The international medical cannabis company informed investors this week that it expects to push through a 1-40 reverse stock split on its ordinary shares, effective May 23, 2024.
This will mark the second time the company has employed such a strategy to bump up its share price in the wake of a non-compliance notice, which threatens to see its stock delisted from the NASDAQ stock market if not rectified.
It also marks the third non-compliance notice from the exchange. Previously, the non-compliance issues were in regard to Akanda’s share price, which is required to remain above $1 per share on a consistent basis.
However, on May 16, NASDAQ warned the company that it must ‘maintain a minimum stockholders equity of $2.5m’.
Stockholders’ equity is a calculation of the overall value of a company that belongs to its shareholders, deducting total liabilities from the total value of its assets.
According to Akanda’s latest financial figures, also published last week, the stockholders equity as of December 31, 2023 was -$3.8m, meaning its liabilities now outweigh its assets.
Its full-year results for 2023 paint a concerning picture of the company’s finances. For the year, Akanda reported sales of $2.2m, down from $2.6 a year earlier.
Operating losses halved from $20.2m in 2022 to $10m last year, but net losses increased significantly to $32.3m from $11.7m a year earlier.
This deficit appeared to be in relation to a $24.7 ‘impairment loss’, including the liquidation of subsidiaries Bophelo and the sale of RPK Biosciences.
The company’s total assets now sit at $8.8m, while total liabilities top $12.6m.
In the days following the publication of its financial results, Akanda announced a new share offering of 2,491,381 common shares at a price of $0.1031 per share, raising a total of $1.5m, below the $2.5m it hoped to raise.
Elsewhere, the company announced the resolution of its legal dispute with former CEO Tejinder Virk, who took the company to court amid contractual disagreements which saw him resign in February 2023.
While the two parties have now agreed on an undisclosed settlement, this marks the latest in a staggering five such legal disputes Akanda has been involved in with former staff members since 2022.
