Aftermath of the Battle of Bophelo: Akanda CEO Tej Virk May be the Latest Victim as Group Rakes in Losses After Exit from Africa
Ben Stevens, BusinessCann
9 January 2023 at 15:00:00
Akanda has dropped almost US$11 million in last six months and CEO Tej Virk has been placed on “paid leave of absence for administrative and personal reasons” as the Nasdaq-listed group struggles to find its way between European opportunity and destruction of shareholder value.
BusinessCann reports that 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 2022.
The international cannabis operator issued a press release on 21 December 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 30 June 2022, 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.”