Akanda (US:AKAN)2023-05-01 16:00Financial Performance - Bophelo generated sales revenue of $31,123 in the twelve-month period ended December 31, 2022, compared to $0 in 2021[27]. - Canmart generated sales revenue of approximately $101,778 in the twelve-month period ended December 31, 2022, up from $41,431 in 2021[27]. - RPK generated sales revenue of approximately $1,933,203 during the year ended December 31, 2022[27]. - Revenue for the year ended December 31, 2022, was $2,619,682, a significant increase from $41,431 in 2021, attributed to the acquisition of RPK and ramping up operations[220]. - Gross profit before loss on change in fair value of biological assets for 2022 was $2,053,430, compared to a gross loss of $1,591 in 2021[219]. - Total operating expenses for 2022 were $23,445,948, up from $2,568,560 in 2021, reflecting increased costs in various areas including consulting and personnel expenses[219]. - The net loss for the year ended December 31, 2022, was $(11,657,674), compared to a net loss of $(8,131,197) in 2021[219]. - The company reported a loss per share of $(0.39) for 2022, compared to $(0.50) in 2021[219]. - Operating loss for 2022 was $(20,176,389), significantly higher than $(2,570,151) in 2021, indicating increased operational challenges[219]. - The company experienced a gain on bargain purchase of $12,760,356 during the year, contributing positively to financial results[219]. Operational Challenges - The company incurred a consolidated net loss for the fiscal year ending December 31, 2022, primarily due to costs of listing and increased operating expenses[29]. - The company expects to require additional funding to maintain and expand operations, with no assurance that such funding will be available[28]. - Bophelo was placed into liquidation in July 2022, resulting in the derecognition of its net assets and accounting for its operating results as discontinued operations[31][32]. - Future acquisitions and strategic investments may be difficult to integrate and could dilute shareholder value[36]. - Future growth may be constrained by the ability to manage operational and financial systems effectively amid rapid expansion[64]. - The company is dependent on third-party suppliers and distributors, and any disruptions in these relationships could materially affect operations[57][58]. - The company may face challenges in obtaining future financing on acceptable terms, which could hinder product development and business operations[120]. Market and Industry Risks - The legal cannabis industry is at an early stage, with demand potentially influenced by scientific research, regulatory proceedings, and public perception[40]. - The medical cannabis industry is still in early stages, with limited clinical trials supporting its medical benefits, safety, and efficacy[45]. - The demand for pharmaceutical-grade cannabis is influenced by various uncontrollable social, political, and economic factors, making future growth uncertain[48]. - The company may face strong competition from existing and new market entrants, which could pressure market share and pricing[65]. - Legalization of recreational cannabis could negatively impact sales of medical cannabis products, increasing competition in the market[66]. - The company faces inherent risks related to product liability claims and recalls, which could adversely affect its financial condition[42][44]. Regulatory Environment - The company operates under a dynamic regulatory environment, which may require extensive changes to operations and increase compliance costs[107]. - The medicinal cannabis regulatory regime in the UK is restrictive and may change rapidly, creating operational uncertainty[87]. - Compliance with INFARMED, the Portuguese government agency, is mandatory, requiring audits for every batch of cannabis produced[93]. - The legal framework for cannabis in Portugal is governed by Law no. 33/2018 and Decree-Law no. 8/2019, which regulate the use of cannabis for medicinal purposes[94]. - Cannabis-based medicinal products can only be prescribed when conventional treatments are ineffective, and prescriptions must follow a special form approved by the Ministry of Health[95]. - The price of cannabis-based medicines is proposed by the holder of the authorization to INFARMED, referencing international market prices[97]. - The company faces ongoing costs related to regulatory compliance, with potential penalties for non-compliance that could adversely affect operations[104]. Strategic Initiatives - The company plans to expand its product offerings to include cannabis oils and extracts, aiming to produce consumer-branded cannabis products[41]. - The company is committed to researching and developing new markets and products, but there are no assurances that these efforts will be profitable[109]. - The company targets a 10% market share position in German medical cannabis imports, with plans for further expansion[158]. - The company entered into a cooperation agreement with Cansativa GmbH to supply the German market with dried flowers from its EU-GMP certified facility[156]. - A multi-year exclusive license agreement with Cookies allows the company to cultivate and distribute Cookies strains in Portugal, targeting both medical and future adult-use opportunities[175]. Shareholder and Financial Structure - A significant shareholder, Halo, owns approximately 12.7% of the company's outstanding Common Shares, potentially influencing corporate matters and decisions[123]. - Future sales and issuances of capital stock could result in substantial dilution for existing shareholders, affecting the price of Common Shares[124]. - The company incurs increased costs as a public entity, including legal and compliance expenses, which may impact operational efficiency[125]. - The concentration of ownership among executive officers and significant shareholders may limit the ability of other shareholders to influence corporate matters[132]. - The company has never declared or paid any cash dividends on its Common Shares and does not intend to do so in the foreseeable future[145].