Full Press Release Details
Condensed Interim Consolidated Statements of Financial Position
in United States Dollars)
| As at | June 30, | December 31, | |||||||||
| Note | 2023 | 2022 | |||||||||
| ASSETS | |||||||||||
| Current | |||||||||||
| Cash | $ | 443,338 | $ | 228,794 | |||||||
| Cash held in trust | - | 27,009 | |||||||||
| Trade and other receivables | 6 | 657,568 | 1,235,619 | ||||||||
| Prepayments | 336,985 | 199,488 | |||||||||
| Biological assets | 7 | 257,144 | 809,180 | ||||||||
| Inventory | 7 | 1,280,073 | 1,057,240 | ||||||||
| Marketable securities | 8 | 270,000 | 263,691 | ||||||||
| Total Current Assets | 3,245,108 | 3,821,021 | |||||||||
| Non-Current | |||||||||||
| Property, plant and equipment | 9 | 11,556,836 | 12,159,504 | ||||||||
| Intangible assets | 11 | 20,972,510 | 22,208,594 | ||||||||
| Loan receivable | 12 | 506,460 | 483,588 | ||||||||
| Right-of-use assets | 10 | 226,642 | 324,070 | ||||||||
| Total Non-Current assets | 33,262,448 | 35,175,756 | |||||||||
| Total Assets | $ | 36,507,556 | $ | 38,996,777 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current | |||||||||||
| Trade and other payables | $ | 8,460,194 | $ | 7,139,817 | |||||||
| Lease liability | 13 | 225,265 | 214,058 | ||||||||
| Loans and borrowings | 14 | 2,478,555 | 936,793 | ||||||||
| Holdback payable | 4 | 400,000 | 377,465 | ||||||||
| Due to related party | 16 | 811,905 | 679,617 | ||||||||
| Total Current Liabilities | 12,375,919 | 9,347,750 | |||||||||
| Non-Current | |||||||||||
| Lease liability | 13 | 19,831 | 116,763 | ||||||||
| Loans and borrowings | 14 | 2,462,763 | 2,632,103 | ||||||||
| Total Non-Current Liabilities | 2,482,594 | 2,748,866 | |||||||||
| Total Liabilities | 14,858,513 | 12,096,616 | |||||||||
| Shareholders' Equity | |||||||||||
| Share capital | 15 | 50,188,451 | 49,434,692 | ||||||||
| Other reserves | 15 | 21,053 | 21,053 | ||||||||
| Accumulated deficit | (26,965,844 | ) | (21,087,962 | ) | |||||||
| Accumulated other comprehensive income (loss) | (1,594,617 | ) | (1,467,622 | ) | |||||||
| Total Shareholders' Equity | 21,649,043 | 26,900,161 | |||||||||
| Total Liabilities and Shareholders' Equity | $ | 36,507,556 | $ | 38,996,777 |
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
in United States Dollars)
| Six months ended | |||||||||||
| June 30, | |||||||||||
| Note | 2023 | 2022 | |||||||||
| Sales | $ | 1,397,443 | $ | 73,096 | |||||||
| Cost of sales | 7 | 570,275 | 12,870 | ||||||||
| Gross Profit before gain on change in fair value of biological assets and inventory | 827,168 | 60,226 | |||||||||
| Gain on change in fair value of biological assets and inventory | 7 | 108,239 | 33,078 | ||||||||
| Gross Profit | 935,407 | 93,304 | |||||||||
| Operating expenses | |||||||||||
| Depreciation and amortization | 9, 10, 11 | 2,150,045 | 1,511,138 | ||||||||
| Consulting and professional fees | 2,205,504 | 2,366,997 | |||||||||
| Personnel expenses | 16 | 1,442,231 | 3,782,727 | ||||||||
| Share-based payment expenses to social development trust | 15, 16 | - | 2,174,908 | ||||||||
| General and administrative expenses | 958,814 | 1,175,647 | |||||||||
| Total operating expenses | 6,756,594 | 11,011,417 | |||||||||
| Operating loss | (5,821,187 | ) | (10,918,113 | ) | |||||||
| Other income: | |||||||||||
| Finance income | 20 | 747 | |||||||||
| Finance expense | (224,458 | ) | (36,606 | ) | |||||||
| Foreign exchange gain (loss), net | 152,775 | (180,990 | ) | ||||||||
| Gain on bargain purchase | 4 | - | 12,760,356 | ||||||||
| Gain on debt settlement | 10,422 | - | |||||||||
| Other income | 4,082 | 207 | |||||||||
| Change in fair value of financial assets measured at FVTPL | 8 | 464 | (472,311 | ) | |||||||
| (56,695 | ) | 12,071,403 | |||||||||
| Net income (loss) from continuing operations | (5,877,882 | ) | 1,153,290 | ||||||||
| Loss from discontinued operations | 5 | - | (3,747,034 | ) | |||||||
| Net loss | $ | (5,877,882 | ) | $ | (2,593,744 | ) | |||||
| Translation adjustment | (126,995 | ) | (1,019,498 | ) | |||||||
| Comprehensive loss | $ | (6,004,877 | ) | $ | (3,613,242 | ) | |||||
| Earnings (loss) per share from continuing operations - basic and diluted | 15 | $ | (1.46 | ) | $ | 0.43 | |||||
| Loss per share - basic and diluted | 15 | $ | (1.46 | ) | $ | (0.97 | ) | ||||
| Weighted average common shares outstanding | 15 | 4,029,293 | 2,683,544 |
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Condensed Interim Consolidated Statements of Shareholders' Equity
in United States Dollars)
| Note | Share capital | Contributed surplus | Other reserves | Accumulated deficit | Accumulated other comprehensive loss | Total | |||||||||||||||||||||
| Balance, December 31, 2021 | $ | 7,255,695 | $ | - | $ | 3,618,670 | $ | (13,293,889 | ) | $ | 218,102 | $ | (2,201,422 | ) | |||||||||||||
| Issuance of shares for Holigen Acquisition | 4, 15 | 16,131,000 | - | - | - | - | 16,131,000 | ||||||||||||||||||||
| Issuance of shares to ASDT | 15 | 2,174,908 | - | - | - | - | 2,174,908 | ||||||||||||||||||||
| Issuance of shares from private placement | 15 | 298,684 | - | - | - | - | 298,684 | ||||||||||||||||||||
| Issuance of shares from IPO | 15 | 14,682,078 | - | - | - | - | 14,682,078 | ||||||||||||||||||||
| Issuance of shares upon conversion of note | 15, 16 | 6,559,000 | - | - | - | - | 6,559,000 | ||||||||||||||||||||
| Loss of control of Bophelo Bio | 5 | (156 | ) | - | (3,597,619 | ) | 3,863,601 | (232,712 | ) | 33,114 | |||||||||||||||||
| Stock-based compensation | 15 | - | 576,340 | - | - | - | 576,340 | ||||||||||||||||||||
| Net loss | - | - | - | (2,593,744 | ) | - | (2,593,744 | ) | |||||||||||||||||||
| Translation adjustment | - | - | - | - | (1,019,498 | ) | (1,019,498 | ) | |||||||||||||||||||
| Balance, June 30, 2022 | $ | 47,101,209 | $ | 576,340 | $ | 21,051 | $ | (12,024,032 | ) | $ | (1,034,108 | ) | $ | 34,640,460 | |||||||||||||
| Balance, December 31, 2022 | $ | 49,434,692 | $ | - | $ | 21,053 | $ | (21,087,962 | ) | $ | (1,467,622 | ) | $ | 26,900,161 | |||||||||||||
| Fair value of RSUs issued at $1.84 per share | 15 | 774,736 | - | - | - | - | 774,736 | ||||||||||||||||||||
| Fair value of RSUs issued at $1.11 per share | 15 | 179,037 | - | - | - | - | 179,037 | ||||||||||||||||||||
| Cancelled shares | 15 | (200,014 | ) | - | - | - | - | (200,014 | ) | ||||||||||||||||||
| Net loss | - | - | - | (5,877,882 | ) | - | (5,877,882 | ) | |||||||||||||||||||
| Translation adjustment | - | - | - | - | (126,995 | ) | (126,995 | ) | |||||||||||||||||||
| Balance, June 30, 2023 | $ | 50,188,451 | $ | - | $ | 21,053 | $ | (26,965,844 | ) | $ | (1,594,617 | ) | $ | 21,649,043 |
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Condensed Interim Consolidated Statements of Cash Flows
in United States Dollars)
| Six months ended June 30, | |||||||||||
| Note | 2023 | 2022 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss from continuing operations | $ | (5,877,882 | ) | $ | 1,153,290 | ||||||
| Net loss from discontinued operations | - | (3,747,034 | ) | ||||||||
| Net loss for the period | (5,877,882 | ) | (2,593,744 | ) | |||||||
| Adjustments for non-cash items: | |||||||||||
| Loss on loss of control of Bophelo Bio, net of cash surrendered | - | 2,571,054 | |||||||||
| Gain on bargain purchase | 4 | - | (12,760,356 | ) | |||||||
| Share based payments to social development trust | 15 | - | 2,174,908 | ||||||||
| Depreciation and amortization | 9, 10, 11 | 2,150,045 | 1,685,038 | ||||||||
| Change in fair value of biological assets | 7 | (108,239 | ) | - | |||||||
| Change in fair value of financial asset at fair value through profit or loss | 8 | (464 | ) | 472,311 | |||||||
| Stock-based compensation | 15 | - | 576,340 | ||||||||
| Interest expenses | 219,936 | 122,829 | |||||||||
| Fair value of RSU's exercised, net of cancelled shares | 15 | 753,759 | - | ||||||||
| Gain on settlement on debt | (10,422 | ) | - | ||||||||
| Working capital adjustments (net of amounts acquired/disposed): | |||||||||||
| Trade and other receivables | 599,081 | (118,397 | ) | ||||||||
| Prepayments | (129,786 | ) | (932,981 | ) | |||||||
| Inventory | 467,285 | - | |||||||||
| Trade and other payables | 1,025,203 | 330,065 | |||||||||
| Due to related parties | - | 119,212 | |||||||||
| Cash flows used in operating activities | (911,484 | ) | (8,353,721 | ) | |||||||
| Cash flows from investing activities: | |||||||||||
| Acquisition of Holigen, net of cash acquired and holdback | 4 | - | (2,366,593 | ) | |||||||
| Purchase of financial assets at fair value through profit or loss | 8 | - | (801,160 | ) | |||||||
| Additions to property, plant and equipment | 9 | (1,935 | ) | (263,391 | ) | ||||||
| Cash surrendered on loss of control of Bophelo Bio Sciences | 5 | - | (800,794 | ) | |||||||
| Cash flows used in investing activities | (1,935 | ) | (4,231,938 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from IPO, net of costs | - | 14,654,593 | |||||||||
| Proceeds from private placement, net of costs | - | 278,482 | |||||||||
| Loans received | 1,495,597 | 495,665 | |||||||||
| Loans repaid | (221,063 | ) | (189,892 | ) | |||||||
| Lease payments | (60,000 | ) | (596,522 | ) | |||||||
| Cash flows provided by financing activities | 1,214,534 | 14,642,326 | |||||||||
| Net increase in cash and cash equivalents | 301,115 | 2,056,667 | |||||||||
| Effects of exchange rate changes on cash and cash equivalents | (113,580 | ) | (1,148,843 | ) | |||||||
| Cash and cash equivalents at the beginning of the period | 255,803 | 3,495,390 | |||||||||
| Cash and cash equivalents at the end of the period | $ | 443,338 | $ | 4,403,214 |
accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
Notes to the Unaudited Condensed Interim Consolidated
Financial Statements
in United States Dollars)
Corp. (the "Company") is domiciled in Canada and was incorporated on July 16, 2021. The Company's registered office
is 77 King Street West, Suite 400, Toronto-Dominion Centre, Toronto Canada, Ontario, M5K 0A1.
to the liquidation event on July 15, 2022 described below, the Company, through its indirectly held subsidiary, Bophelo Bio Science and
Wellness (Pty) Ltd. is in the business of cultivating and manufacturing cannabis biomass and medical cannabis products in Lesotho (specifically
near Ts'akholo, in the Mafeteng district of the Kingdom of Lesotho, Southern Africa), for export to international markets. At December
31, 2022, the Company determined that it no longer controlled Bophelo Bio Science and Wellness (Pty) Ltd. as a result of the insolvent
liquidation order signed by the Lesotho Court on July 15, 2022 (note 5). As a result of the loss of control, the Company derecognized
all assets and liabilities at their book values on December 31, 2022 and wrote down all balances receivable from the entity to $nil.
During the year ended December 31, 2022, the Company recorded a loss on loss of control of Bophelo Bio Science and Wellness (Pty) Ltd.
of $2,085,624, which included $739,947 of cash held by Bophelo Bio Science and Wellness (Pty) Ltd. The Company accounted for the
operating results of Bophelo Bio Science and Wellness (Pty) Ltd. which was a net loss of $1,336,601 as a discontinued operation during
the year ended December 31, 2022 and has reclassified the operating results of Bophelo Bio Science and Wellness (Pty) Ltd. as a discontinued
operation for the year ended December 31, 2021. At the date of these condensed interim consolidated financial statements, the liquidation
of Bophelo Bio Science and Wellness (Pty) Ltd. is still ongoing. The Company is also in the business of sales and distribution of cannabis-based
products for medical use, through its subsidiary Canmart Ltd. ("Canmart") which is based in the UK.
Company was incorporated for the designed purpose of becoming the ultimate parent company of Cannahealth Ltd. ("Cannahealth"),
through a reorganization of entities with common control. The share purchase agreement became unconditional on or about November 3, 2021
and the Company acquired the shares in the aforementioned entities from Halo Collective Inc. ("Halo").
April 29, 2022, the Company, through its wholly owned subsidiary, Cannahealth, acquired 100% of the Ordinary Shares of Holigen Limited
("Holigen") and its wholly-owned subsidiary, RPK Biopharma Unipessoal, LDA ("RPK") from the Flowr Corporation
Company's condensed interim consolidated financial statements have been prepared on a going concern basis which assumes that the
Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.
The Company incurred a net cash outflow of $911,484 from operating activities for the six months ended June 30, 2023. As of June
30, 2023, the Company had working capital deficit of $9,130,811 and has accumulated losses of $26,965,844. The continuing operations
of the Company are dependent upon its ability to raise further cash funding by way of issuing debt and/or equity, as well as its ability
to generate cash profits from its investments in Canmart and Holigen Ltd. in the near future.
Company is an early-stage company and is primarily dependent on externally provided financing to continue as a going concern. Additional
funds will be required to enable the Company to pursue such an initiative and the Company may be unable to obtain such financing on satisfactory
terms. Furthermore, there is no assurance that the Company will be profitable. Management intends to finance operating costs over the
next twelve months with its cash on hand, and/or additional cash that will be generated from operations. The Company does not at this
stage have any firm plans or commitments regarding further financing.
uncertainties may cast significant doubt upon the Company's ability to continue as a going concern. These condensed interim consolidated
financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities which
might be necessary should the Company be unable to continue in existence.
Notes to the Unaudited Condensed Interim Consolidated
Financial Statements
in United States Dollars)
condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations
issued by the International Financial Reporting Interpretations Committee ("IFRIC").
condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS")
34 Interim Financial Reporting and have been prepared using the same accounting policies and methods of application as those used in
the Company's audited consolidated financial statements for the year ended December 31, 2022. These condensed interim consolidated
financial statements do not include all of the information required for full annual consolidated financial statements and should be read
in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022.
condensed interim consolidated financial statements have been prepared on an accrual basis, except for cash flow information, and are
based on the historical cost, modified where applicable and related to the valuation of certain financial assets and financial liabilities
and its subsidiaries, Bophelo Holdings Ltd, Bophelo Bio Science and Wellness (Pty) Ltd, and Canmart were under the common control of
Halo until the acquisition by the Company had occurred. As of November 2021, shareholdings in each of the three separate entities were
made consistent through the issuance of shares or the repurchase of shares for cash to the relevant shareholders (the Reorganization
Transactions'). As of November 2021, shareholdings in each of the four entities were identical. When the Company was formed in
July 2021 with a view to ultimately acquiring Cannahealth and its subsidiaries, its majority shareholders were also consistent with each
of the three existing entities. Therefore, immediately prior to the acquisition, the majority shareholder ownership of the Company and
Cannahealth were demonstrated common control, and immediately after the acquisition, the shareholdings held in the Company by each individual
shareholder were also identical.
Company performed an assessment and determined Bophelo Bio Science and Wellness (Pty) Ltd to be the predecessor entity to the Company,
and that the corporate restructuring in which Akanda became the parent company did not have economic substance. As such, in preparing
the Company's condensed interim consolidated financial statements, the Company accounted for the acquisition in as a transaction
between entities under common control combining the Company and Cannahealth from the earliest reporting date using the pooling
of interests method' of accounting, where assets for the Companies that came under common control were transferred into the consolidated
group at the book value on the date in which common control was achieved.
the acquisition described above, shares were issued to existing shareholders for no consideration. Therefore, the number of shares outstanding
was increased without an increase in resources. The number of shares outstanding before the exchange have been adjusted for the change
in shares as if the issuance had occurred at the beginning of the earliest period presented. All share and per share information presented
herein has been retrospectively adjusted to give effect to the culmination of the reorganization and the issuance of shares on incorporation
of Akanda on January 1, 2019.
Notes to the Unaudited Condensed Interim Consolidated
Financial Statements
in United States Dollars)
Company and its subsidiaries are measured using the currency of the primary economic environment in which each subsidiary operates -
the functional currency. The Euro is the functional currency of RPK, Holigen and Cannahealth, Great British Pounds is the functional
currency of Canmart and Canadian Dollars is the functional currency of 1371011 and Akanda while the United States Dollars is its reporting
condensed interim consolidated financial statements are prepared and presented in United States Dollars ("USD" or "$"),
which is the Company's reporting currency. All financial information has been rounded to the nearest dollar except where indicated
preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make estimates, judgements
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses
during the year. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimates are revised and in any future periods affected. Areas in which management has made critical judgments
in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated
financial statements include the determination of the Company's and its subsidiaries' functional currencies. Information
about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying