20-F: BYND Cannasoft Enterprises Inc. Reports Financial Results for Fiscal Year Ended December 31, 2023

BYND Cannasoft Enterprises Inc. reported a net loss of $18.5 million for the fiscal year ended December 31, 2023, amid strategic shifts in its cannabis and CRM operations.

Summary

• BYND Cannasoft Enterprises Inc. reported a net loss of $18,495,121 for the fiscal year ended December 31, 2023, compared to a net loss of $1,664,684 in the previous year.
• The company's revenue for 2023 was $1,076,861, a slight decrease from $1,123,072 in 2022, primarily due to decreased revenues from support services and software licenses.
• Cost of revenues increased to $678,305 in 2023 from $506,500 in 2022, mainly due to increased salaries and benefits.
• General and administrative expenses increased to $1,254,089, primarily due to higher compensation to senior management and directors.
• Professional fees increased to $1,739,430, mainly due to increased fees in financial advisory, M&A, and corporate finance.
• Consulting and marketing expenses significantly increased to $1,387,628 due to increased investor and public relations and digital marketing expenses.
• Research and development expenses increased to $836,833 due to the development of the EZ-G Device.
• The company recognized impairment losses of $13,142,480 due to impairment of intangible assets and assets under construction.
• As of December 31, 2023, the company's cash balance was $3,113,934.
• The company completed a reverse stock split of 1:190 on March 22, 2024.
• The company is actively searching for opportunities outside of Israel in the CBD and medical cannabis space for collaborations or acquisitions.

Sentiment

Score: 3

Explanation: The document presents a negative financial picture due to increased losses and impairment charges, although there are some positive aspects such as the recent capital raise and ongoing search for strategic opportunities.

Positives

• The company completed the required development work for the New CRM Platform and implementation of the final product has been executed successfully with two of its customers.
• The company is actively searching for opportunities outside of Israel in the CBD and medical cannabis space for collaborations or acquisitions.
• The company closed a firm commitment underwritten U.S. public offering with gross proceeds to the Company of approximately US$7,000,000 on March 14, 2024.

Negatives

• The company reported a significant net loss of $18,495,121 for the fiscal year ended December 31, 2023.
• The company's revenue decreased slightly from the previous year.
• The company recognized substantial impairment losses of $13,142,480.
• The company's board of directors took the decision to suspend activities related to construction of the Company's planned cannabis growing facility.
• The company is dependent on a single client for the majority of its current revenues.

Risks

• The company's cannabis business is dependent on obtaining the final license to engage in medical cannabis from the MCU and receiving certain licences and certain GSP and GAP certifications.
• The Israeli cannabis market has experienced a very significant upheaval in recent years, and most of the negative impact was done to the growing farms considering the opening of cannabis import channels to Israel.
• The company may experience breaches of security at its facilities or in respect of information systems, electronic documents and data storage.
• The company's operations are conducted in Israel, and conditions in Israel, including the recent attack by Hamas and other terrorist organizations and Israels war against them, may affect our operations.

Future Outlook

The Company is actively searching for opportunities outside of Israel in the CBD and medical cannabis space for collaborations or acquisitions. The Companys board of directors intends to revisit the suspension of the cannabis growing facility later this year.

Industry Context

The document notes significant consolidation in the Israeli cannabis market, with many farms closing due to economic unfeasibility, reflecting broader challenges in the global cannabis industry.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or benchmarks.
• The document does not list specific comparible companies, projects, and results.

Related Party Transactions

• During the fiscal year ended December 31, 2023, the Company paid management, consulting and director fees in the aggregate amount of $1,874,710 to its President, CEO, CFO, CTO and three directors.
• As at December 31, 2023, $843 was owed from a shareholder of the Company.
• As at December 31, 2023, $450,048 was owed to directors of the Company for management, consulting and director fees.
• On April 27, 2023, the Company granted 53 stock options post reverse split to a director.
• On April 27, 2023, the Company granted 231 RSUs post reverse split to two directors.
• On August 8, 2023, the Company granted 474 stock options post reverse split to three directors.
• On August 8, 2023, the Company granted 146 RSUs post reverse split to two directors.
• On December 31, 2023, the Company granted 490 RSUs post reverse split to a director and a consultant.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances.
• Employees may be affected by the company's cost-cutting measures and strategic shifts.
• Customers of the CRM software may experience changes in service offerings as the company focuses on new platforms.
• Suppliers and creditors may be impacted by the company's financial performance and ability to meet its obligations.

Next Steps

• The Company intends to use the net proceeds from the recent offering primarily for product design and manufacturing of the EZ-G Device, sales and marketing campaigns, patent prosecution and working capital.
• The Companys board of directors intends to revisit the suspension of the cannabis growing facility later this year.

Key Dates

Keywords

Cannabis, CRM, Software, EZ-G Device, Financial Results, BYND Cannasoft, Impairment, Revenue, Net Loss