Bakhu Holdings Corp (BKUH), a company focused on commercializing cannabis plant cell-extraction and replication technologies, has reported a decrease in total warrants during the nine months ended April 30, 2023. The total warrants have been reduced from 30,000,000 to 15,000,000, according to the amended agreement with Fourth and G Holdings, effective September 11, 2021. Despite the reduction in warrants, BKUH has maintained a stable office cost-sharing agreement with The OZ Corporation, a controlling stockholder of the company. This has led to space-sharing fees of $306,000 for both the nine months ended April 30, 2023, and 2022.
The company’s net operating loss carryforwards, which may be available for reducing future taxable income, have not been recognized in the financial statements. This is due to the determination that their realization is not likely to occur, leading to a valuation allowance being recorded for the deferred tax asset relating to these tax loss carryforwards.
Under the April 2020 strategic alliance agreement and related sublicense between BKUH’s subsidiary, CBD Biotech, and Integrity Cannabis Solutions (ICS), BKUH is obligated to issue shares of its common stock to ICS at a value equal to 0.5% of the outstanding shares as of the date of ICS’s production facility completion and commencement of production. Furthermore, if the sublicense is terminated, CBD Biotech must repay the initial $250,000 license fee to ICS and reimburse them for the cost of laboratory operational equipment used in the production facility.
As of April 30, 2023, the company had a net loss of $13,140,188 for the nine months ended, compared to $15,560,527 for the nine months ended April 30, 2022. The company has not generated any net revenues during the three and nine months ended April 30, 2023, and 2022, and it does not expect to generate revenues until it launches its proposed commercialization program.
To fund its activities during the next 12 months, BKUH estimates that it will require a minimum of approximately $8.5 million in external capital. This includes around $2.0 million for accounts payable, approximately $3.5 million under a promissory note payable for its licensed technology, and roughly $3.0 million for obligations due to a promissory note for advances that have funded its operations to date. The company is currently seeking between $10.0 and $20.0 million through the sale of convertible secured notes to reduce its liabilities and fund its proposed activities.
In conclusion, Bakhu Holdings Corp has managed a stable office cost-sharing agreement while reducing its total warrants. The company’s focus on commercializing cannabis plant cell-extraction and replication technologies has led to a net operating loss carryforward, but prospects for revenue generation remain once its commercialization program is launched.
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