TIDMAPOL
Apollon Formularies PLC / EPIC: APOL / Market: AQUIS / Sector: Biotechnology
29 September 2023
APOLLON FORMULARIES PLC
("Apollon" or the "Company")
Interim Results
Apollon Formularies plc (AQUIS: APOL, "Apollon" or the "Company"), a UK based
international medical cannabis pharmaceutical company trading on Aquis Stock
Exchange, is pleased to report its interim results for the period ended 30 June
2023.
I am pleased to provide shareholders with Apollon's unaudited interim results
for the six months ended 30 June 2023 and update on the progress that the
Company has made, and continues to make, as it takes steps to transition towards
serving a wider global market. Building on the success of 2022, we achieved some
important milestones in new international jurisdictions in the first half of
2023.
Intellectual Property Licensing
During the first quarter, Apollon has focused on licensing its intellectual
Property (IP) portfolio along with its proprietary formulations and patient
protocols to international strategic partners.
In January 2023, Apollon announced that it had granted an exclusive Licensing
Agreement with Global Hemp Group (CSE: GHG) for North America (USA, Canada and
Mexico). Under the terms of this exclusive license agreement, Global Hemp Group
paid Apollon a fee of USD$250,000 (CAD$341,000) and issued 10 million common
shares in GHG to Apollon for a total consideration of CAD$491,000. In addition,
GHG will pay Apollon an ongoing royalty of 10% of gross revenue derived from sub
-licenses and products stemming from this exclusive license agreement.
Subsequently, GHG extended its exclusive license agreement to include the
European Union with extension to Morocco and Israel under the same royalty
terms. GHG has completed and announced its first US sublicense under this
agreement.
Post-Period
In July 2023, Apollon announced the granting of an exclusive license agreement
to PureCann Pty Ltd., for the territory of South Africa. Under the terms of this
agreement, PureCann paid Apollon an upfront exclusive license fee of £100,000.
In addition, PureCann will pay Apollon an ongoing royalty of 6% on gross sales
from products stemming from this exclusive license agreement. The license
agreement with PureCann allows for continued expansion into Africa, which
represents a significant development for the Company as it provides access to
South Africa and the Southern African Development Community (SADC), comprising
of 16 member states with the potential to reach over 350 million people and
eventually the entire African continent as more countries legalise medicinal
cannabis with an extended addressable market of over 1.4 billion people.
PureCann intends to roll out a significant dispensary network providing cannabis
based medicinal products with Apollon products forming the cornerstone of their
business. Apollon stands to benefit greatly from PureCann's current network
where Purecann has contractual agreements with multiple GACP/GMP cultivators,
where together we would have access to high-quality low-cost biomass reducing
input costs dramatically across the production chain. PureCann also has access
to two GMP extraction facilities meaning they can fully produce a complete range
of certified cannabis based medicinal products'(CBMP's) for use locally within
South Africa, but also for export markets within Africa with medium term goals
to export back into Europe where together we would have a competitive advantage
on cost across the board from plant to patient.
In September 2023, the Company signed a letter of intent with Supernature Co.,
Ltd for an Exclusive License Agreement for Thailand. Both Apollon and
Supernature are currently working on the terms of the final Exclusive Licence
Agreement which will be announced to the market in due course.
Asset Purchase
On September 12, 2023, Apollon announced a new executed binding Letter of Intent
("LOI") with Sproutly Canada, Inc. (CSE: SPR). Sproutly is a Canadian public
company specialising in proprietary natural biologics drug discovery utilising a
proprietary technique known as Aqueous Phytorecovery Process (APP), which
extracts high-quality phytonutrients in their complete and proportional
profiles. As applied to cannabis, APP can produce water-soluble cannabis
solutions that can be stably formulated into medicinal products and traditional
beverages without the use of artificial chemical and/or physical means to keep
the cannabinoids dissolved in the water base.
The combination of Apollon's AI based therapeutic product formulation with
demonstrated success in pre-clinical and clinical testing, clinical trial
capability, manufacturing and production laboratories, with Sproutly's APP
technology and natural water-soluble ingredients, creates a unique opportunity
to develop, new natural biologic therapeutic products with increased
bioavailability, faster therapeutic response times, lower patient dose
requirements and increased product shelf life.
The binding LOI, allows Sproutly to acquire the assets of Apollon pursuant to an
Asset Purchase Agreement. In exchange for the assets of Apollon, Sproutly will
issue to Apollon a sufficient number of Sproutly shares so that Apollon will own
49% of the enlarged share capital of Sproutly, post-transaction. If the
transaction takes place with the number of outstanding Sproutly shares as are
currently in issue, and at an anticipated deemed price of CAD$0.02 (the price at
which the trading of common shares of Sproutly was suspended), the effective
valuation of the Apollon's assets will be CAD$7million (approximately
£4.2million). If the number of Sproutly shares increases between now and the
date of the transaction, the number of shares to be issued to Apollon will
increase accordingly.
Sproutly and Apollon have granted each other a 60-day option to conduct due
diligence, following which, if agreed to by both companies, the asset
acquisition will be completed. The due diligence period may be shortened by
mutual agreement. It is understood by the parties that Sproutly must complete
one or more audits and take other legal and regulatory steps (the "Steps") to
again become active and trading on the Canadian Securities Exchange ("CSE"). The
Steps will proceed simultaneously with the due diligence period and the
preparation and finalisation of necessary transaction agreements for a closing
(the "Closing") of the transaction.
Outlook
The first half of 2023 was a busy and successful period for Apollon, and we are
excited about the Company's prospects as we look towards 2024.
We are working extensively on ways in which to access the global market, by
expanding our current capabilities to contract manufacturing in international
GMP facilities in addition to the manufacturing, production operations and
export opportunities we have currently in Jamaica. The Company is working
closely with our international partners to produce and distribute Apollon's
proprietary formulations. We will keep the market updated with any new
developments.
We would like to thank our shareholders for their continued support and
investment as we continue to work towards our goal of becoming the premier
global medical cannabis and medicinal mushroom company in oncology and chronic
pain.
Financials
For the six-month period ended 30 June 2023 the Group is reporting a loss of
£763,796 (six months ended 30 June 2022: loss £212,436).
The interim report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Stephen D Barnhill M.D
Chairman
29 September 2023
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside
information for the purposes of Article 7 of Regulation (EU) No 596/2014 until
the release of this announcement.
The Directors of the Group accept responsibility for the contents of this
announcement.
For further information please visit www.apollon.org.uk or contact:
Apollon Formularies
Tel: +44 771 198 0221
Stene Jacobs stene@apollon.org.uk
Peterhouse Capital Limited (Corporate Adviser)
Tel: +44 207 220 9795
Guy Miller gm@peterhousecapital.com
BlytheRay (Financial PR/IR-London)
Tel: +44 207 138 3204
Tim Blythe/Megan Ray apollon@blytheray.com
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 6 months to 30 6 months to 30
June 2023 June 2022
Unaudited£ Unaudited£
Continuing operations
Revenue 47,551 165,053
Administration (450,625) (535,889)
expenses
Foreign exchange (91,533) 203,786
Operating loss (494,607) (167,050)
Share on loss from - (45,386)
associate
Other gains/(losses) 8 (273,171) -
Finance costs 3,982 -
Loss before tax for (763,796) (212,436)
the period
Tax - -
Loss for the period (763,796) (212,436)
Total comprehensive (763,796) (212,436)
income for the period
Total comprehensive (763,796) (212,436)
income for the period
attributable to equity
holders
Earnings per share
from continuing
operations
attributable to the
equity owners of the
parent
Basic and diluted 5 (0.1)p (0.03)p
(pence per share)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes As at30 June As at31 As at30 June
2023 December 2022 2022
Unaudited£ Audited£ Unaudited£
Non-Current
Assets
Intangible 7 - - 384,056
Assets
Available for 8 15,485 - -
Sale
Investments
Investments in 6 2,829,140 2,996,788 2,625,721
associate
2,844,625 2,996,788 3,009,777
Current Assets
Trade and other 677,267 593,262 645,283
receivables
Cash and cash 50,934 389 2,653
equivalents
728,201 593,651 647,936
Asset held for 7 384,056 384,056 -
Sale
Total Assets 3,956,882 3,974,495 3,657,713
Current
Liabilities
Trade and other 9 1,842,475 1,096,292 619,442
payables
1,842,475 1,096,292 619,442
Total 1,842,475 1,096,292 619,442
Liabilities
Net Assets 2,114,407 2,878,203 3,038,271
Equity
Share premium 54,671,250 54,671,250 54,338,863
Share option 85,363 85,363 85,363
reserve
Reverse (47,030,385) (47,030,385) (47,030,385)
acquisition
reserve
Retained losses (5,611,821) (4,848,025) (4,355,570)
Total Equity 2,114,407 2,878,203 3,038,271
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Note Share Share Reverse Retained Total
premium£ option Acquisition losses£ equity£
reserve£ Reserve£
Balance as at 54,050,764 85,363 (47,030,385) (4,143,134) 2,962,608
1
January 2022
Loss for the - - - (212,436) (212,436)
period
Other
comprehensive
income for
the year
Items that
may
be
subsequently
reclassified
to
profit or
loss
Total - - - (212,436) (212,436)
comprehensive
income for
the year
Share issue 288,099 - - - 288,099
Total 288,099 - - - 288,099
transactions
with
owners,
recognised in
equity
Balance as at 54,338,863 85,363 (47,030,385) (4,355,570) 3,038,271
30 June 2022
Balance as at 54,671,250 85,363 (47,030,385) (4,848,025) 2,878,203
1
January 2023
Loss for the - - - (763,796) (763,796)
period
Other
comprehensive
income for
the year
Items that
may
be
subsequently
reclassified
to
profit or
loss
Total - - - (763,796) (763,796)
comprehensive
income for
the year
Total - - - - -
transactions
with
owners,
recognised in
equity
Balance as at 54,671,250 85,363 (47,030,385) (5,611,821) 2,114,407
30 June 2023
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Notes 6 months to 30 6 months to 30
June June 2022
2023Unaudited£ Unaudited£
Cash flows from operating
activities
Operating loss (763,796) (212,436)
Adjustments for:
Loss from associate - 45,386
Finance costs 10 5,856 -
Decrease in trade and (87,005) (284,626)
other receivables
Increase/(decrease) in 722,658 440,469
trade and other payables
Foreign exchange 91,533 (203,786)
Net cash used in (30,754) (214,993)
operations
Cash flows from investing
activities
Proceeds from sale of 8 13,147 -
investments
Loans granted (to)/from 76,115 (87,340)
associate
Net cash used in investing 89,262 (87,340)
activities
Cash flows from financing
activities
Loan repaid to director 10 (7,963) -
Net cash generated from (7,963) -
financing activities
Net (decrease)/increase in 50,545 (302,333)
cash and cash equivalents
Cash and cash equivalents 389 304,986
at beginning of period
Cash and cash equivalents 50,934 2,653
at end of period
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General Information
Apollon Formularies Plc is a medicinal cannabis pharmaceutical company
incorporated and registered in the Isle of Man. The Company's registered office
is Quayside House, 6 Hope Street, Castletown, Isle of Man, IM9 1AS. The
Company's ordinary shares are traded on the Aquis Exchange Growth Market as
operated by Aquis Stock Exchange Ltd ("AQUIS").
2. Basis of Preparation
The condensed interim financial statements have been prepared in accordance with
the Aquis Growth Market Rulebook. As permitted, the Company has chosen not to
adopt IAS 34 "Interim Financial Statements" in preparing this interim financial
information. The condensed consolidated interim financial statements should be
read in conjunction with the annual financial statements for the year ended 31
December 2022. The interim financial statements have been prepared in accordance
with UK adopted International Accounting Standards.
The interim financial information set out above does not constitute statutory
accounts within the meaning of the Companies Act 2006. It has been prepared on a
going concern basis in accordance with the recognition and measurement criteria
of UK adopted International Accounting Standards.
Statutory financial statements for the period ended 31 December 2022 were
approved by the Board of Directors on 30 June 2023. The report of the auditors
on those financial statements was unqualified. The condensed interim financial
statements are unaudited and have not been reviewed by the Company's auditor.
Going concern
The preparation of financial statements requires an assessment on the validity
of the going concern assumption. The Directors have reviewed projections for a
period of at least 12 months from the date of approval of the financial
statements as well as potential opportunities. Any potential shortfalls in
funding have been identified and the steps to which Directors are able to
mitigate such scenarios and/or defer or curtail discretionary expenditures
should these be required have been considered.
The Directors are aware that the Group's ability to remain a going concern for
at least 12 months from the approval of these financial statements is dependent
on the Group's ability to raise further equity and/or debt finance. This is
expected to happen within the going concern period of the next 12 months.
In approving the financial statements, the Board has recognised that these
circumstances create a level of uncertainty. However, having made enquiries and
considered the uncertainties outlined above, the Directors have a reasonable
expectation that the Group will continue to be able to raise finance as required
over this period to enable it to continue in operation and existence for the
foreseeable future. Accordingly, the Board believes it is appropriate to adopt
the going concern basis in the preparation of the financial statements.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business. The
key risks that could affect the Group's medium term performance and the factors
that mitigate those risks have not substantially changed from those set out in
the Group's 2022 Annual Report and Financial Statements, a copy of which is
available on the Group's website: www.apollon.org.uk. The key financial risks
are market risk, exchange rate risk, liquidity risk and credit risk.
Critical accounting estimates
The preparation of condensed interim financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the end of the reporting period. Significant items subject to
such estimates are set out in Note 2 of the Group's 2022 Annual Report and
Financial Statements. The nature and amounts of such estimates have not changed
significantly during the interim period.
3. Accounting Policies
The same accounting policies, presentation and methods of computation are
followed in the interim consolidated financial information as were applied in
the Group's latest annual audited financial statements except for Intangible
assets and those that relate to new standards and interpretations effective for
the first time for periods beginning on (or after) 1 January 2023 and will be
adopted in the 2023 annual financial statements.
A number of new standards, amendments and became effective on 1 January 2023 and
have been adopted by the Group. None of these standards have materially affected
the Group.
3.1 Basis of preparation of financial statements
The Group Financial Statements consolidate the Financial Statements of the
Company and its subsidiaries made up to 30 June 2023. Subsidiaries are entities
over which the Group has control. Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a majority
of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee,
including:
· The contractual arrangement with the other vote holders of the investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are deconsolidated from the date that
control ceases. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the period are included in the Group Financial
Statements from the date the Group gains control until the date the Group ceases
to control the subsidiary.
Investments in Group undertakings are stated at cost, which is the fair value of
the consideration paid, less any impairment provision. The financial statements
of the subsidiary are prepared for the same reporting period as the Group. When
necessary, adjustments are made to bring the accounting policies in line with
those of the Group.
Where necessary, adjustments are made to the Financial Statements of
subsidiaries to bring the accounting policies used in line with those used by
other members of the Group. All significant intercompany transactions and
balances between Group enterprises are eliminated on consolidation.
3.2 Intangible assets
Intangible asset expenditure relates to patents and associated data acquired.
Intangible assets are only capitalised if the costs can be measured reliably and
will generate future economic benefits in the form of cashflows to the Group.
Intangible assets are not subject to amortisation but are assessed annually for
impairment. The assessment is carried out by allocating the patent assets to
cash generating units ("CGU's"), which are based on specific projects. The CGU's
are then assessed for impairment using a variety of methods including those
specified in IAS 36.
Whenever the patent assets in cash generating units does not lead to the desired
research outcome and the Group has decided to discontinue such activities of
that unit, the associated expenditures are written off to the Statement of
Comprehensive Income.
The Group is not income generating as yet and therefore there has been no
amortization since acquisition. Patents and associated data will be amortized
when the Group starts generating revenue relating to the assets.
1.
3. Asset held for sale
Asset are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly
probable. They are stated at the lower of carrying amount and fair value less
costs to sell.
1.
4. Intellectual property (IP)
IP assets (comprising patents) acquired by the Group as a result of a business
combination are initially recognised at fair value or as a purchase at cost and
are capitalised.
Internally generated IP costs are written off as incurred except where IAS 38
criteria, as described in research and development above, would require such
costs to be capitalised.
The Group's view is that capitalised IP assets have a finite useful life and to
that extent they should be amortised over their respective unexpired periods
with provision made for impairment when required. Capitalised IP assets are not
amortised until the Group is generating an economic return from the underlying
asset and as such no amortisation has been incurred to date as the products to
which they relate are not ready to be sold on the open market. When the trials
are completed and the products attain the necessary accreditation and clearance
from the regulators, the Group will assess the estimated useful economic like
and the IP will be amortised using the straight-line method over their estimated
useful economic lives.
4. Dividends
No dividend has been declared or paid by the Group during the six months ended
30 June 2023 (six months ended 30 June 2022: £nil).
5. Earnings per Share
The calculation of loss per share is based on a retained loss of £763,796 for
the six months ended 30 June 2023 (six months ended 30 June 2022: £212,436) and
the weighted average number of shares in issue in the period ended 30 June 2023
of 771,191,266 (six months ended 30 June 2022: 748,713,039).
No diluted earnings per share is presented for the six months ended 30 June 2023
or six months ended 30 June 2022 as the effect on the exercise of share options
would be to decrease the loss per share.
6. Associate
On 28 September 2018, the Legal Subsidiary acquired a right to receive a 49%
equity interest in Apollon Formularies Jamaica Limited ("Apollon Jamaica"), a
company incorporated in Jamaica, upon approval by the Cannabis Licensing
Authority (CLA) of Jamaica for Company to so own such equity in a medically
licensed cannabis company. In the interim, the Company entered into a contract
with Apollon Jamaica whereby the Company receives 95% of the net profits of
Apollon Jamaica. The Legal Subsidiary also entered into a contract with its
shareholder, Stephen D. Barnhill, M.D., who is the person presently recognised
as the owner of such 49% equity interest in Apollon Jamaica, that he: (i)
pledges to assign such equity to Company upon CLA approval of Company being an
owner, (ii) commits to vote the equity he holds in Apollon Jamaica in accordance
with such assignment obligation to the extent permitted by law, and (iii) will
participate as a director of Apollon Jamaica and act when voting in a way that
is consistent with such equity commitments to the Company to the extent
permitted by law.
Apollon Jamaica is accounted for as an associate because the Legal Subsidiary
has significant influence over it, has a representative serving as a director
who participates in its policy-making process, and has engaged in material
transactions with it that includes loans and a right to receive 95% of its
profits.
These factors have been determined to be sufficient to meet the requirements of
IAS 28 even though the Company does not presently own any equity in Apollon
Jamaica and, once it does, will only receive a 49% share of the return on
investment (which will come from the 5% net income) and only have 49% voting
rights.
As an associate, Apollon Jamaica is accounted for on an equity accounting basis.
The carrying value of the investment in the associate is determined as follows:
30 June 2023£
Investment in associate
At beginning of period -
Share of loss in associate -
At end of period -
Loans to Associate
At beginning of period 2,996,788
Loans granted from associate (76,115)
Foreign exchange (91,533)
At end of period 2,829,140
Total 2,829,140
The Company's share of Apollon Jamaica result for the year was a loss of £5,035
(2022: loss of £45,386) of a total loss of £10,275 (2022: total loss of
£92,624). The share of the loss in associate for the period ended 30 June 2023
is restricted to the carried forward investment in associate and has therefore
been recognised as £nil. As a result, the remaining investment balance carried
forward from the period ended 31 December 2022 remains at £nil.
7. Asset Held for Sale
Following the mutual termination of the proposed asset disposal to Global Hemp
Group, on 12 September 2023, the Company entered into a binding letter of intent
("LOI") with Sproutly Canada, Inc. ("Sproutly").
Under the terms of the LOI, Sproutly will acquire all the Assets of Apollon
Formularies plc, other than cash, cash equivalents, and accounts receivables,
for a payment of 350,000,000 Sproutly common shares at a deemed price of C$0.02
per share, for a total consideration of C$7,000,000. If the number of Sproutly
shares increases between now and the date of the transaction, the number of
shares to be issued to Apollon will increase accordingly.
Sproutly and Apollon have granted each other a 60-day option to conduct due
diligence, following which, if agreed to by both companies, the asset
acquisition will be completed. The due diligence period may be shortened by
mutual agreement.
The value of Asset Held for Sale is the expected sale proceeds from Sproutly,
being the total consideration of shares and cash, converted into pounds sterling
using the exchange rates on 12 September 2023 being C$0.58.
8. Available for sale investment
The movement in available for sale investments during the period was as follows:
Available for sale investments £
Balance as at 1 January 2023 -
10,000,000 shares in Global Hemp Group Plc 301,803
Sale of Global Hemp Group Plc Shares (13,147)
Fair value adjustment (273,171)
As at 30 June 2023 15,485
9. Trade and Other Payables
Current: 30 June 2023£ 30 June 2022£
Trade payables 1,113,012 503,509
Directors Loan (note 10) 152,305 -
Tax and payroll 19,976 19,976
Other creditors 557,182 95,957
1,842,475 619,442
The carrying amounts of the Group's trade and other payables are denominated in
pounds sterling.
10. Director Loan
During the year ended 31 December 2022, the Company entered into a loan
agreement with Director Roderick McIllree. The term of the loan is 12 months
(extendable for an additional 12 months by mutual agreement) and bears an
interest rate of 8% pa. Roderick McIllree is also a shareholder of the Company.
At as 30 June 2023, the Company owes Roderick McIllree £152,305.
30 June 2023£
Opening balance 154,412
Loans granted 6,000
Loans repaid (13,963)
Interest 5,856
Closing balance 152,305
11. Events after the reporting date
On 12 September 2023, the Group entered into a binding letter of intent ("LOI")
with Sproutly Canada, Inc. ("Sproutly"), Under the terms of the LOI, Sproutly
will acquire all the Assets of Apollon Formularies plc, for a payment of
350,000,000 Sproutly common shares at a deemed price of C$0.02 per share, for a
total consideration of C$7,000,000. If the number of Sproutly shares increases
between now and the date of the transaction, the number of shares to be issued
to Apollon will increase accordingly.
12. Approval of interim financial statements
The Condensed interim financial statements were approved by the Board of
Directors on 29 September 2023.
**ENDS**
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