Radio silence from THC BioMed after auditor resigns, leaving investors in dark

Last year, Vancouver-based THC BioMed Intl Ltd. (OTC: THCBF) said it hoped to bounce back after some financial setbacks, but it seems like the company opted to go AWOL instead.

The Canadian cannabis producer hasn’t provided any company updates since June 2023, leaving investors wondering what’s next for those with money still tied up in its stock.

“(THC BioMed) has shit the bed,” one user anonymously wrote to Green Market Report in an email.

According to regulatory filings, the company last month reported the appointment of a new auditor, as required by Canadian securities law. That change came after it was revealed that the company had been struggling to file its annual financial statements due to unpaid auditor fees.

It’s unknown whether the company’s former auditor was ever paid, but the firm, Baker Tilly, resigned at the request of THC BioMed to facilitate the appointment of Davidson & Company LLP, according to a Notice of Change of Auditor. The transition was approved by the company’s board of directors.

According to filings, Baker Tilly didn’t issue any negative opinions or raise concerns about THC BioMed’s financial statements in the past two years or any subsequent period, nor were there disagreements or unresolved issues between THC BioMed and Baker Tilly.

Additionally, the March documents state that there had been no reportable consultations between THC BioMed and their new auditor.

Dialing back

THC BioMed’s troubles came to light in January after the company failed to submit its financial statements for the fiscal year ending July 31, 2023, by the required November deadline. At the time, the delay was attributed to cash flow issues that prevented the firm from paying its auditor, and it led to a management cease trade order issued by the British Columbia Securities Commission.

The company said in the January news release that its CEO and CFO offered bridge financing to partially cover the outstanding auditor fees, while management explored additional financing options. It added that it expected to receive payments from various provincial cannabis operations in Canada, which it believed would be sufficient to settle the remaining fees.

Despite that, months have passed now, and the company still hasn’t reported any business developments other than the change of auditor since it filed its third-quarter financial reports for the period that ended April 30, 2023. The firm reported a tough quarter, with sales dropping by a third versus the same period the year before.

The company said in filings at the time that it brought in just $476,230 in revenue, largely because its biggest customer, the Province of B.C., stopped buying some of its products.

Additionally, its net loss for the quarter jumped to $935,212, more than seven times the loss it had in the same period last year. Even though management tried to cut costs, reducing G&A expenses by 2%, the company couldn’t stave off the growing losses.

By January, the company said that it was making efforts to increase its cash flow by shipping newly released products, which it expected would help satisfy the auditor’s requirements for completing the annual filings. But the company has yet to say how those efforts have gone.

Attempts to reach out to THC BioMed’s CEO, John Miller, as well as representatives from both Baker Tilly WM LLP and Davidson & Company LLP, for comment on the situation were unsuccessful.

The management cease trade order, which prohibits executives from trading company securities until the overdue financials are filed, from January remains in effect.