Akanda unveiled its unaudited financial figures for the six months to the end of June 2022, two weeks after revealing that its CEO has been on ‘paid leave of absence’ since November.
The international cannabis operator issued a press release on December 21, 2022, revealing that its CEO Tej Virk has been on ‘both administrative and personal’ leave since the start of December.
It is understood that all of Mr Virk’s responsibilities as CEO have been passed along to Katie Field ‘together with other directors’, who will provide interim management.
Little detail was given about the reasons behind Mr Virk’s leave of absence, other than it was ‘pending an independent investigation being conducted by (Akanda’s subsidiary) Canmart directors and council’.
In its ‘unaudited condensed consolidated statements of financial position’, filed with the SEC this week, Akanda reported an operating loss of US$10.9m in the six months to June 2022, up from a loss of $143.5k in the previous six-month period.
This reflected sales of $73k, up from $3.9k, and gross profits of $93.3k, up from a loss of $1.9k in the six months to the end of December 2021.
It is understood that a major chunk of Akanda’s comprehensive losses from the period, which totalled $3.6m, up from $1.9m, are due to the loss of control of its Bophelo subsidiary in Lesotho.
In November 2022, BusinessCann reported that Akanda had made the decision to ‘cease involvement in Bophelo’s Lesotho operations’, following an extended legal battle with its former Executive Chairman Louisa Mojela.
Ms Mojela has been accused by Akanda of filing the ‘unauthorised’ application ‘without Akanda’s prior authorisation, knowledge or consent’ with the Lesotho High Court to place Bophelo into liquidation.
According to its recently published financial statements, Akanda had ‘determined that it no longer controlled Bophelo by June 30, and has therefore factored its liquidation into its reporting.’
“As a result of the loss of control, the Company derecognized all assets and liabilities at their book values on June 30, 2022 and wrote down all balances receivable from the entity to nil. During the six months ended June 30, 2022, the Company recorded a loss on loss of control of Bophelo Bio Science and Wellness (Pty) Ltd. of $2,338,342, which included $800,794 of cash held by Bophelo Bio Science and Wellness (Pty) Ltd.”
The CBD retailer also revealed its full year results for the year ended August 2022 over the Christmas period, stating that it had been a ‘difficult full year’ for the company.
BusinessCann has previously reported that the sales of Cellular Goods inaugural product range, which went live on December 1, 2021, had hit just over £13k by the end of February.
According to its most recent financial statement, sales in the full year to the end of August 2022 were just £28.9k.
This suggests that sales since February, which Cellular Goods previously described as ‘disappointing’, had slowed, totalling £15.8k in the six months from February to August.
Furthermore, the company’s total loss for the year nearly doubled from £3.3m to £5.9m, while its total assets halved from £10.5m in 2021 to £4.8m.
Investors have previously criticised the company’s advertising expenditure, criticisms which now appear to have been exacerbated by the poor growth in sales.
Cellular Goods sought to address this in their recent statement, arguing that its increased marketing expenditure in the second half is ‘essential for fostering brand recognition and loyalty for long term growth’.
However, it conceded that ‘it takes time for these types of marketing activities to translate into significant revenues and product sales within the premium beauty segment due to entrenched consumer habits.’
This meant that its campaign ‘generated disappointingly low revenue growth during the year’.
Meanwhile, the company pointed to the ‘operating environment for CBD and CBG-infused beauty products’ in the UK for its slow sales, arguing that its is ‘impacted by a glut of niche brands and products from many companies with subscale operations and resources’, prompting ‘fierce competition for both online and offline retail space as well as for consumer ‘mindspace’, leading to cannabinoid confusion, fragmentation and fatigue, thereby slowing adoption of new products.’
In an effort to stem its growing losses, Cellular Goods says it has taken ‘remedial measures’ which include a 56% reduction in its overall cash cost base, ‘achieved through lower management and staff costs’.
Oxford Cannabinoid Technologies
Oxford Cannabinoid Technologies has seen a dramatic surge in its stock price since December 15, seeing its stock return above 1p for the first time since August 2022.
Excitement in the stock seems to have been building since the departure of its former CEO Dr John Lucas in early December, with the promise of Phase 1 trials beginning in January.
While news that OCT’s former COO Clarissa Sowemimo-Coker was stepping in to take over as interim CEO saw its shares perk up around 20%, since December 23 its shares have skyrocketed over 70% from 0.61p to 1.07p at the time of writing.
This week (January 5), the company announced that it has now submitted its clinical trials application for its lead programme to the MHRA, with a review meeting due to take place on January 11.
OCT reaffirmed that its human trials are expected to start in Q1 this year, and complete within Q2.
Ms Sowemimo-Coker said: “This submission is a very significant milestone for both the Company and its shareholders, as OCTP advances from a pre-clinical stage pharmaceutical company to a clinical stage pharmaceutical company.
“It moves us substantially closer to achieving our core aim of helping patients suffering from debilitating pain to feel better and have an improved quality of life, whilst also, ultimately, delivering value for shareholders.”