Akanda Corp. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022, with 2021 comparisons. This is an annual filing, not a standalone 2022 fourth-quarter report. Financial statements are prepared under IFRS and presented in U.S. dollars unless otherwise noted.
Business context
Akanda is an early-stage medical cannabis cultivator, manufacturer and distributor operating principally through Canmart in the U.K. and RPK/Holigen in Portugal. In May 2022, it acquired Holigen, adding Portugal cultivation and EU-GMP-certified production. In July 2022, Bophelo in Lesotho was placed into liquidation; Akanda reported loss of control and classified its results as discontinued operations.
Financial results and position
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $2.620 million | $41,431 |
| Gross profit, including biological-asset fair-value gain | $3.270 million | $(1,591) |
| Operating loss | $(20.176) million | $(2.570) million |
| Net loss from continuing operations | $(8.235) million | $(2.474) million |
| Loss from discontinued operations | $(3.422) million | $(5.657) million |
| Total net loss | $(11.658) million | $(8.131) million |
| Cash used in operating activities | $(11.469) million | $(6.557) million |
- Revenue comprised $2.518 million from cultivation (RPK) and $101,778 from distribution (Canmart). The filing also reports $31,123 of Bophelo sales, presented within discontinued operations.
- Gross profit before the $1.216 million biological-asset fair-value gain was $2.053 million, or about 78% of revenue. The reported gross-profit figure includes that non-cash valuation gain.
- Operating expenses were $23.446 million, led by consulting and professional fees ($7.760 million), personnel ($6.594 million), general and administrative costs ($3.370 million), and depreciation and amortization ($3.598 million). The filing attributes the increase largely to the Holigen acquisition, operating ramp-up, listing and corporate costs.
- Other significant items included a $12.760 million bargain-purchase gain on the Holigen acquisition and a $516,281 fair-value loss on Flowr securities. The bargain-purchase gain materially reduced the continuing-operations loss.
- At year-end, cash was $228,794 and cash held in trust was $27,009; total current assets were $3.821 million against current liabilities of $9.348 million. Total assets were $38.997 million, liabilities $12.097 million and shareholders’ equity $26.900 million. Current liabilities exceeded current assets by about $5.527 million.
- Loans and borrowings totaled $3.569 million; lease liabilities were $330,821. Cash used in investing activities was $4.219 million and financing activities provided $14.139 million, including net IPO proceeds. Year-end cash and cash held in trust were substantially below the $3.495 million cash balance reported at the end of 2021.
- Basic and diluted loss per share was $(0.39), versus $(0.50) in 2021; continuing-operations loss per share was $(0.28), versus $(0.15). Weighted-average shares rose to 29.930 million from 16.224 million.
Material changes and outlook
- Revenue increased sharply, primarily because of the Holigen/RPK acquisition and greater Canmart sales activity. The business nevertheless remained loss-making and cash-consuming.
- Akanda raised $16.0 million gross in its March 2022 IPO, with approximately $14.655 million reported as net proceeds in the cash flow statement. It issued 1.9 million shares as part of the Holigen purchase consideration. Year-end shares outstanding were 34,637,379, before the March 2023 1-for-10 reverse split.
- Management described plans to expand Canmart’s sales channels and develop medical cannabis products in Europe. The filing cites a 1,000-kilogram supply agreement for German pharmacies through Cansativa and a right of first refusal on additional quantities; it does not provide formal revenue or earnings guidance. Management said it could not identify reliable trends because the company was still in its startup phase.
- The Sintra indoor facility was described as having 2,000 kilograms of annual production capacity. Capacity, sales agreements and market-share ambitions are plans or stated potential, not assurance of future results.
- The auditor issued an unqualified opinion on the 2022 IFRS financial statements but highlighted substantial doubt about Akanda’s ability to continue as a going concern. The company reported $11.469 million of operating cash outflow and said continued operations depend on future financing and/or generating cash from Canmart and Holigen. No firm financing commitment was disclosed.
- Risks include Bophelo’s ongoing liquidation and contested legal proceedings, potential claims involving former executives, cannabis licensing and regulatory uncertainty, customer concentration, foreign-exchange exposure, and the need for additional funding. One customer represented 85% of year-end receivables; Akanda recorded a $332,715 bad-debt expense.
- The filing says Canmart’s U.K. controlled-drug license renewal was pending with the Home Office, while Canmart continued operating under its existing license. Management reported disclosure controls and internal control over financial reporting as effective; the auditor did not provide an ICFR attestation because Akanda was an emerging growth company.
Important facts for investors to verify
- Current cash runway, near-term obligations and whether committed financing or operating cash generation is sufficient to address the going-concern uncertainty.
- Status and recoverability of amounts and assets tied to Bophelo, the liquidation challenge, and any related litigation or claims.
- Renewal status of Canmart’s U.K. license and continued validity of RPK’s EU-GMP certification and other operating approvals.
- Actual deliveries, collections and customer diversification under the Cansativa arrangement, including the concentration and collectability of receivables.
- Basis and continuing recoverability of the $22.209 million year-end intangible-asset balance, and the assumptions behind the $12.760 million bargain-purchase gain and biological-asset valuation.
- Share count and potential dilution after the reverse split, including outstanding restricted stock units and any subsequent financing.