Akanda (US:AKAN)2024-05-01 17:34Acquisitions and Sales - Akanda Corp. completed the acquisition of Cannahealth Limited on November 3, 2021, issuing 1,312,921 Common Shares at $10.00 per share, resulting in Halo owning approximately 68.3% of outstanding shares [171]. - The Holigen Acquisition closed on April 29, 2022, for a total consideration of $3,000,000 in cash and 190,000 Common Shares [175]. - On February 28, 2024, Akanda entered into a share purchase agreement to sell RPK for $2,000,000, completing the transaction on April 1, 2024 [189]. - The Company completed the sale of RPK to Somai Pharmaceuticals for a cash purchase price of $2,000,000, with Somai assuming approximately €4,000,000 in liabilities [206]. - The Company completed the transaction with Somai for the sale of RPK in April 2024, resulting in the discontinuation of previous cooperation agreements [216]. Financial Performance - Revenue decreased to $2,160,052 in 2023 from $2,619,682 in 2022, attributed to higher sales discounts and returns [281]. - Cost of sales increased significantly from $566,252 in 2022 to $1,908,515 in 2023, reflecting increased sales activities and marketing efforts [282]. - Gross profit fell to $111,449 in 2023 compared to $3,269,559 in 2022, impacted by the loss on the change in fair value of biological assets [283]. - Operating loss improved to $(10,051,373) in 2023 from $(20,176,389) in 2022, despite overall losses [291]. - Net loss from continuing operations was $(32,275,070) in 2023, compared to $(8,235,449) in 2022, primarily due to an impairment loss of $24,665,564 [291]. - Cash used by operating activities was $(1,500,574) in 2023, a decrease of $9,968,822 from $(11,469,396) in 2022 [295]. - Cash provided by financing activities was $1,486,567 in 2023, a significant change from $(12,652,069) in 2022 [295]. Capital Raising and Financing - The company raised approximately $708,000 from a registered direct offering of 280,851 Common Shares at $0.406 per share on February 2, 2024 [190]. - A subsequent registered direct offering on March 4, 2024, raised approximately $150,000 from the sale of 367,870 Common Shares at $0.20544 per share [191]. - In a subsequent underwritten public offering, the Company sold 3,087,443 Common Shares at $0.1217 per share and pre-funded warrants for 37,997,190 Common Shares, generating gross proceeds of $5,000,000 before expenses, with 20,085,234 pre-funded warrants exercised [193]. - The Company issued 280,851 common shares at $0.406 per share and 1,462,991 pre-funded warrants for gross proceeds of $708,000 on February 2, 2024 [307]. - On March 24, 2024, the Company entered into an underwriting agreement for the issuance of 3,087,443 common shares at $0.1217 per share, raising gross proceeds of $5,000,000 [312]. Operations and Production - Akanda's facilities in Portugal can produce approximately seven tonnes of high-THC cannabis annually, with THC levels consistently around 25% [176]. - RPK operates a 20,000 square foot indoor EU GMP certified grow facility in Portugal, yielding over 2,000 kg of premium cannabis flower annually, with over 25% of its production sold in Germany [204]. - The Company has established a partnership with Cansativa Group to supply the German market with dried flowers from its EU-GMP certified facility in Portugal [214]. - Canmart has successfully imported over 100 kg of cannabis products for distribution in the UK, operating under a Controlled Drug License [200]. - The Company plans to develop THC and CBD facilities in British Columbia, having made an initial non-refundable payment of $1,800,000 for the farming property [208]. Regulatory and Compliance - A Controlled Drug License is required for companies wishing to possess, supply, or produce controlled drugs, with licenses issued for specific drugs and locations [222]. - The U.K. Food Standards Agency regulates the sale of CBD products, which must comply with the Novel Food Regulation for safety and labeling [233][234]. - The Novel Food Regulation requires that a food product must not have been used for human consumption to a significant degree within the EU before May 15, 1997, to be classified as "novel" [235]. - Health Canada oversees the licensing process for cannabis-related activities, with no guaranteed timelines for application reviews [250]. - Security clearances are required for individuals in key positions within cannabis licensees, with the Minister of Health having discretion over approvals [251]. Corporate Governance and Management - The Company approved a new 30% evergreen 2024 Equity Incentive Plan during the annual shareholder meeting held on March 22, 2024 [194]. - The audit committee consists of three independent directors, ensuring compliance with Nasdaq standards [351]. - The compensation committee is responsible for evaluating executive performance and recommending compensation [352]. - The company follows Canadian corporate governance practices, which may differ from Nasdaq requirements [340]. - The company did not hold its annual shareholders meeting in fiscal year 2023, complying with a court order [347]. Employee and Executive Compensation - Total compensation for executive officers decreased from $2,656,958 in 2022 to $520,298 in 2023, a reduction of approximately 80.4% [330]. - The total compensation for the former Chief Executive Officer was $1,469,111 in 2022, significantly higher than the current interim CEO's compensation of $111,968 in 2023 [330]. - Non-executive directors will receive an annual retainer of $75,000, with additional compensation for committee service [331]. - The company has a total of 5 employees as of April 29, 2024 [361]. Miscellaneous - The Company is still in the startup phase and unable to identify recent trends in revenue or expenses [317]. - The Company has a new Chief Financial Officer, Gurcharn Deol, who has over 35 years of public company management experience [326]. - The Company entered into a settlement agreement for £30,000 with the former SVP of Finance to settle claims [316]. - A claim of CAD $271,990 was filed by the former CFO for unpaid salary and invoices, which the Company disputes [315].