater clarity on the pandemic’s long-term consequences, concerns over its impact are likely to affect most of our investee businesses in some way; amongst other things, it is naturally a more challenging market for fundraising, which could delay the roll-out of future growth plans. At the same time, certain companies could or have prospered during the pandemic year.
Online gaming group Leap Gaming (Leap) is one such company, with daily turnovers increasing significantly as well as an exciting new business pipeline increasing by similar multiples. As an example of its high calibre work, on 1 April 2020 Leap announced that its strategic partner, IMG Arena (‘IMG’), was launching an official virtual tennis product jointly developed by the two companies. This first-ever officially branded virtual tennis product, which uses state of the art motion capture technology to create extremely realistic experiences for its customers, features logos from the ATP Masters 1000 series along with official tournament names, to deliver an authentic experience. This same partnership has enabled IMG to offer bookmakers a virtual sports betting product for the NASCAR US stock car racing series, as well as distributing the international betting streaming rights for the first time.
Post year-end in June 2020, Leap provided updates on the extension of two further partnerships, one with 888Sport and another with Stoixman/Betano. Leap has expanded its geographic footprint delivering a 123% year-on-year increase in gross gaming and a 95% year-on-year increase in revenues for January to May 2020 compared to the same period in 2019. The Board strongly believes these recent developments could increase the potential for liquidity opportunities in a very reasonable timeframe.
Not all our investments have experienced quite such a smooth ride. For example, our investee company Factom has experienced significant difficulties during the year and we took the prudent decision to write the value of the investment down to nothing. Subsequently, we have been working with Factom on a restructuring following their announcement of filing for Chapter 11 bankruptcy and, subject to Court approval, we have agreed to convert our SAFE into equity equivalent to 30.39% of the issued share capital of the company. Whilst there are still a number of factors to be resolved this at least gives us a meaningful stake in the business as it seeks to recapitalise and move forward. However, given our strategy is to invest across a broad range of companies, risk is spread appropriately.
As our financial statements highlight (click here to access the RNS release), there has been variation within the portfolio with regard to performance. Some of our investee companies have increased in valuation including EMMAC by £400,000 and Leap by £1.6m, both of which have performed particularly strongly. The rest of the portfolio can be seen in the valuation report below.”
FFWD: Medical cannabis a bright spot in FastForward Innovations results