Akanda Corp 20-F for FY2025
Akanda Corp. (AKAN)
About this 20-F
Akanda Corp filed this 20-F on June 9, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $258.08K
- Net loss
- $1.21M
- Diluted EPS
- -$662.22
- compared with -$276.40 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year
ended
OR
For the transition period from to
OR
Date of event requiring this shell company report
Commission file number
(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
c/o Gowling WLG (Canada) LLP
Tel: +1 (416) 862-7525
(Address of principal executive offices)
Phone:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
Securities registered or to be registered pursuant to Section 12(g) of the Act. None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
The number of common shares outstanding as
of December 31, 2025 was
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
If this report is an annual or transition report,
indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. ☐ Yes ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. ☒
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☐ | Emerging growth company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | by the International Accounting Standards Board ☒ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
If this is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
TABLE OF CONTENTS
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INTRODUCTION
Akanda Corp. was incorporated on July 16, 2021 in the Province of Ontario, Canada under the Business Corporations Act (Ontario). The principal listing of our ordinary shares is The Nasdaq Capital Market, or Nasdaq. We filed a registration statement on Form F-1 (File No.: 333-262436) with respect to our common shares with the U.S. Securities and Exchange Commission, or SEC, which was declared effective on March 14, 2022. Our common shares are listed on The Nasdaq Capital Market, under the symbol “AKAN”. As used in this Annual Report on Form 20-F, the terms “we,” “us,” “our”, “Akanda” and the “Company” mean Akanda Corp. and its subsidiaries, unless otherwise indicated.
FINANCIAL AND OTHER INFORMATION
Our financial statements appearing in this Annual Report on Form 20-F are prepared in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. Our fiscal year ends on December 31 of each year as does our reporting year.
We have made rounding adjustments to some of the figures included in this Annual Report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.
Statements made in this Annual Report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this Annual Report or to any registration statement that we previously filed, you may read the document itself for a complete description of its terms.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in this Annual Report on Form 20-F, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning our possible or assumed future results of operations, financial condition, business strategies and plans, market opportunity, competitive position, industry environment, and potential growth opportunities. In some cases, you can identify forward-looking statements by terms such as “may”, “might”, “will”, “should”, “believe”, “expect”, “could”, “would”, “intend”, “plan”, “anticipate”, “estimate”, “continue”, “predict”, “project”, “potential”, “target,” “goal” or other words that convey the uncertainty of future events or outcomes. You can also identify forward-looking statements by discussions of strategy, plans or intentions. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, because forward-looking statements relate to matters that have not yet occurred, they are inherently subject to significant business, competitive, economic, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements in this Annual Report, including among other things:
| ● | our limited operating history; |
| ● | the successful integration of First Towers into our business, and growth of that business; |
| ● | unpredictable events and associated business disruptions; |
| ● | changes in cannabis laws, regulations and guidelines; |
| ● | decrease in demand for cannabis and cannabis-derived products; |
| ● | exposure to product liability claims and actions; |
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| ● | exposure to product liability claims and actions; |
| ● | damage to our reputation due to negative publicity; |
| ● | risks associated with product recalls; |
| ● | the viability of our product offerings; |
| ● | our ability to attract and retain skilled personnel; |
| ● | maintenance of effective quality control systems; |
| ● | regulatory compliance risks; |
| ● | risks inherent in an agricultural business and in the other businesses in which we operate; |
| ● | increased competition in the markets in which we operate and intend to operate; |
| ● | risks associated with expansion into new jurisdictions, including our new operations in Mexico through our First Tower subsidiary; |
| ● | our ability to obtain and maintain adequate insurance coverage; |
| ● | our ability to identify and integrate strategic acquisitions, investments and partnerships and to manage our growth; |
| ● | our ability to raise capital and the availability of future financing; |
| ● | global economy risks; and |
| ● | our ability to maintain the listing of our securities on The Nasdaq Capital Market. |
Given the foregoing risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements in this Annual Report. The forward-looking statements contained in this Annual Report are not guarantees of future performance, and our actual results of operations and financial condition may differ materially from such forward-looking statements. In addition, even if our results of operations and financial condition are consistent with the forward-looking statements in this Annual Report, they may not be predictive of results or developments in future periods. Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release any update or revision to any forward-looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof. Please see the Risk Factors section that appears in “Item 3. Key Information – D. Risk Factors.”
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
| A. | [Reserved] |
| B. | Capitalization and Indebtedness |
Not applicable.
| C. | Reasons for the Offer and Use of Proceeds |
Not applicable.
| D. | Risk Factors |
The following risks relate specifically to our business and should be considered carefully. Our business, financial condition and results of operations could be harmed by any of the following risks. As a result, the trading price of our common shares could decline and shareholders could lose part or all of their investment.
Risks Related to the First Towers Transaction
The market price of our Common Shares is expected to continue to fluctuate after the First Towers Transaction.
The market price of the common shares of Akanda has and is expected to continue to, fluctuate, potentially significantly, following completion of the Transaction, as a result of a variety of factors, including for example, among others, general market and economic conditions, changes in our businesses, operations and prospects, interest rates, general market, industry and economic conditions and other factors generally affecting the stock prices, federal, state and local legislation, governmental regulation and legal developments in the industry segments in which Akanda now operates. In addition, any significant price or volume fluctuations in the stock market generally could have a material adverse effect on the market for, or liquidity of, our common shares, regardless of the post-transaction actual operating performance.
As a result of the First Towers Transaction, the market price for our common shares may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of Akanda Common Stock.
First Towers’ business differs from those of Akanda’s historical cannabis operations, and, accordingly, our results of operations post-Transaction have been and will likely continue to be affected by some factors that are different from those currently or historically affecting the results of operations of Akanda.
Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Transaction.
The success of our integration of First Towers into our company will depend in part on our ability to retain the talents and dedication of key professionals of First Towers. It is possible that these employees may decide not to remain with First Towers. If key employees terminate their employment, or if an insufficient number of employees are retained to maintain effective operations, Akanda’s business activities with respect to our First Towers subsidiary may be adversely affected and management’s attention may be directed to hiring suitable replacements, all of which may cause that business to suffer. In addition, Akanda may not be able to locate suitable replacements for any key employees that leave either company or offer employment to potential replacements on reasonable terms. No assurance can be given that post-Transaction, Akanda will be able to attract or retain key employees to the same extent that those companies have been able to attract or retain their own employees in the past.
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The First Towers Transaction has and may continue to cause disruptions in the business of Akanda and First Towers, which could have an adverse effect on Akanda’s business and financial results.
The First Towers Transaction has caused disruptions in the business of Akanda and of First Towers, including by diverting some of the attention of their respective management toward the completion of the First Towers Transaction instead of focusing on their respective business. In addition, Akanda has diverted significant management resources in an effort to complete the First Towers Transaction and integrate First Towers into our company, which could have been applied to further building its legacy business.
Akanda may be exposed to increased litigation, which could have an adverse effect on Akanda’s business and operations post-Transaction.
Akanda may be exposed to increased litigation from stockholders (including former stockholders of First Towers), customers, suppliers, distributors, consumers and other third parties following the First Towers Transaction. Such litigation may have an adverse impact on Akanda’s business and results of operations or may cause disruptions to Akanda’s operations.
Akanda’s cannabis business may be secondary to First Tower’s existing business. Akanda Shareholders will therefore after the Transaction have a continuing equity interest predominantly in the business of First Towers.
Akanda expects to continue its planned development of the hemp and cannabis cultivation business in Gabriola Island, British Columbia; however, the assets and existing business of First Towers are expected to account for a substantial percentage of the combined business’ focus.
Akanda’s debt post-Transaction may limit its financial flexibility.
Akanda assumed approximately $20 million of First Towers indebtedness, although a significant amount has been prepaid to date. Our indebtedness could have adverse effects on the financial condition and results of operations of Akanda post-Transaction, including:
| ● | increasing its vulnerability to changing economic, regulatory and industry conditions; |
| ● | limiting its ability to compete and its flexibility in planning for, or reacting to, changes in its business and the industry; |
| ● | limiting its ability to pay dividends to its stockholders, if at all; |
| ● | limiting its ability to borrow additional funds; and |
| ● | increasing its interest expense and requiring Akanda post-Transaction to dedicate a substantial portion of its cash flow from operations to payments on its debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, share repurchases, dividends and other purposes. |
The ability of Akanda post-Transaction to arrange any additional financing for the purposes described above or otherwise will depend on, among other factors, Akanda’s financial position and performance, as well as prevailing market conditions and other factors beyond its control.
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Holders of Akanda’s common shares will be diluted by the future issuance of additional common shares underlying the issuances of Class B Special Shares in connection with the First Towers Transaction or otherwise; future sales of such shares in the public market or the expectation that such sales may occur may decrease the market price of Akanda’s common shares.
Akanda is expected to issue a significant number of common shares in the future, relative to the number of shares outstanding, in connection with the issuance of its Class B Special Shares that are held by the former shareholders of First Towers, in addition to the common shares already issued to such former shareholders upon the conversion of their Class A Special Shares issued at the closing of the First Towers Transaction. These issuances have and are expected to further dilute Akanda existing stockholders, and such dilution could be significant. Moreover, such dilution could have a material adverse effect on the market price for the shares of Akanda’s common shares. Since the Class B Special Shares vote with the common shares as a single class, the voting rights of existing common shareholders of Akanda will be adversely affected, by diluting the voting power of Akanda’s common shares.
Risks Related to Akanda’s Cannabis Business
We are an early-stage cannabis company with limited operating history and these operations may never become profitable.
Akanda was only recently incorporated to be a holding company in 2021, with operating subsidiaries having limited operating histories and generating minimal revenue. Since then, we have discontinued our European operations while we are seeking to launch our hemp and THC/CBD farming facility in British Columbia, Canada. We remain an early-stage company and have limited financial resources and minimal operating cash flow. If we cannot successfully develop, manufacture and distribute our planned cannabis products, or have capacity constraints, quality control problems or other disruptions, we may not be able to develop or offer market-ready commercial products at acceptable costs, which would adversely affect our ability to effectively enter the market or expand our market share. A failure by us to achieve a low-cost structure through economies of scale or improvements in cultivation, manufacturing or distribution processes would have a material adverse effect on our commercialization plans and our business, prospects, results of operations and financial condition.
We expect to require additional funding to develop and launch our pre-revenue hemp and THC/CBD cultivation facility in Gabriola Island, British Columbia. However, there can be no assurance that additional funding will be available to us for the development of our planned businesses, which will require the commitment of substantial resources. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development. Potential investors should carefully consider the risks and uncertainties that an early stage company with a very limited operating history will face. In particular, potential investors should consider that we may be unable to:
| ● | successfully implement or execute our business plan, or that our business plan is sound; |
| ● | effectively pursue business opportunities, including potential acquisitions; |
| ● | adjust to changing conditions or keep pace with increased demand; |
| ● | attract and retain an experienced management team; or |
| ● | raise sufficient funds in the capital markets to effectuate our business plan, including expanding production capacity. licensing and approvals. |
Demand for cannabis and its derivative products could be adversely affected and significantly influenced by scientific research or findings, regulatory proceedings, litigation, or media attention.
The legal cannabis industry in Canada and in many other potential markets for us is at an early stage of its development. Consumer perceptions regarding legality, morality, consumption, safety, efficacy and quality of medicinal cannabis are mixed and evolving and can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of medicinal cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the medicinal cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity, could have a material adverse effect on the demand for medicinal cannabis and on our business, results of operations, financial condition and cash flows. Public opinion and support for medicinal cannabis use has traditionally been inconsistent and varies from jurisdiction to jurisdiction. Our ability to gain and increase market acceptance of our business may require substantial expenditures on investor relations, strategic relationships and marketing initiatives. There can be no assurance that such initiatives will be successful, and their failure to materialize into significant demand may have an adverse effect on our financial condition.
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Our success will depend, in part, on our ability to continue to enhance our product offerings to respond to technological and regulatory changes and emerging industry standards and practices.
Rapidly changing markets, technology, emerging industry and regulatory standards and frequent introduction of new products characterize our business and planned business. The process of cultivating and processing our planned cannabis products to meet applicable standards and successfully marketing such products and obtaining necessary licenses requires significant continuing costs, marketing efforts, third-party commitments and regulatory approvals. We may also decide to expand our planned product offering to include cannabis oils and extracts, and ultimately, to produce consumer branded cannabis products. We may not be successful in expanding our production capacity, or obtaining any required regulatory approvals or licenses, to implement our growth plans, which, together with any capital expenditures made in our operations, may have a material adverse effect on our business, financial condition and operating results.
We are subject to the inherent risk of exposure to product liability claims.
As a planned cultivator and distributor of products designed to be ingested by humans, we will face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused bodily harm or injury. In addition, the sale of our planned products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Adverse reactions resulting from human consumption of our products alone or in combination with other medications or substances could occur. We may be subject to various product liability claims, including, among others, that our products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning health risks, possible side effects or interactions with other substances. Product liability claims or regulatory actions against us could result in increased costs, could adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our products.
We are subject to the inherent risks involved with product recalls.
Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labelling disclosure. If any of our planned products are recalled due to an alleged product defect or for any other reason, we could be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection therewith. There can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if our products are subject to recall, our reputation could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for our planned products and could have a material adverse effect on our results of operations and financial condition. Additionally, product recalls may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention, potential loss of applicable licenses, and increased legal fees and other expenses.
Research regarding the medical benefits, viability, safety, efficacy, use and social acceptance of cannabis or isolated cannabinoids (such as cannabidiol and tetrahydrocannabinol) remains in early stages.
There have been relatively few clinical trials on the benefits of cannabis or isolated cannabinoids (such as cannabidiol and tetrahydrocannabinol). Although we believe that the articles, reports and studies published support our beliefs regarding the viability, safety, efficacy, dosing and social acceptance of cannabis, future research and clinical trials may prove such statements to be incorrect, or could raise concerns regarding, and perceptions relating to, cannabis. Given these risks, uncertainties and assumptions, investors should not place undue reliance on such articles and reports. Future research studies and clinical trials may draw opposing conclusions to those stated herein or reach negative conclusions related to medical cannabis, which could have a material adverse effect on the demand for our future products and could result in a material adverse effect on our business, financial condition and results of operations or prospects.
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We may not be able to maintain effective quality control systems.
We may not be able to maintain an effective quality control system. The effectiveness of our quality control system and our ability to maintain any Good Agricultural and Collecting Practices (“GACP”) certification we may receive with respect to our planned manufacturing, processing and testing facilities depend on a number of factors, including the design of our quality control procedures, training programs, and the ability to ensure that our employees adhere to our policies and procedures. We also may depend on third party service providers to manufacture, process or test our products, that are subject to GACP requirements.
We expect that regulatory agencies will periodically inspect our and our service providers’ facilities to evaluate compliance with applicable GACP requirements. Failure to comply with these requirements may subject us or our service providers to possible regulatory enforcement actions. Any failure or deterioration of our or our service providers’ quality control systems, including loss of the GACP certification we may receive, may have a material adverse effect on our business, results of operations and financial condition.
The cannabis and cannabinoid industries face strong opposition.
Many political and social organizations oppose hemp and cannabis and their legalization, and many people, even those who support legalization, oppose the sale of hemp, cannabis and their derivatives in their geographies. Our business will need support from local governments, industry participants, consumers and residents to be successful. Additionally, there are large, well-funded businesses and industry groups that may have a strong opposition to the cannabis industry. For example, the pharmaceutical and alcohol industries have traditionally opposed cannabis legalization. Any efforts by these or other industries opposed to cannabis to halt or impede the cannabis industry could have detrimental effects on our business.
We are subject to the risks inherent in an agricultural business.
Our business involves the growing of cannabis, which is an agricultural product. As a result, our financial results are subject to the risks inherent to the agricultural business, such as crop disease, mold or mildew, insect infestations, volatile weather, drought, absorption of heavy metals, climate change and similar agricultural risks, which may adversely affect supply, reduce production and sales volumes, increase production costs, or prevent or impair shipments. Natural elements have had and could continue to have a material adverse effect on the production of our cannabis products, while prior use of pesticides at our agricultural sites, if not discovered prior to cultivation on such sites, could lead to the production of tainted and unsaleable product, which could negatively impact the results of our operations. Additionally, crop insurance is generally not available to cannabis.
We further have not started any farming or cultivation at our British Columbia location and are subject to the additional risks of starting an agricultural business. Cannabis cultivation and processing, can significantly influence the demand for agricultural equipment. Changing demand for certain agricultural products could have an effect on the price of farming output and consequently the demand for certain of our equipment and could also result in higher research and development costs related to changing machine requirements. Additionally, cannabis cultivation dynamics is similar to that of other agricultural commodities cultivation dynamics in that failure to deliver quality products that meet customer needs at competitive prices ahead of competitors could have a significant adverse effect on the Company’s business. Our business results, therefore, depends on our ability to understand and anticipate our customers’ specific preferences and requirements, and preplan and cultivate cannabis products accordingly to meet such customer demand.
Our business will be reliant upon third party suppliers, service providers and distributors.
As our business grows, we will need a supply chain for certain material portions of the production and distribution process of our products. Our suppliers, service providers and distributors may elect, at any time, to breach or otherwise cease to participate in supply, service or distribution agreements, or other relationships, on which our operations rely. Loss of our suppliers, service providers or distributors would have a material adverse effect on our business and operational results.
Part of our strategy is to enter into and maintain arrangements with third parties related to the development, testing, marketing, manufacturing, distribution and commercialization of our products. Our revenues are dependent on the successful efforts of these third parties, including the efforts of our distribution partners. Entering into strategic relationships can be a complex process and the interests of our distribution partners may not be or remain aligned with our interests. Some of our current and future distribution partners may decide to compete with us, refuse or be unable to fulfill or honor their contractual obligations to us, or change their plans to reduce their commitment to, or even abandon, their relationships with us. There can be no assurance that our distribution partners will market our products successfully or that any such third-party collaboration will be on favorable terms.
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Our profit margins and the timely delivery of our products are dependent upon the ability of our outside suppliers and manufacturers to supply us with products in a timely and cost-efficient manner. Our ability to develop our business and enter new markets and sustain satisfactory levels of sales in each market depends upon the ability of our outside suppliers and manufacturers to produce the ingredients and products and to comply with all applicable regulations. The failure of our primary suppliers or manufacturers to supply ingredients or produce our products could adversely affect our business operations.
There is no assurance that our sales and promotional activities will be successful.
Our future growth and profitability will depend on the effectiveness and efficiency of sales and promotional expenditures, including our ability to (i) achieve the necessary licenses and regulatory approvals for our cultivation facility, (ii) determine the appropriate creative message and media mix for future marketing expenditures and (iii) effectively manage cultivation and processing costs in order to maintain acceptable operating margins. There can be no assurance that our sales and promotional expenditures will result in revenues in the future or will generate awareness of our products and services. In addition, no assurance can be given that we will be able to manage our sales and promotional expenditures on a cost-effective basis.
We believe that maintaining and promoting our brand is critical to expanding our customer base. Maintaining and promoting our brand will depend largely on our ability to provide quality, reliable and innovative products, which we may not do successfully. We may introduce new products or services that our customers do not like, which may negatively affect our brand and reputation. Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not achieve the desired goals. If we fail to successfully promote and maintain our brand or if we incur excessive expenses in this effort, our business and financial results from operations could be materially adversely affected.
We may be unable to sustain our planned pricing models.
Once we expect to commence cultivation of our products, significant price fluctuations or shortages in the cost of materials may increase our cost of goods sold and cause our results of operations and financial condition to suffer. If we are unable to secure materials at a reasonable price, we may have to alter or discontinue selling some of our products or attempt to pass along the cost to our customers, any of which could adversely affect our results of operations and financial condition.
Additionally, increasing costs of labor, freight and energy could increase our and our suppliers’ cost of goods. If our suppliers are affected by increases in their costs of labor, freight and energy, they may attempt to pass these cost increases on to us. If we pay such increases, we may not be able to offset them through increases in its pricing, which could adversely affect our results of operations and financial condition.
We may be unable to effectively manage future growth.
We may be subject to growth-related risks, including capacity constraints and pressure on our internal systems and controls. Our ability to manage growth effectively will require us to continue to implement and improve our operational and financial systems and to expand, train and manage our employee base. Rapid growth of our business may significantly strain our management, operations and technical resources. If we are successful in obtaining large orders for our products once we commence cultivation, we will be required to deliver large volumes of products to our customers on a timely basis and at a reasonable cost. We may not obtain large-scale orders for our products and if we do, we may not be able to satisfy large-scale production requirements on a timely and cost-effective basis. Our inability to deal with this growth may have a material adverse effect on our business, financial condition, results of operations and prospects.
We are subject to significant competition by new and existing competitors in the cannabis industry.
The industry in which we operate and intend to operate is subject to intense and increasing competition. Many of our competitors have greater resources that may enable them to compete more effectively than us in the cannabis industry, or they have a longer operating history and greater capital resources and facilities, which may enable them to compete more effectively in this market. We expect to face additional competition from existing licensees and new market entrants who are granted licenses in the jurisdictions in which we operate or intend to operate. If a significant number of new licenses are granted in the near term, we may experience increased competition for market share and may experience downward pricing pressure on our products as new entrants increase production. Such competition may cause us to encounter difficulties in generating revenues and market share, and in positioning our products in the market. If we are unable to successfully compete with existing companies and new entrants to the market, our lack of competitive advantage will have a negative effect on our business and financial condition.
We could be subject to a security breach that could result in significant damage or theft of products and equipment.
Breaches of security at our British Columbia facilities may occur and could result in damage to or theft of products and equipment. A security breach at our British Columbia facilities could result in a significant loss of inventory or work in process, expose us to liability under applicable regulations and increase expenses relating to the investigation of the breach and implementation of additional preventative security measures, any of which could have an adverse effect on our business, financial condition and results of operations.
6
Risks Related to Our International Operations
As a company based outside of the United States, we are subject to economic, political, regulatory and other risks associated with international operations.
Our business is subject to risks associated with conducting business outside of the United States. Our operations are based primarily in Canada and Mexico. Accordingly, our future results could be harmed by a variety of factors, including, without limitation, the following:
| ● | economic weakness, including inflation, or political instability in non-U.S. economies and markets; |
| ● | differing and changing regulatory requirements for product licenses and approvals; |
| ● | differing jurisdictions could present different issues for securing, maintaining or obtaining freedom to operate in such jurisdictions; |
| ● | difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations; |
| ● | changes in applicable non-U.S. regulations and customs, tariffs and trade barriers; |
| ● | changes in applicable non-U.S. currency exchange rates and currency controls; |
| ● | changes in a specific country’s or region’s political or economic environment; |
| ● | trade protection measures, import or export licensing requirements or other restrictive actions by governments; |
| ● | differing reimbursement regimes and price controls in certain non-U.S. markets; |
| ● | negative consequences from changes in tax laws; |
| ● | compliance with applicable tax, employment, immigration and labor laws for employees living or traveling abroad, including, for example, the variable tax treatment in different jurisdictions of options granted under our share option schemes or equity incentive plans; |
| ● | workforce uncertainty in countries where labor unrest is more common than in the United States; |
| ● | difficulties associated with staffing and managing international operations, including differing labor relations; |
| ● | production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and |
| ● | business interruptions resulting from geo-political actions, including war and terrorism, or natural disasters, including droughts, floods and fires. |
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Political, social and geopolitical conditions can adversely affect our existing and planned business.
Political, social and geopolitical conditions in the markets in which our products are expected to be sold have been and could continue to be difficult to predict, resulting in adverse effects on our business. The results of elections, referendums or other political conditions (including government shutdowns), geopolitical events and tensions, wars and other military conflicts in these markets have in the past impacted and could continue to impact how existing laws, regulations and government programs or policies are implemented or result in uncertainty as to how such laws, regulations, programs or policies may change, including with respect to the negotiation of new trade agreements, new, expanded or retaliatory tariffs against certain countries or covering certain products or ingredients, sanctions, environmental and climate change regulations, taxes, benefit programs, the movement of goods, services and people between countries, relationships between countries, customer or consumer perception of a particular country or its government and other matters. Such conditions have resulted in and could continue to result in exchange rate fluctuation, limitations on access to credit markets and other corporate banking services, including working capital facilities, volatility in global stock markets and global economic uncertainty and heightened risk to employee safety, any of which can adversely affect our existing and planned business.
Political uncertainty may have an adverse impact on our operating performance and results of operations.
General political uncertainty may have an adverse impact on our operating performance and results of operations. In particular, the U.S. and the world at large continue to experience significant political events that cast uncertainty on global financial and economic markets. It is presently unclear as to all of the actions the second Trump administration in the U.S. will implement, and if implemented, how these actions may impact us or how we intend to operate in or with the U.S. Any actions taken by the Trump administration, including the many recent executive orders, may have a negative impact on the U.S. or World economy in general and on our business, financial condition, and results of operations in particular. Political, social and geopolitical conditions can adversely affect our existing and planned business.
We may seek international sales in the future, and such sales may be subject to unexpected exchange rate fluctuations, regulatory requirements and other barriers.
We currently expect that any sales we may have will be denominated in U.S. Dollars or Mexican Pesos and that we may, in the future, have sales denominated in the currencies of additional countries in which we may establish operations or distribution. In addition, we expect to incur the majority of our operating expenses in U.S. Dollars and Canadian Dollars. Our international sales may be subject to unexpected regulatory requirements and other barriers. Any fluctuation in the exchange rates of foreign currencies may negatively affect our business, financial condition and results of operations. We have not previously engaged in foreign currency hedging. If we decide to hedge our foreign currency exposure, we may not be able to hedge effectively due to lack of experience, unreasonable costs or illiquid markets. In addition, those activities may be limited in the protection they provide from foreign currency fluctuations and can themselves result in losses.
Tax regulations and challenges by tax authorities could have a material adverse effect on our business.
We expect to operate in a number of countries and will therefore be regularly examined by and remain subject to numerous tax regulations. Changes in our global mix of earnings could affect our effective tax rate. Furthermore, changes in tax laws could result in higher tax-related expenses and payments. Legislative changes in any of the countries in which we operate could materially impact our tax receivables and liabilities as well as deferred tax assets and deferred tax liabilities. Additionally, the uncertain tax environment in some regions in which we operate may limit our ability to successfully challenge an adverse determination by any local tax authorities. We expect to operate in countries with complex tax rules, which may be interpreted in a variety of ways and could affect our effective tax rate. Future interpretations or developments of tax regimes or a higher than anticipated effective tax rate could have a material adverse effect on our tax liability, return on investments and business operations.
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In addition, our subsidiaries operate in, are incorporated in and are tax residents of, various jurisdictions. The tax authorities in the various jurisdictions in which we and our subsidiaries operate, or are incorporated, may disagree with and challenge our assessments of our transactions, tax position, deductions, exemptions, where we or our subsidiaries are tax resident, or other matters. If we are unsuccessful in responding to any such challenge from a tax authority, we may be required to pay additional taxes, interest, fines or penalties, we may be subject to taxes for the same business in more than one jurisdiction or may also be subject to higher tax rates, withholding or other taxes. A successful challenge could potentially result in payments to the relevant tax authority of substantial amounts that could have a material adverse effect on our financial condition and results of operations.
Even if we are successful in responding to challenges by taxing authorities, responding to such challenges may be expensive, consume time and other resources, or divert management’s time and focus from our business operations. Therefore, a challenge as to our tax position or status or transactions, even if unsuccessful, may have a material adverse effect on our business, financial condition, results of operations or liquidity or the business, financial condition, and results of operations.
We face the risk of disruption from labor disputes and changes to labor laws, which could result in significant additional operating costs or alter our relationship with our employees.
We are required to comply with extensive labor regulations in each of the countries in which we have employees, including with respect to wages, social security benefits and termination payments. Labor or employee led disruptions could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to our Cannabis Regulatory Framework
The cannabis regulatory regime is relatively new in Canada, and laws and enforcement could rapidly change again.
In Canada, cannabis regulation is primarily managed by individual provinces and territories, although the federal government sets the framework through the Cannabis Act. Each province or territory has its own regulatory agency responsible for the sale, distribution, and use of cannabis within its jurisdiction. From a federal perspective, Health Canada is responsible for administering the federal regulatory program for cannabis production and medical purposes, including granting licenses, setting licensure requirements, and enforcing compliance.
On September 5, 2024, Akanda’s wholly-owned subsidiary, 1468243 B.C. Ltd., was issued a hemp license by Health Canada to propagate industrial hemp. The license is valid through September 5, 2027.
Our activities are, and will continue to be, subject to evolving regulation by governmental authorities. Due to the current regulatory environment in Canada, new risks may emerge; management may not be able to predict all such risks.
Our activities are, and will continue to be, subject to evolving regulation by governmental authorities.
Cannabis laws, regulations, and guidelines are dynamic and subject to changes.
Cannabis laws and regulations are dynamic and subject to evolving interpretations which could require us to incur substantial costs associated with compliance or alter certain aspects of our business plan. It is also possible that regulations may be enacted in the future that will be directly applicable to certain aspects of our businesses. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business. Management expects that the legislative and regulatory environment in the cannabis industry in the Canada and internationally will continue to be dynamic and will require innovative solutions to try to comply with this changing legal landscape in this nascent industry for the foreseeable future. Failure to comply with any such legislation may have a material adverse effect on our business, financial condition and results of operations.
Public opinion can also exert a significant influence over the regulation of the cannabis industry. A negative shift in the public’s perception of the cannabis industry could affect future legislation or regulation in different jurisdictions.
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There are risks associated with the regulatory regime and permitting requirements of our operations.
Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by governmental authorities and obtaining all regulatory approvals, where necessary, for the cultivation, processing and sale of our products. Our wholly-owned subsidiary, 1468243 B.C. Ltd., currently holds a hemp license for propagating industrial hemp. We may not be able to obtain or maintain the necessary licenses, permits, quotas, authorizations, certifications or accreditations to operate our business going forward, or may only be able to do so at great cost. We cannot predict the time required to secure all appropriate regulatory approvals for our products, or the extent of testing and documentation that may be required by local governmental authorities.
Our officers and directors must rely, to a great extent, on our local legal counsel and local consultants retained in the Canada in order to keep abreast of material legal, regulatory and governmental developments as they pertain to and affect our business operations, and to assist us with governmental relations. We must rely, to some extent, on those members of management and the Board who have previous experience working and conducting business in the Canada in order to enhance our understanding of and appreciation for the local business culture and practices in such jurisdictions.
We also rely on the advice of local experts and professionals in connection with any current and new regulations that develop in respect of banking, financing and tax matters in the jurisdictions in which we operate. Any developments or changes in such legal, regulatory or governmental requirements or in local business practices in such jurisdictions are beyond our control and may adversely affect our business.
We will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. We may be required to compensate those suffering loss or damage by reason of our operations and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. In addition, changes in regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition.
Any failure on our part to comply with applicable regulations or to obtain and maintain the necessary licenses and certifications could prevent us from being able to carry on our business, and there may be additional costs associated with any such failure.
Our business activities are heavily regulated in all jurisdictions where we do business. Our operations are subject to various laws, regulations and guidelines by governmental authorities relating to the cultivation, processing, manufacture, marketing, management, distribution, transportation, storage, sale, packaging, labelling, pricing and disposal of cannabis and cannabis products. In addition, we are subject to laws and regulations relating to employee health and safety, insurance coverage and the environment. Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion over our activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on our products and services.
Any failure by us to comply with applicable regulatory requirements could:
| ● | require extensive changes to our operations; |
| ● | result in regulatory or agency proceedings or investigations; |
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| ● | result in the revocation of our licenses and permits, the imposition of additional conditions on licenses to operate our business, and increased compliance costs; |
| ● | result in product recalls or seizures; |
| ● | result in damage awards, civil or criminal fines or penalties; |
| ● | result in the suspension or expulsion from a particular market or jurisdiction of our key personnel; |
| ● | result in restrictions on our operations or the imposition of additional or more stringent inspection, testing and reporting requirements; |
| ● | harm our reputation; or |
| ● | give rise to material liabilities. |
There can be no assurance that any future regulatory or agency proceedings, investigations or audits will not result in substantial costs, a diversion of management’s attention and resources or other adverse consequences to our business.
In addition, changes in regulations, government or judicial interpretation of regulations, or more vigorous enforcement thereof or other unanticipated events could require extensive changes to our operations, increase compliance costs or give rise to material liabilities or a revocation of our licenses and other permits. Furthermore, governmental authorities may change their administration, application or enforcement procedures at any time, which may adversely affect our ongoing regulatory compliance costs. There is no assurance that we will be able to comply or continue to comply with applicable regulations.
The legal cannabis market is a relatively new industry. As a result, the size of our target market is difficult to quantify, and investors will be reliant on their own estimates on the accuracy of market data.
Because the cannabis industry is in a nascent stage, there is a lack of information about comparable companies available for potential investors to review in deciding whether to invest in us and, few, if any, established companies whose business model we can follow or upon whose success we can build. Accordingly, investors should rely on their own estimates regarding the potential size, economics and risks of the cannabis market in deciding whether to invest in our Common Shares. We are an early-stage company that has not generated net income. There can be no assurance that our growth estimates are accurate or that the cannabis market will be large enough for our business to grow as projected.
Although we are committed to researching and developing new markets and products and improving existing products, there can be no assurances that such research and market development activities will prove profitable or that the resulting markets or products, if any, will be commercially viable or successfully produced and marketed. We must rely largely on our own market research to forecast sales and design products as detailed forecasts and consumer research are not generally obtainable from reliable third-party sources in the United Kingdom, the European market, Canada and in other international jurisdictions.
In addition, there is no assurance that the industry and market will continue to exist and grow as currently estimated or anticipated or function and evolve in the manner consistent with management’s expectations and assumptions. We could also be subject to other events or circumstances that adversely affect the cannabis industry, such as the imposition of further restrictions on sales and marketing or further restrictions on sales in certain areas and markets. In this respect, we may determine that exiting the industry is in the best financial interests of the Company and may undertake all necessary actions to effectuate a shift to another industry.
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U.S. federal law has changed, but Marijuana remains a controlled substance.
Although the legal framework is changing, there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Some forms of marijuana remain a Schedule I drug under the Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute or possess cannabis in the United States. As of 2024, 47 states, the District of Columbia, and the U.S. Territories of Guam, Puerto Rico, and the U.S. Virgin Island allow the of cannabis for medical purposes. 24 states and the District of Columbia have legalized cannabis for recreational purposes. In those states in which the use of marijuana has been legalized, its use remains a violation of federal law pursuant to the Controlled Substances Act. The Controlled Substances Act presently classifies marijuana in general as a Schedule I controlled substance, however, marijuana or marijuana products approved by the Food & Drug Administration (FDA) or subject to a state-issued medical license has been rescheduled to Schedule III as of April 28, 2026.
On December 18, 2025, President Trump signed an executive order directing the Attorney General to expedite the reclassification of cannabis from a Schedule 1 to a Schedule III substance under the Controlled Substance Act. On April 23, 2026, the Department of Justice issued an order rescheduling medical marijuana, enabling its export or import by permit, and establishing a DEA registration process for entities holding state medical licenses. A new hearing on June 29, 2026 will evaluate broader changes to marijuana’s status under U.S. federal law.
While the order does not federally legalize marijuana or its recreational use, it marks a significant policy shift by formally recognizing the drug’s potential medical value for the first time in over 50 years. Schedule III indicates evidence supporting accepted medical use and the moderate to low potential for physical and psychological dependence. The primary implications of rescheduling are: (a) the elimination of IRS Section 280E which enables state-legal cannabis business to deduct standard operating expenses from their federal taxes, (b) reduced administrative and regulatory barriers for clinical trials, (c) a pathway for the FDA to develop federal standards for product quality, labeling accuracy, and consumer protection, (e) reduced legal risks for financial institutions, (f) the listing of U.S. medicinal cannabis companies on U.S. stock exchanges, and (g) federal de-prioritization on non-violent marijuana offenses. Rescheduling, nonetheless, does not permit interstate commerce of cannabis within the United States, nor does it override state laws criminalizing marijuana use or provide full banking protections for financial institutions providing traditional services to the U.S. cannabis market. As part of the executive order, a pilot program was established for Medicare beneficiaries to receive up to $500 annually for doctor-recommended CBD products starting in 2026.
However, until marijuana in all its forms is rescheduled by the Attorney General and until the regulatory framework with respect to marijuana adapts to these recent and future changes, there is a risk that federal authorities may enforce current federal law. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable U.S. federal money laundering legislation. While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis regulatory programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve us of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against us should we expand our operations into the U.S. However, since U.S. federal law criminalizing the use of marijuana pre-empts state laws that legalize its use, enforcement of federal law regarding marijuana may be a significant risk and could greatly harm our business, prospects, revenue, results of operation and financial condition if we were to expand our operations into the United States. We currently have no operations in the United States and no current plans to expand our operations into the United States in the foreseeable future.
Our activities are, and will continue to be, subject to evolving regulation by governmental authorities. The legality of the production, cultivation, extraction, distribution, retail sales, transportation and use of cannabis differs among states in the United States. Due to the current regulatory environment in the United States, new risks may emerge; management may not be able to predict all such risks. Due to the conflicting views between state legislatures and the federal government regarding cannabis, cannabis businesses are subject to inconsistent laws and regulations. There can be no assurance that the federal government will not enforce federal laws relating to marijuana and seek to prosecute cases involving marijuana businesses that are otherwise compliant with state laws in the future. To date, federal enforcement agencies have taken little or no action against state-compliant cannabis businesses in the United States. However, the DOJ may change its enforcement policies at any time, with or without advance notice. The uncertainty of U.S. federal enforcement practices going forward and the inconsistency between U.S. federal and state laws and regulations may present risks for us if we expand our operations into the United States in the future; however the reclassification to Schedule III, the possibility of a future FDA medicinal regulatory framework for cannabis, and future hearings on the broader status of marijuana under U.S. federal law, reduces some of this uncertainty.
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Risks Related to Financials and Accounting
Our financial situation creates doubt as to whether we will continue as a going concern.
Akanda did not generate material revenues in 2025, as a result of shutting down its Canmart operations, and does not of yet generate any revenues from its British Columbia farming facility. Furthermore, although Akanda is generating revenues as a result of its 2025 acquisition of First Towers, there can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain funding from additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements.
To the extent that revenue generated by our First Towers subsidiary, and funds generated from any private placements, public offerings and/or bank financing, are insufficient, we will have to raise additional working capital. No assurance can be given that our revenues will increase or that additional financing will be available, or if available, will be on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available, we may be forced to discontinue operations, which would cause investors to lose their entire investment.
Akanda will require additional financing and cannot be certain that such additional financing will be available on reasonable terms when required, or at all.
To date, Akanda has relied primarily on equity and debt financing to carry on its business. Akanda has limited financial resources and operating cash flow and can make no assurance that sufficient funding will be available to it to fund its operating expenses and to further develop its business.
Any additional financing may involve substantial dilution for the existing shareholders. There can be no assurance that such additional capital will be available, on a timely basis or on acceptable terms. Failure to obtain such additional financing could result in delay or indefinite postponement of operations or the further development of its business with the possible loss of such properties or assets. If adequate funds are not available or are not available on acceptable terms, Akanda may not be able to fund its business or the expansion thereof, take advantage of strategic acquisitions or investment opportunities or respond to competitive pressures. Such inability to obtain additional financing when needed could have a Material Adverse Effect on its business, financial condition and results of operations.
We are subject to significant accounts payable and other current liabilities.
We have total current liabilities of $6,199,365 as of December 31, 2025. We may also incur indebtedness from time to time to fund operations, which have historically been converted into equity but in the future may be required to be repaid at maturity. Our operations are not currently able to generate sufficient cash flows to meet our payable and other liabilities, which could reduce our financial flexibility, increase interest expenses, and adversely impact our operations. We have not historically generated sufficient cash flow from operations to enable us to repay indebtedness and to fund other liquidity needs, including capital expenditure requirements. Such indebtedness could affect our operations in several ways, including the following:
| ● | a significant portion of our cash flows could be required to be used to service such indebtedness. |
| ● | a high level of indebtedness could increase our vulnerability to general adverse economic and industry conditions. |
| ● | any covenants contained in the agreements governing such outstanding indebtedness could limit our ability to borrow additional funds, dispose of assets, pay dividends and make certain investments. |
| ● | a high level of indebtedness may place us at a competitive disadvantage compared to our competitors that are less leveraged and, therefore, our competitors may be able to take advantage of opportunities that our indebtedness may prevent us from pursuing. |
| ● | debt covenants may affect our flexibility in planning for, and reacting to, changes in the economy and in our industry, if any; and |
| ● | any ability to convert or exchange such indebtedness for equity in the Company can cause substantial dilution to existing stockholders of the Company. |
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Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.
Accounting principles generally accepted in IFRS and related pronouncements, implementation of guidelines and interpretations with regard to a wide variety of matters that are relevant to our businesses, such as, but not limited to, revenue recognition, stock-based compensation, trade promotions, and income taxes, are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.
Our subsidiary, Bophelo, is currently in insolvency proceedings.
Our indirect wholly-owned subsidiary, Bophelo, was placed into liquidation by the High Court of Lesotho (the “Lesotho Court”) in July 2022 pursuant to an unauthorized application and request (the “Liquidation Application”) that was filed by Louisa Mojela, our former Executive Chairman, who was terminated as Executive Chairman of Akanda, and the Mophuti Matsoso Development Trust (“MMD Trust”), which we believe was established by Ms. Mojela. Mr. Chavonnes Cooper of Cape Town, South Africa, was appointed by the Lesotho Court as liquidator of Bophelo for purposes of maintaining the value of the assets owned or managed by Bophelo. While we intend to contest and seek to reverse the determination by the Lesotho Court to place Bophelo in liquidation, and will seek to recover significant loans made to Bophelo to fund the execution of Bophelo’s business plan, including payment of rents and staffing costs in the event that the Lesotho Court does not reverse its determination to place Bophelo in liquidation, there can be no assurance that we will be successful in reversing the Lesotho Court’s determination to place Bophelo in liquidation.
As a result of Bophelo’s liquidation, during the year ended December 31, 2022, Bophelo ceased operations and we derecognized its assets and have since determined that it is no longer a significant subsidiary. We will continue to report about Bophelo, until such time as our inquiry into the liquidation confirms that the process is complete.
There are tax risks we may be subject to in carrying out our business in multiple jurisdictions.
We will operate and, accordingly, will be subject to income tax and other forms of taxation in multiple jurisdictions. We may be subject to income taxes and non-income taxes in a variety of jurisdictions and our tax structure may be subject to review by both domestic and foreign taxation authorities. Those tax authorities may disagree with our interpretation and/or application of relevant tax rules. A challenge by a tax authority in these circumstances might require us to incur costs in connection with litigation against the relevant tax authority or reaching a settlement with the tax authority and, if the tax authority’s challenge is successful, could result in additional taxes (perhaps together with interest and penalties) being assessed on us, and as a result an increase in the amount of tax payable by us. In addition, we may be subject to different taxes imposed by the local governments in the jurisdictions where we operate, and changes within such tax, legal and regulatory framework may have an adverse effect on our financial results.
Taxation laws and rates which determine taxation expenses may vary significantly in different jurisdictions, and legislation governing taxation laws and rates are also subject to change. Therefore, our earnings may be affected by changes in the proportion of earnings taxed in different jurisdictions, changes in taxation rates, changes in estimates of liabilities and changes in the amount of other forms of taxation. The determination of our provision for income taxes and other tax liabilities will require significant judgment (including based on external advice) as to the interpretation and application of these rules. We may have exposure to greater than anticipated tax liabilities or expenses.
There is a risk that we will be a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes for the current or any future taxable year, which could result in material adverse U.S. federal income tax consequences if you are a U.S. Holder.
If we (or any of our non-U.S. subsidiaries) are a PFIC for any taxable year during which a U.S. Holder owns Common Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. The determination of whether a corporation is a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules that are subject to differing interpretations. In addition, the determination of whether a corporation will be a PFIC for any taxable year generally can only be made after the close of such taxable year. Therefore, it is possible that we could be classified as a PFIC for our initial taxable year or in future years due to changes in the nature of our business, composition of our assets or income, as well as changes in our market capitalization. In particular, our PFIC status will depend, in part, on the amount of cash that we raise and how quickly we utilize the cash in our business. Based upon the foregoing, it is uncertain whether we will be a PFIC for our current taxable year or any future taxable year. We have not determined, if we (or any of our non-U.S. subsidiaries) were to be classified as a PFIC for a taxable year, whether we will provide information necessary for a U.S. Holder to make a “qualified electing fund” election which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs. Accordingly, U.S. Holders should assume that they will not be able to make a qualified electing fund election with respect to our Common Shares. The PFIC rules are complex, and each U.S. Holder should consult his, her or its own tax advisor regarding the PFIC rules, the elections which may be available, and how the PFIC rules may affect the U.S. federal income tax consequences relating to the ownership and disposition of our Common Shares.
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Failure to develop our internal controls over financial reporting as we grow could have an adverse effect on our operations.
As we mature, we will need to continue to develop and improve our current internal control systems and procedures to manage our growth. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish appropriate controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors.
Risks Related to Our Common Shares
We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product and business development efforts or other operations.
We need to seek additional funds, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances or a combination of these approaches. Raising funds in the current economic environment may present additional challenges. It is not certain that we have accounted for all costs and expenses of future development and regulatory compliance. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.
Any additional fundraising efforts may divert the attention of our management team from their day-to-day activities, which may adversely affect our ability to launch our business and develop and commercialize our products. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any future financing may adversely affect the holdings or the rights of our shareholders, and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities may dilute our existing shareholders.
The incurrence of indebtedness would result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely affect our ability to conduct our business.
We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or products or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our shareholders and could cause the price of our Common Shares to decline.
We may issue additional securities. Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing shareholders. We may sell Common Shares, convertible securities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences, and privileges senior to those of holders of our Common Shares.
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The Company has effected numerous reverse stock splits and may effect additional reverse stock splits in the future, which has in the past and could in the future have the effect of decreasing the liquidity of our Common Shares and further causing the Company’s stock price to decline relative to its value before the reverse stock split.
The Company may strategically effect one or more additional reverse stock splits from time to time during 2026 or beyond; however, there can be no assurance that the Company will so effect additional reverse stock splits or what the ratio(s) may be for any such reverse stock split(s). The Company’s decision whether or not (and when) to effect additional reverse stock splits (and at what ratio to effect such reverse stock splits) will be based on a number of factors, including market conditions, existing and anticipated trading prices for the Common Shares and the requirements of the Nasdaq Capital Market. The Company has effected reverse stock splits when there is downward pressure on the trading price of its Common Shares, sometimes as a result of the sale into the market of registered Common Shares upon the conversion of outstanding convertible promissory notes.
The liquidity of the Common Shares has in the past, and may in the future, be affected adversely by a reverse stock split given the reduced number of shares that will be outstanding following a reverse stock split, especially if the market price of the Common Shares does not increase as a result of the reverse stock split. Although the Company believes that a higher market price of its Common Shares may help generate greater or broader investor interest, the Company cannot assure you that a reverse stock split will result in a share price that will attract new investors and may instead carry the risk of dampening the overall attractiveness of the Company’s securities. In addition, the Company’s reverse stock splits have increased the number of stockholders who own odd lots (less than 100 shares) of Common Shares, creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
Any future reverse stock split can also cause a decline in the value of the Common Shares relative to its value before the reverse stock split, and the Company can make no assurance that the market price of the Company’s Common Shares will remain at or above the post-split price on the commencement of trading on its effective date, as many times stocks decrease in value after a reverse stock split.
Finally, although the Company does not believe that its reverse stock splits have violated or any further reverse stock splits will violate any particular Nasdaq rules, and the Company further believes that it is in compliance with the Nasdaq listing standards, the Company can give no assurance that the Company’s numerous prior reverse stock splits and potential future reverse stock splits will not result in Nasdaq issuing a deficiency notice or even delisting the Company from the Nasdaq Capital Market, which would have a material adverse effect on our ability to raise capital, the stock price and liquidity of the Common Shares, or the value of the Common Shares held by the Company’s shareholders.
We incur increased costs as a result of operating as a public company and our management is required to devote substantial time to new compliance initiatives.
As a public company, particularly after we are no longer an emerging growth company, we incur and will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and rules implemented by the SEC and Nasdaq, impose various requirements on public companies, including requirements to file periodic and event-driven reports with respect to our business and financial condition and operations and establish and maintain effective disclosure and financial controls and corporate governance practices. Our management and other personnel have limited experience operating a public company, which may result in operational inefficiencies or errors, or a failure to improve or maintain effective internal controls over financial reporting (“ICFR”) and disclosure controls and procedures necessary to ensure timely and accurate reporting of operational and financial results. Our existing management team will need to devote a substantial amount of time to these compliance initiatives, and we may need to hire additional personnel to assist us with compliance. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly.
Pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), we are required to furnish a report by our management on our ICFR, which, after we are no longer an emerging growth company, must be accompanied by an attestation report on ICFR issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will document and evaluate our ICFR, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, and adopt a detailed work plan to assess and document the adequacy of our ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for ICFR. If our management and/or auditors determine that there are one or more material weaknesses in our ICFR, such a determination could cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
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In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some public company required activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and divert management’s time and attention from revenue generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
Being a public company and complying with applicable rules and regulations make it more expensive for us to obtain director and officer liability insurance. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our Board.
We may not be able to maintain a listing of our Common Shares on Nasdaq. If we fail to meet applicable listing requirements, Nasdaq may delist our Common Shares from trading, in which case the liquidity and market price of our Common Shares could decline.
Since 2022, we have received four notifications of non-compliance from Nasdaq, the most recent being in May 2026 when we received a letter from the Listing Qualifications Department of Nasdaq, notifying us that we are not in compliance with the periodic filing requirements for continued listing set forth in Nasdaq Listing Rule 5250(c)(1) as a result of our failure to file our Annual Report on Form 20-F for the fiscal year ended December 31, 2025 with the SEC by the required due date. We expect that we will again be in compliance with Nasdaq upon the filing of this Annual Report on Form 20-F.
We cannot assure you that we will be able to meet the continued listing standards of Nasdaq in the future. If we fail to comply with the applicable listing standards and Nasdaq delists our Common Shares, we and our shareholders could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our Common Shares; |
| ● | reduced liquidity for our Common Shares; |
| ● | a determination that our Common Shares are “penny stock”, which would require brokers trading in our Common Shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Common Shares; |
| ● | a limited amount of news about us and analyst coverage of us; and |
| ● | a decreased ability for us to issue additional equity securities or obtain additional equity or debt financing in the future. |
The Company can give no assurance that it will not again be subject to delisting as a result of non-compliance with any Nasdaq listing requirement.
We are a foreign private issuer and take advantage of the less frequent and detailed reporting obligations applicable to foreign private issuers.
We are a “foreign private issuer”, as such term is defined in Rule 405 under the Securities Act, and are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we are subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, we do not file the same reports that a U.S. domestic issuer files with the SEC, although we are required to file with or furnish to the SEC the continuous disclosure documents that we are required to file in Canada under Canadian securities laws, if applicable. In addition, our officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell shares.
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As a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While we comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under Canadian securities laws, if and when applicable, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive the same information at the same time as such information is provided by U.S. domestic companies. In addition, we have more time than U.S. domestic companies after the end of each fiscal year to file our annual report with the SEC and are not required under the Exchange Act to file quarterly reports with the SEC.
In addition, as a foreign private issuer, we have the option to follow certain Canadian corporate governance practices instead of those otherwise required under the applicable rules of Nasdaq for domestic U.S. issuers, except to the extent that such practices would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We may in the future elect to follow home country practices in Canada instead of those otherwise required under the applicable rules of Nasdaq for domestic U.S. issuers with regard to certain corporate governance matters.
As a result, our shareholders may not have the same protections afforded to shareholders of U.S. domestic companies that are subject to all corporate governance requirements.
We may lose our status as a foreign private issuer in the United States, which would result in increased costs related to regulatory compliance under United States securities laws.
We will cease to qualify as a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4 under the Exchange Act, if, as of the last business day of our second fiscal quarter, more than 50% of our outstanding Common Shares are directly or indirectly owned by residents of the United States and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States. If we determine that we fail to qualify as a foreign private issuer, we will cease to be eligible to avail ourselves of the forms and rules designated for foreign private issuers beginning on the first day of the fiscal year following such determination. Among other things, this will result in loss of the exemption from registration under the Exchange Act provided by Rule 12g3-2(b) thereunder, and, if we are required to register our Common Shares under section 12(g) of the Exchange Act, we will have to do so as a domestic issuer. Further, any securities that we issue in unregistered or unqualified offerings both within and outside the United States will be “restricted securities” (as defined in Rule 144(a)(3) under the Securities Act) and will continue to be subject to United States resale restrictions notwithstanding their resale in “offshore transactions” pursuant to Regulation S under the Securities Act. As a practical matter, this will likely require us to register more offerings of our securities under the Securities Act on either a primary offering or resale basis, even if they take place entirely outside the United States. The resulting legal and administrative costs of complying with the resulting regulatory requirements are anticipated to be substantial, and to subject us to additional exposure to liability for which we may not be able to obtain insurance coverage on favorable terms, or at all.
If our share price fluctuates, you could lose a significant part of your investment.
The market price of our Common Shares could be subject to wide fluctuations in response to, among other things, the risk factors described in this section of the Annual Report on Form 20-F, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us.
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Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our Common Shares. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.
The public offering price of our Common Shares has been determined by negotiations between us and the underwriter based upon many factors and may not be indicative of prices that will prevail following the closing of an offering. Volatility in the market price of our Common Shares may prevent investors from being able to sell their shares at or above the public offering price. As a result, you may suffer a loss on your investment.
Investors may be unable to enforce judgments against certain of our directors and officers because they reside outside of the United States.
We are incorporated under the laws of the Province of Ontario, Canada and most of our assets are located outside of the United States. Furthermore, most of our directors and officers reside outside of the United States in Canada. As a result, investors may not be able to effect service of process within the United States upon such of our directors or officers or enforce against them in U.S. courts, judgments predicated on U.S. securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts, judgments obtained against these persons in courts located in jurisdictions outside of the United States.
As a result of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of our Board of Directors or controlling shareholders than they would as public shareholders of a U.S. based company.
We do not intend to pay dividends on our Common Shares in the near future, and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our Common Shares.
We have never declared or paid any cash dividend on our Common Shares and do not currently intend to do so in the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. Therefore, the success of an investment in our Common Shares will depend upon any future appreciation in their value. There is no guarantee that our Common Shares will appreciate in value or even maintain the price at which you purchased them.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us, our share price and trading volume could decline.
The trading market for our Common Shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our operations. We do not have any control over these analysts and their research and reports. Securities and industry analysts do not currently, and may never, publish research on our business. If no security or industry analysts commence coverage on us, the trading price for our Common Shares would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our shares or publish inaccurate or unfavorable research about our business, our share price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our shares could decrease, which might cause our share price and trading volume to decline.
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Specific Risks Related to Our First Towers’ Business
First Towers has a limited operating history and operates in an innovative and steady sector with long-term commitments. Its future earnings, if any, and cash flows are subject to these long-term commitments, resulting in uncertainty about the prospects of Akanda post-Transaction.
First Towers was founded in February 2017 and is focused on tower development and operating its 700+km fiber optic network in the attractive wireless market of Mexico, with an intention to expand to other Latin American countries. Consequently, First Towers is subject to all the risks and uncertainties inherent in a new business and in connection with the development and sale of new services. In addition, the fiber optic/telecommunications industry is an innovative sector. Accordingly, investors should consider First Towers’ prospects in light of the costs, uncertainties, delays, and difficulties frequently encountered by companies in this early stage of development and operating in a changing and evolving sector. Investors should carefully consider the risks and uncertainties that a company, such as First Towers, with a limited operating history will face. In particular, investors should consider that First Towers cannot provide assurance that it will be able to:
| ● | successfully implement or execute First Towers’ current business plan; |
| ● | maintain First Towers’ management team; |
| ● | raise sufficient funds in the capital markets to effectuate First Towers’ business plan; |
| ● | attract, enter or maintain contracts with, and retain clients; and/or |
| ● | compete effectively in the extremely competitive environment in which First Towers operates. |
If First Towers cannot successfully accomplish any of the foregoing objectives, First Towers’ business may not succeed.
First Towers’ insurance may not adequately cover its operating risk and Akanda post-Transaction may have difficulty obtaining insurance at economically viable rates.
First Towers has insurance to protect its assets, operations and employees. While First Towers believes its insurance coverage addresses all material risks to which First Towers is exposed and is adequate and customary in its current state of operations, such insurance is subject to coverage limits and exclusions and may not be available for all the risks and hazards to which First Towers is exposed. In addition, no assurance can be given that such insurance will be adequate to cover its liabilities or will be generally available in the future or, if available, that premiums will be commercially justifiable. If First Towers were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if First Towers were to incur such liability at a time when First Towers is not able to obtain liability insurance, its business, results of operations and financial condition could be materially adversely affected. First Towers’ limited operating history may make it difficult to obtain insurance policies at competitive rates. Insurance that is otherwise readily available, such as workers’ compensation, general liability, title insurance and directors’ and officers’ insurance, is more difficult for First Towers to find and more expensive because of its involvement in emerging areas. There are no guarantees that Akanda post-Transaction, particularly with Akanda’s continued business in hemp and cannabis cultivation, will be able to find insurance coverage at otherwise competitive, or even economically viable terms.
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First Towers’ growth and financial health are subject to substantial uncertainty due to extreme market volatility in securities prices, reduced liquidity and credit availability, rating downgrades of certain investments and declining values.
The financial markets in the United States have experienced substantial uncertainty during recent years, particularly following the COVID-19 outbreak and potential onset of reciprocal U.S. tariffs. This uncertainty has included, among other things, extreme volatility in securities prices, reduced liquidity and credit availability, rating downgrades of certain investments and declining values with respect to others. If capital and credit markets continue to experience uncertainty and available funds remain limited, Akanda post-Transaction may not be able to obtain debt or equity financing or to refinance its existing indebtedness on favorable terms or at all, which could affect its strategic operations, financial performance and force modifications to its operations. These conditions currently have not precluded Akanda post-Transaction from accessing credit markets or financing its operations, but there can be no assurance that financial markets and confidence in major economies will not deteriorate. In addition, Akanda post-Transaction may be vulnerable to changes in market preferences or other market changes, such as general economic conditions, recession and fears of recession, interest rates, tax rates, policies, and inflation. The U.S. is currently experiencing unusually high rates of inflation, and Akanda post-Transaction may experience a compression in its margins as a result. The U.S. and global economies have in the past, and will in the future, experience recessionary periods and periods of economic instability. During such periods, the existing and potential customers of Akanda post-Transaction may choose not to expend the amounts that Akanda post-Transaction anticipates based on its expectations with respect to the addressable market for the services offered. There could also be a number of other effects from adverse general business and economic conditions on the business of Akanda post-Transaction, including insolvency of any of third-party suppliers or contractors, decreased market confidence, decreased interest in communications solutions, decreased discretionary spending and reduced customer demand for the services offered, any of which could have a Material Adverse Effect on the business, financial condition and results of operations.
The current and future state of the domestic and global economy, including increased costs and inflation may adversely affect the operations and anticipated revenue of Akanda post-Transaction.
The business of Akanda post-Transaction may be adversely affected by changes in domestic and international economic conditions, including inflation, which can adversely affect Akanda post-Transaction due to the increasing costs of critical materials, equipment, labor, and other services. In addition, inflation is often accompanied by higher interest rates. Continued inflationary pressures could impact the profitability of Akanda post-Transaction. Inflation may also affect the ability to enter into future traditional debt financing, as high inflation may result in an increase in costs related to any future financing.
The U.S. Congress, the Canadian House of Commons, the General Congress of the United Mexican States, the Organization for Economic Co-operation and Development, and other government agencies in jurisdictions where Akanda and its affiliates do business have been focused on issues related to the taxation of multinational corporations. Specific attention has been paid to “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the United States, Canada and Mexico and other countries in which Akanda and its affiliates do business could change on a prospective or retroactive basis, and any such change could adversely affect the Akanda post-Transaction.
A significant failure or deterioration in the First Towers’ dark fiber optic network and its control systems could have a Material Adverse Effect on its business and operating results.
The quality and integrity of First Towers’ dark fiber optic networks are critical to the success of our business and operations. As such, it is imperative that First Towers (and First Towers’ service providers’) network and its control systems operate effectively and successfully. The network and its control systems can be negatively impacted by the design of the control systems, the quality training programs and adherence by employees to control guidelines. Although First Towers strives to ensure that all of its service providers have implemented and adhere to high-quality control systems, any significant failure or deterioration of such systems could have a Material Adverse Effect on its infrastructure, business, and operating results.
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First Towers may experience breaches of security at its facilities or on its networks or losses as a result of the theft of its products.
A security breach or any theft at one of First Towers’ facilities or to its networks could result in a significant loss of available service/coverage, expose First Towers to additional liability under applicable regulations and to potentially costly litigation or increase expenses relating to the resolution and future prevention of these thefts or breaches and may deter potential customers from choosing First Towers’ services, any of which could have an adverse effect on its business, financial condition and results of operations.
First Towers’ networks and services may be affected from time to time by design and manufacturing defects that could cause a Material Adverse Effect on First Towers’ business and result in harm to First Towers’ reputation.
First Towers offers telecommunication infrastructure and provides networks and service connections that can be affected by design and manufacturing defects. Sophisticated operating system software and applications, as well as hardware on its networks can often have issues that can unexpectedly interfere with the intended operation of hardware or software products and give rise to connectivity or service connection issues. Defects can also exist in components and products First Towers purchases from third parties. Component defects could make First Towers’ infrastructure unsafe and create a risk of environmental or property damage and personal injury. As a result, First Towers’ infrastructure may from time to time not perform as anticipated and may not meet customer expectations. There can be no assurance First Towers will be able to detect and fix all issues and defects in its available infrastructure and it cannot guarantee that one tenant’s defect or malfunction will not affect other tenants utilizing the infrastructure. Failure to conduct timely repairs can result in widespread technical and performance issues affecting First Towers’ infrastructure and the network providers utilizing it. In addition, First Towers can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines. Quality problems can also adversely affect the experience for users of First Towers’ infrastructure, and result in harm to First Towers’ reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, delay in new product and service introductions and lost sales.
First Towers will need to raise substantial additional funds in the future, which funds may not be available or, if available, may not be available on acceptable terms.
Changing circumstances may cause First Towers to consume capital more rapidly than anticipated. The continued growth of First Towers’ business, including development, regulatory approval and leasing space, will significantly increase First Towers’ expenses going forward, regardless of First Towers’ ability to generate revenue. As a result, First Towers will be required to seek substantial additional funds to continue its business. First Towers’ future capital requirements will depend on many factors, including:
| ● | the cost of building towers and installing fiber; |
| ● | obtaining and maintaining any regulatory clearance or approvals; |
| ● | maintenance of current infrastructure; |
| ● | any change in development priorities; |
| ● | the revenue generated by use of towers and fiber; |
| ● | the cost of ongoing compliance with regulatory requirements; |
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| ● | expenses incurred in connection with potential litigation or governmental investigations; |
| ● | anticipated or unanticipated capital expenditures; and |
| ● | unanticipated general and administrative expenses. |
First Towers may need to raise additional funds in the future to support its operations. If First Towers is required to secure additional financing, such additional fundraising efforts may divert First Towers’ management from their day-to-day activities. If First Towers is unable to raise additional capital in sufficient amounts or on terms acceptable to First Towers, First Towers may be prevented from carrying out its business plan. This would have a Material Adverse Effect on First Towers’ business, financial condition and results of operations.
First Towers may be subject to risks associated with climate change, including the potential increased impact of severe weather events on First Towers’ operations and infrastructure.
The potential physical effects of climate change, such as increased frequency and severity of storms, floods, fires, fog, mist, hail, freezing conditions, sea-level rise and other climate-related events, could affect First Towers’ operations, infrastructure and financial results. First Towers could incur significant costs to improve the climate resiliency of its infrastructure and otherwise prepare for, respond to, and mitigate such physical effects of climate change. First Towers is not able to accurately predict the materiality of any potential losses or costs associated with the physical effects of climate change.
First Towers and its third-party suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how First Towers does, or interrupt First Towers’ business.
First Towers’ and its third-party manufacturers’ and suppliers’ activities may involve the generation, use, storage and disposal of hazardous materials. First Towers may work with materials, compounds and samples that could be hazardous to human health and safety and the environment. First Towers’ operations may also produce waste products. Accordingly, First Towers and its third-party manufacturers and suppliers are subject to federal, state, local and foreign environmental, health and safety laws and regulations, and permitting and licensing requirements. If First Towers does not comply with applicable laws and regulations, and permitting and licensing requirements, First Towers may be subject to fines, penalties, a suspension of our business or other sanctions.
First Towers’ networks, service coverage, and telecommunication infrastructure may be subject to regulation, or local municipal approvals, which may limit demand for First Towers’ infrastructure in particular locations and harm our business and operating results.
Operating a telecommunications infrastructure company in Mexico presents several risk factors, particularly regarding regulatory challenges. The Mexican government has implemented reforms aimed at increasing competition and digital inclusion, which can lead to stricter compliance requirements and potential market shifts. First Towers’ infrastructure may be subject to regulatory approval, particularly by local governments, which may impact First Towers’ ability to site infrastructure in particular advantageous locations. Additionally, geopolitical concerns, including the presence of foreign technology providers, could lead to policy changes that impact infrastructure investments and customer commitments, which may cause outages if new suppliers need to be obtained or legacy equipment needs to be updated. Such outages may limit demand for First Towers’ services and consequently materially harm its business and results of operations. Depending on the height of certain telecommunication infrastructure, First Towers may also need to cooperate with the Federal Aviation Administration (FAA) and Agencia Federal de Aviación Civil (AFAC) for necessary safety standards.
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Infrastructure development and maintenance is a long, expensive and uncertain process.
The infrastructure development and maintenance process is a costly, complex and time-consuming process, and investments in infrastructure development and maintenance often involve a long wait until a return, if any, can be achieved on such an investment. First Towers might face difficulties or delays in the infrastructure development and maintenance process that will result in First Towers’ inability to timely offer services that satisfy the market, which might allow competing services to emerge during the developing new infrastructure and maintaining existing infrastructure development. First Towers anticipates making significant investments in construction and development to expand its services and coverage, but such investments are inherently speculative and require substantial capital expenditures. Any unforeseen technical obstacles and challenges that First Towers encounters in the research and development, permitting, construction, and/or associated processes could result in delays in or the abandonment of a particular service or coverage area, may substantially increase development costs, and may negatively affect its results of operations.
Rapid technological changes may adversely affect the market acceptance of First Towers’ networks and services and could adversely affect its business, financial condition and results of operations.
The telecommunications market is subject to technological changes, introduction of new products and services, change in customer demands and evolving industry standards. First Towers’ future success will depend upon its ability to keep pace with technological developments and to timely address the increasingly sophisticated needs of its customers by supporting existing and new technologies and by developing and introducing enhancements to its current products and new products. First Towers may not be successful in developing and marketing its infrastructure in response to technological change, evolving industry standards or customer requirements, particularly satellite-based internet/communication infrastructure. In addition, First Towers may experience difficulties internally or in conjunction with key vendors and partners that could delay or prevent the successful development, introduction and sale of its infrastructure may not adequately meet the requirements of the market and may not achieve any significant degree of market acceptance. If release dates of First Towers’ new products or infrastructure are delayed or, if when released, they fail to achieve market acceptance, First Towers’ business, operating results and financial condition may be adversely affected.
First Towers may face competition from other telecommunications companies, many of which have substantially greater resources.
The telecommunications industry is evolving rapidly and is highly competitive. There are many telecommunication companies, both with and without their own infrastructure, which have substantially greater resources, expertise and capital. First Towers’ failure to compete with such industry participants could have a material adverse effect on First Towers’ ability to grow its business and consequently its results of operations and financial condition.
If First Towers’ services do not experience significant growth, if First Towers cannot create and expand its customer base, or if its services do not achieve broad acceptance, then First Towers may not be able to achieve its anticipated level of growth.
We cannot accurately predict the future growth rates or sizes of the markets for First Towers’ services. Demand for First Towers’ services may not increase, or may decrease, either generally or in specific markets, for particular types of services or during particular time periods. The expansion of the telecommunication market in general, and the market for First Towers’ services in particular, depends on a number of factors, including the following:
| ● | customer satisfaction with telecommunication provider; |
| ● | customer satisfaction with First Towers’ specific services; |
| ● | First Towers’ ability to technologically reduce maintenance costs; |
| ● | the cost, performance and reliability of First Towers’ services and services offered by First Towers’ competitors; |
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| ● | customer perceptions regarding the effectiveness and value of First Towers’ network and use of physical telecommunication infrastructure; |
| ● | obtaining timely regulatory approvals, including, access to airspace, right of ways, and the wireless spectrum; and |
| ● | marketing efforts and publicity regarding First Towers’ services. |
If First Towers’ services specifically do not gain wide market acceptance, then First Towers may not be able to achieve its anticipated level of growth and our revenue and results of operations will decline.
If First Towers’ long-term contracts are not maintained, First Towers may not earn enough revenue to become profitable.
First Towers relies on long-term contracts to build its tower infrastructure and for the lease of its fiber network. Economic downturns, changing consumer preferences, or unexpected disruptions may make these commitments difficult to uphold or less profitable overtime. Additionally, failure to adapt to new industry trends or renegotiate contracts effectively could result in declining revenue, reputational damage, or financial strain. First Towers inability to be flexible in agreements, continuously assess market dynamics to mitigate risks, or adapt to consumer preferences could result in the loss of long-term contracts underpinning its revenue generation.
First Towers may engage in transactions with businesses that may be affiliated with our officers, directors or significant stockholders, and which may involve actual or potential conflicts of interest.
First Towers may decide to make investments in one or more businesses affiliated with its officers, directors or significant stockholders. Although First Towers will not specifically focus on, or target, any particular transaction with any affiliates or affiliated entities, First Towers would pursue such a transaction if First Towers determined that such an affiliated investment was attractive from a risk-adjusted return perspective, and such transaction were approved by a majority of Combined Corporation’s independent and disinterested directors. Any such activity would involve actual or potential conflicts of interest. Although First Towers is confident that it can navigate these conflicts consistent with best practices and applicable law, the existence or appearance of such conflicts of interest could make our securities less attractive and thereby reduce their trading prices.
Risks Related to First Towers’ Business and Operations - Regulations and Compliance
Operating a telecommunications infrastructure business requires significant resources.
First Towers operates a telecommunications infrastructure business. As a result, First Towers expects a significant amount of its management’s time and external resources to be used to comply with the laws, regulations and guidelines that impact First Towers’ business, and changes thereto, and such compliance may place a significant burden on First Towers’ management and other resources. Additionally, First Towers may be subject to a variety of local laws, regulations and guidelines in each of the jurisdictions in which First Towers operates, which may differ among these various jurisdictions. Complying with multiple regulatory regimes will require additional resources and may impair our ability to expand into certain jurisdictions.
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The growth of First Towers’ business continues to be subject to new and changing federal, state, and local laws and regulations.
Changes in applicable federal, state, and local regulations, including zoning restrictions, environmental requirements, FAA and AFAC compliance, security requirements, or permitting requirements and fees, could restrict the products and services First Towers may offer or impose additional compliance costs on First Towers. Violations of applicable laws, or allegations of such violations, could disrupt First Towers’ business and result in a Material Adverse Effect on First Towers’ operations. First Towers cannot predict the nature of any future laws, regulations, interpretations or applications, including local, state or federal, and it is possible that regulations may be enacted in the future that will be materially adverse to First Towers’ business or which would have materially significant costs of compliance which could negatively impact First Towers’ business.
First Towers is subject to Canadian Privacy and Data Security Laws, which impose a range of obligations on First Towers. Failure to comply with PIPEDA and other provincial privacy legislation could expose First Towers to significant liability and reputational harm.
First Towers is subject to Canadian federal and, where applicable, provincial privacy legislation, including the Personal Information Protection and Electronic Documents Act (“PIPEDA”) and substantially similar provincial laws in British Columbia, which govern the collection, use, and disclosure of personal information in the course of commercial activities and impose a range of obligations on First Towers. Failure to comply with PIPEDA and other provincial privacy legislation could expose First Towers to significant liability and reputational harm.
Increasingly, companies are subject to a wide variety of attacks on their networks and information technology infrastructure on an ongoing basis. Traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, denial of service attacks, ransomware attacks and sophisticated nation-state and nation-state supported actors engage in intrusions and attacks that create risks for our (and our suppliers’) internal networks, vehicles, infrastructure, and cloud deployed products and the information they store and process. Although First Towers has implemented security measures to prevent such attacks, its networks and systems may be breached due to the actions of outside parties, employee error, malfeasance, a combination of these, or otherwise, and as a result, an unauthorized party may obtain access to our systems, networks, or data.
First Towers may face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or threats. A breach in our data security could create system disruptions or slowdowns and provide malicious parties with access to information stored on our networks, resulting in data being publicly disclosed, altered, lost, or stolen, which could subject us to liability and adversely impact our financial condition. Further, any breach in our data security could allow malicious parties to access sensitive systems, such as our product lines and the vehicles themselves. Such access could adversely impact the safety of our employees and customers.
In addition, First Towers may incur significant financial and operational costs to investigate, remediate and implement additional tools, devices and systems designed to prevent actual or perceived security breaches and other security incidents, as well as costs to comply with any notification obligations resulting from any security incidents. Any of these negative outcomes could adversely impact the market perception of First Towers’ products and customer and investor confidence in our company, and would materially and adversely affect business, prospects, financial condition, results of operations, and cash flows.
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Risks Related to First Towers’ Business and Operations - Intellectual Property
First Towers may be subject to risks related to information technology systems, including cyber-security risks; successful cyber-attacks or technological malfunctions can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of confidential information and reputational risk, all of which would negatively impact First Towers’ business, financial condition or results of operations.
First Towers’ use of technology is critical to its continued operations. First Towers may be susceptible to operational, financial and information security risks resulting from cyber-attacks or technological malfunctions. Successful cyber-attacks or technological malfunctions affecting First Towers or its service providers can result in, among other things, financial losses, the inability to process transactions, the unauthorized release of confidential or proprietary information and reputational risk. As cyber-security threats continue to evolve, First Towers may be required to use additional resources to continue to modify or enhance protective measures or to investigate security vulnerabilities, which could have a Material Adverse Effect on First Towers’ business, financial condition or results of operations.
Maintaining the integrity of First Towers’ computer systems and protecting confidential information and personal identifying information may become increasingly costly, as cyber-security incidents could disrupt business operations, result in the loss of critical and confidential information, and adversely impact First Towers’ reputation and results of operations.
Global cyber-security threats and incidents can range from uncoordinated individual attempts that gain unauthorized access to information technology systems, both internally and externally, to sophisticated and targeted measures, known as advanced persistent threats, directed at First Towers and its affiliated agents. In the ordinary course of First Towers’ business, First Towers intends to collect and store sensitive data, including its proprietary business information and IP, and personally identifiable information of First Towers’ customers. Additionally, First Towers may rely on third-party providers, including cloud storage solution providers. The secure processing, maintenance and transmission of this information are critical to First Towers’ operations and with respect to information collected and stored by First Towers’ third-party service providers, First Towers may be reliant upon their security procedures. First Towers’ systems and the confidential information on them may also be compromised by employee misconduct or employee error. First Towers and third-party service providers may experience these types of internal and external threats and incidents, which can result in the misappropriation and unavailability of critical data and confidential or proprietary information (First Towers’ own and that of third parties, including personally identifiable information) and the disruption of business operations. Depending on their nature and scope, these incidents could potentially also result in the destruction or corruption of such data and information. The potential consequences of a material cyber-security incident include reputational damage, litigation with third parties, diminution in the value of the services First Towers provides to our customers, and increased cyber-security protection and remediation costs, which in turn could adversely affect First Towers’ competitiveness and results of operations. Developments in the laws and regulations governing the handling and transmission of personal identifying information in the United States may require First Towers to devote more resources to protecting such information, which could in turn adversely affect First Towers’ results of operations and financial condition.
Losses or unauthorized access to or releases of confidential information, including personal information, could subject First Towers to significant reputational, financial, legal and operational consequences.
First Towers intends to use and store confidential information, including personal information, with respect to First Towers’ customers and employees. First Towers intends to devote significant resources to network and data security, including through the use of encryption and other security measures intended to protect its systems and data, but these measures cannot provide absolute security, and losses or unauthorized access to or releases of confidential information occur and could materially adversely affect First Towers’ business, reputation, results of operations and financial condition. First Towers’ business also intends to share confidential information with suppliers and other third parties. First Towers may rely on global suppliers that are also exposed to ransomware and other malicious attacks that can disrupt business operations. Although First Towers intends to take steps to secure confidential information that is provided to or accessible by third parties working on First Towers’ behalf, such measures may not always be effective and losses or unauthorized access to or releases of confidential information occur. Such incidents and other malicious attacks could materially adversely affect First Towers’ business, reputation, results of operations and financial condition.
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Any material disruption in our information systems could adversely affect First Towers’ business.
First Towers may rely on information technology networks and systems to operate and manage its business. First Towers’ information technology networks and systems will process, transmit and store personal and financial information, proprietary information of First Towers’ business, and also allow First Towers to coordinate its business across its operation bases, and allow First Towers to communicate with its employees and externally with customers, suppliers, partners, and other third parties. While First Towers believes it takes reasonable steps to secure these information technology networks and systems, and the data processed, transmitted, and stored thereon, such networks, systems, and data may be susceptible to cyberattacks, viruses, malware, or other unauthorized access or damage (including by environmental, malicious, or negligent acts), which could result in unauthorized access to, or the release and public exposure of, First Towers’ proprietary information. Any of the foregoing could cause substantial harm to First Towers’ business, require First Towers to make notifications to governmental authorities, or the media, and could result in litigation, investigations or inquiries by government authorities, or subject First Towers to penalties, fines, and other losses relating to the investigation and remediation of such an attack or other unauthorized access or damage to First Towers’ information technology systems and networks.
First Towers Risks Related to Third Parties
First Towers may be subject to liability arising from any fraudulent or illegal activity by its employees, contractors and consultants.
First Towers may be exposed to the risk that its employees, independent contractors and consultants may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless, or negligent conduct or disclosure of unauthorized activities to First Towers that violate (i) government regulations, (ii) manufacturing standards, (iii) federal and state laws and regulations, or (iv) laws that require the true, complete and accurate reporting of financial information or data. It is not always possible for First Towers to identify and deter misconduct by its employees and other third parties, and the precautions taken by First Towers to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting First Towers from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any actions are brought against First Towers, including by former employees, independent contractors or consultants, and First Towers is not successful in defending itself or asserting its rights, those actions could have a significant impact on First Towers’ business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment of First Towers’ operations, any of which would have an adverse effect on its business, financial condition and results from operations.
First Towers’ dependence on suppliers and service partners for the parts and components in its development and maintenance of telecommunication infrastructure may result in shortages of key components necessary for First Towers’ products and services.
First Towers intends to rely on purchased parts and services which First Towers sources from several suppliers and service partners, some of whom are currently single source suppliers for these components and services. First Towers’ supply and service base may be located globally, and many of the components used in First Towers’ telecommunication infrastructure must be custom made for First Towers. This supply chain exposes First Towers to multiple potential sources of delivery failure or component shortages for First Towers’ services. First Towers has not historically maintained long-term agreements with its suppliers, though First Towers is taking steps to put in place certain long-term agreements. While First Towers believes that it may be able to establish alternate supply relationships and can obtain replacement components and services, First Towers may be unable to do so in the short term or at all at prices that are favorable to First Towers. First Towers may experience source disruptions in its supply and service chains which may cause delays in its production process for both prototype and commercial production of telecommunication infrastructure components and parts. First Towers is also in some cases subject to sole source suppliers for certain pieces of equipment for which First Towers relies on, or may be reliant on to achieve our network coverage in particular areas. Changes in business conditions, wars, governmental changes, political intervention, and other factors beyond First Towers’ control or which First Towers does not presently anticipate, could also affect First Towers’ suppliers’ ability to deliver components and services to First Towers on a timely basis. Furthermore, if First Towers experiences significantly increased demand for infrastructure development or maintenance of its telecommunication infrastructure, or need to replace its existing suppliers, there can be no assurance that additional supplies of component parts will be available when required on terms that are acceptable to First Towers, or at all, or that any supplier would allocate sufficient supplies to First Towers in order to meet First Towers’ requirements or fill our orders in a timely manner. The disruption in the supply of components from suppliers could lead to delays in First Towers’ offered services, which could materially adversely affect First Towers’ business prospects and operating results.
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If First Towers or First Towers’ third-party service providers experience a security breach, or if unauthorized parties otherwise obtain access to First Towers’ customers’ data, First Towers’ reputation may be harmed, demand for services may be reduced, and First Towers may incur significant liabilities.
First Towers’ services may involve the storage, processing and transmission of data, including certain confidential and sensitive information. Any security breach, including those resulting from a cyber-security attack, phishing attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss or destruction of or unauthorized access to, or use, alteration, disclosure, or acquisition of, data, damage to First Towers’s reputation, litigation, regulatory investigations, or other liabilities. These attacks may come from individual hackers, criminal groups, and state-sponsored organizations. If First Towers’ security measures are breached as a result of third-party action, employee error, a defect or bug in First Towers’ products or those of its third-party service providers, malfeasance or otherwise and, as a result, someone obtains unauthorized access to First Towers’ data, including First Towers’ confidential, sensitive, or other information about individuals, or any of these types of information is lost, destroyed, or used, altered, disclosed, or acquired without authorization, First Towers’ reputation may be damaged, First Towers’ business may suffer, and First Towers could incur significant liability. Even the perception of inadequate security may damage First Towers’ reputation and negatively impact its ability to win new customers and retain and receive timely payments from existing customers. Further, First Towers could be required to expend significant capital and other resources to address any data security incident or breach, which may not be covered or fully covered by First Towers’ insurance and which may involve payments for investigations, forensic analyses, legal advice, public relations advice, system repair or replacement, or other services. First Towers may engage third-party vendors and service providers to store and otherwise process First Towers’ data, including confidential, sensitive, and other information about individuals. First Towers’ vendors and service providers may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud. First Towers’ ability to monitor its vendors and service providers’ data security is limited, and, in any event, third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our data, including confidential, sensitive, and other information about individuals. Techniques used to sabotage or obtain unauthorized access to systems or networks are constantly evolving and, in some instances, are not identified until after they have been launched against a target. First Towers and its service providers may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventative and mitigating measures. If First Towers is unable to efficiently and effectively maintain and upgrade its system safeguards, First Towers may incur unexpected costs and its systems may become more vulnerable to unauthorized access or disruption.
For certain of the components and services included in First Towers’ products there may be a limited number of suppliers First Towers can rely upon and if First Towers is unable to obtain these components and services when needed, First Towers could experience delays in repairing or maintaining its telecommunication infrastructure and providing services, and its financial results could be adversely affected.
First Towers intends to acquire most of the components for the repair and maintenance of its telecommunication infrastructure from suppliers and subcontractors. Suppliers of some of the components may require First Towers to place orders with significant lead-times to assure supply in accordance with its manufacturing requirements. Delays in supply, or unavailability of services, may significantly hurt First Towers’ ability to fulfill our contractual obligations and may significantly hurt First Towers’ business and result of operations. In addition, First Towers may not be able to continue to obtain such components or services from these suppliers on satisfactory commercial terms. Disruptions of our offered services could ensue if First Towers was required to obtain components or services from alternative sources, which would have an adverse effect on First Towers’ business, results of operations and financial condition.
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First Towers may pursue strategic transactions in the future, which could be difficult to implement, disrupt First Towers’ business or change First Towers’ business profile significantly.
First Towers intends to consider potential strategic transactions, which could involve acquisitions of businesses or assets, joint ventures or investments in businesses, products or technologies that expand, complement or otherwise relate to First Towers’ current or future business. Should First Towers’ relationships fail to materialize into significant agreements, or should First Towers fail to work efficiently with these companies, First Towers may lose sales and marketing opportunities and First Towers’ business, results of operations and financial condition could be adversely affected. These activities, if successful, create risks such as, among others: (i) the need to integrate and manage the businesses and products acquired with First Towers’ own business and products; (ii) additional demands on First Towers’ resources, systems, procedures and controls; (iii) disruption of First Towers’ ongoing business; and (iv) diversion of management’s attention from other business concerns. Moreover, these transactions could involve: (a) substantial investment of funds or financings by issuance of debt or equity securities; (b) substantial investment with respect to technology transfers and operational integration; and (c) the acquisition or disposition of product lines or businesses. Also, such activities could result in one-time charges and expenses and have the potential to either dilute the interests of First Towers’ existing shareholders or result in the issuance of, or assumption of debt. Such acquisitions, investments, joint ventures or other business collaborations may involve significant commitments of financial and other resources. Any such activities may not be successful in generating revenue, income or other returns, and any resources First Towers committed to such activities will not be available to First Towers for other purposes. Moreover, if First Towers is unable to access the capital markets on acceptable terms or at all, First Towers may not be able to consummate acquisitions, or may have to do so on the basis of a less than optimal capital structure. First Towers’ inability to take advantage of growth opportunities or address risks associated with acquisitions or investments in businesses may negatively affect First Towers’ operating results. Additionally, any impairment of goodwill or other intangible assets acquired in an acquisition or in an investment, or changes to earnings associated with any acquisition or investment activity, may materially reduce First Towers’ earnings. Future acquisitions or joint ventures may not result in their anticipated benefits, and First Towers may not be able to properly integrate acquired products, services, technologies or businesses with First Towers’ existing products and operations or successfully combine personnel and cultures. Failure to do so could deprive First Towers of the intended benefits of those acquisitions.
First Towers’ telecommunication infrastructure may be at risk of unexpected technical failure due to the unavailability of third-party information and infrastructure services such as communications, data processing, computing power, SaaS, and other information and infrastructure services or technical issues with third party dependent data and software platforms.
First Towers’ telecommunication infrastructure may experience technical difficulties that prevent customers from collecting and processing data in near real-time or a timely manner. The most common technical problem First Towers’ customers may experience is the unavailability of third-party communications, data processing, computing power, SaaS, and other information and infrastructure services which is necessary to process and collect data through First Towers’ offered services. While this may not affect the performance of First Towers’ telecommunication infrastructure or the collection of the data, it could potentially prevent customers from being able to access their data, services, and analysis in near real-time or a timely manner.
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Miscellaneous Risks
Future acquisitions and strategic investments could be difficult to integrate, divert the attention of key management personnel, disrupt our business, dilute shareholder value, and harm our results of operations and financial condition.
We consummated the Transaction with First Towers to expand our business offerings and be less reliant on the cannabis market. We may further, in the future seek to acquire or invest in, other businesses, products, or technologies that we believe could complement our operations or expand our breadth, enhance our capabilities, or otherwise offer growth opportunities. While our growth strategy with respect to our planned cannabis operations may include broadening our product offerings, implementing an aggressive marketing plan and employing product diversification, there can be no assurance that our systems, procedures and controls will be adequate to support our operations as they expand. We cannot assure you that our personnel, systems, procedures or controls will be adequate to support our operations in the future or that we will be able to successfully implement appropriate measures consistent with our growth strategy. As part of our planned growth and diversified product offerings, we may have to implement new operational and financial systems, procedures and controls to expand, train and manage our employee base, and maintain close coordination among our staff. We cannot guarantee that we will be able to do so, or that if we are able to do so, we will be able to effectively integrate them into our existing staff and systems. Additionally, the integration of our acquisitions, including with First Towers, and pursuit of potential future acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. Any acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In addition, we have limited experience in acquiring other businesses. Specifically, we may not successfully evaluate or utilize the acquired products, assets or personnel, or accurately forecast the financial impact of an acquisition transaction, including accounting charges. Moreover, the anticipated benefits of any acquisition, investment, or business relationship may not be realized, including with respect to First Towers, or we may be exposed to unknown risks or liabilities associated with our acquisitions.
We may not be able to find and identify desirable acquisition targets or we may not be successful in entering into an agreement with any one target. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could harm our results of operations. In addition, if an acquired business fails to meet our expectations, our business, results of operations, and financial condition may suffer. In some cases, minority shareholders may exist in certain of our non-wholly-owned acquisitions (for businesses we do not purchase as an 100% owned subsidiary) and may retain minority shareholder rights which could make a future change of control or necessary corporate approvals for actions more difficult to achieve and/or more costly.
We may also make strategic investments in early-stage companies developing products or technologies that we believe could complement our business or expand our breadth, enhance our technical capabilities, or otherwise offer growth opportunities. These investments may be in early-stage private companies for restricted stock. Such investments are generally illiquid and may never generate value. Further, the companies in which we invest may not succeed, and our investments could lose their value.
We are dependent upon our management, and the loss of any member of our management team could have a material adverse effect on our operations.
Our success is dependent upon the ability, expertise, judgment, discretion and good faith of our senior management and key employees, including, without limitation, Katie Field, our Interim Chief Executive Officer and Executive Director, Gurcharn Deol, our Chief Financial Officer, Chris Cooper, a director who also leads our First Towers subsidiary, and the other executives of First Towers. The loss of any member of our management team or any of our key employees could have a material adverse effect on our business and results of operations. While employment agreements and incentive programs are customarily used as primary methods of retaining the services of key employees, these agreements and incentive programs cannot assure the continued services of such employees. Any loss of the services of such individuals, or an inability to attract other suitably qualified persons when needed, could have a material adverse effect on our business, operating results or financial condition. We do not currently maintain key-person insurance on the lives of any of our key employees or members of management. Competition for qualified technical, sales and marketing staff, as well as officers and directors can be intense, and no assurance can be provided that we will be able to attract or retain such qualified individuals in the future, which may adversely affect our operations.
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Our directors and officers may have conflicts of interest in conducting their duties.
We may be subject to various potential conflicts of interest because of the fact that some of our officers and directors may be engaged in the cannabis industry through their participation in corporations, partnership or joint ventures, which are potential competitors of our company. Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers may conflict with the interests of our company. Our directors and officers with conflicts of interest will be subject to the procedures set out in the related Canadian law and regulations.
Our executive officers are engaged in other business activities and, accordingly, may not devote sufficient time to our business affairs, which may affect our ability to conduct operations.
Our executive officers and directors may devote time to their outside business interests, so long as such activities do not materially or adversely interfere with their duties to us. In some cases, our executive officers and directors may have fiduciary obligations associated with these business interests that interfere with their ability to devote time to our business and affairs and that could adversely affect our operations. These business interests could require significant time and attention of our executive officers and directors. For example, our Interim Chief Executive Officer and Executive Director, Ms. Katie Field, is the Chief Executive Officer and Chairman of Halo among other ventures, and Chris Cooper, our director and head of our First Towers subsidiary, is affiliated with other ventures.
Adverse global economic, market and industry conditions and other geopolitical issues may impact our operations which could have a negative effect on our business results and financial condition and liquidity.
Our performance may be affected by global economic market and industry conditions (including the current inflationary economic environment, rising interest rates and disruptions related to the banking industry) as well as geopolitical issues and other conditions with global reach. In recent years, concerns about the global economic outlook have adversely affected market and business conditions in general. Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations and accurately forecast revenue, gross margin and operating expenses. Further, recent bank failures and other adverse developments that affect financial institutions, transactional counterparties, or other third parties, or concerns or rumors about these events, have led to market-wide liquidity problems. While we have no borrowings with or deposit exposure to these recently failed banks and has not experienced an adverse impact to our liquidity or to its business operations, financial conditions, geopolitical issues, such as the conflict over the Strait of Hormuz and renewed conflict between Iran and the United States, the Russian invasion of Ukraine, armed conflict between Israel and groups based in surrounding regions, relations between the U.S. and China, tariff and trade policy changes, and increasing potential of conflict involving countries in Asia that are or may be critical to our supply-chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce. In addition, rising inflation has affected businesses across many industries, including our business industry, by increasing the costs of labor, employee healthcare, components and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets. To the extent there is a sustained general economic downturn, and our platform and services are perceived by customers or potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in spending. Sustained or worsening of global economic conditions and geopolitical issues may increase our cost of doing business, materially disrupt its supply chain operations, cause its customers to reduce or delay spending and intensify pricing pressures. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or markets in which we operate worsen from present levels, demand for our existing and planned products and services, and our business, financial condition and results of operations, could be adversely affected.
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Disease outbreaks or public health emergencies could adversely affect our future operations.
Our planned and existing operations could be significantly and adversely affected by the effects of a widespread global outbreak of a contagious disease and other unforeseen events and the related economic repercussions. We cannot accurately predict the effects global pandemics or other public health emergencies will have on our operations and the ability of others to meet their obligations with us, including uncertainties relating to the ultimate geographic spread of the disease, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. The ultimate impact on us and our significant suppliers and prospective customers is unknown, but our operations and financial condition could suffer in the event of any of these types of unpredictable events. Further, any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our business, results of operations, financial condition and cash flows.
We may incur significant costs to defend our intellectual property and other proprietary rights.
The ownership and protection of trademarks, patents, trade secrets and intellectual property rights are significant aspects of our future success. Unauthorized parties may attempt to replicate or otherwise obtain and use our products and technology. Policing the unauthorized use of our current or future trademarks, patents, trade secrets or intellectual property rights could be difficult, expensive, time-consuming and unpredictable, as may be enforcing these rights against unauthorized use by others.
In addition, other parties may claim that our products infringe on their proprietary rights such as trade secrets. Such claims, regardless of their merit, may result in the expenditure of significant financial and managerial resources, legal fees, injunctions, temporary restraining orders and/or require the payment of damages. Additionally, we may need to obtain licenses from third parties who allege that we have infringed on their lawful rights. Such licenses may not be available on terms acceptable to us or at all. In addition, we may not be able to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property that we do not own.
If we sustain cyber-attacks or other privacy or data security incidents that result in security breaches that disrupt our operations or result in the unintended dissemination of protected personal information or proprietary or confidential information, or if we are found by regulators to be non-compliant with statutory requirements for the protection and storage of personal data, we could suffer a loss of revenue, increased costs, exposure to significant liability, reputational harm and other serious negative consequences.
As our operations expand, we may process, store and transmit large amounts of data in our operations, including protected personal information as well as proprietary or confidential information relating to our business and third parties. Experienced computer programmers and hackers may be able to penetrate our layered security controls and misappropriate or compromise our protected personal information or proprietary or confidential information or that of third parties, create system disruptions or cause system shutdowns. They also may be able to develop and deploy viruses, worms and other malicious software programs that attack our systems or otherwise exploit any security vulnerabilities. Hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Our facilities may also be vulnerable to security incidents or security attacks, acts of vandalism or theft, coordinated attacks by activist entities, misplaced or lost data, human errors, or other similar events that could negatively affect our systems and our customer’s data.
We may become involved in litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our reputation, business, financial condition or results of operations.
We may become involved in litigation matters that are expensive and time consuming, and, if resolved adversely, could harm our reputation, business, financial condition or results of operations.
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For instance, on January 29, 2024, Shailesh Bhushan, our former Chief Financial Officer, filed a complaint with the Employment Standards Branch of British Columbia claiming unpaid salary and invoices in the aggregate amount of CAD $271,990 from the period December 2022 through November 2023. The Company previously offered to Mr. Bhushan an annual salary of CAD $60,000 and as such, believes the claim to be frivolous, strongly disputes the amount claimed, and intends to vigorously defend itself. Please refer to Note 28 of the Audited Consolidated Financial Statements included in this Annual Report on Form 20-F for the fiscal year ended December 31, 2025 for details of the legal proceedings with Mr. Bhushan.
In January 2024 and January 2025, the Company received subpoenas from the SEC, Division of Enforcement, in an investigation entitled, In the Matter of Halo Collective. The subpoenas requested production of certain documents and information related to, among other things, marketing efforts by third parties, the issuance of shares to consultants, the Company’s spin off from Halo and press releases. We can offer no assurances as to the outcome of the investigation or the potential affect, if any, on the Company or the results of our operation.
Management is unable to assess the likelihood that we would be successful in any trial with respect to ongoing matters. Accordingly, no assurance can be given that if we go to trial and ultimately lose, or if we decide to settle at any time, such an adverse outcome would not be material to our consolidated financial position. Additionally, in any such case, we will likely be required to use available cash, or the proceeds from future offerings, towards the judgment or settlement, that we otherwise would have used to build our business. In such event, we would be required to raise additional capital sooner than we otherwise would, of which we can give no assurance of success, or delay, curtail or cease the commercialization of some or all of our products and services.
Declaration, payment and amounts of dividends, if any, to stockholders of Akanda will be uncertain.
Akanda has not historically paid cash dividends on its capital stock. Whether any dividends are declared or paid to stockholders of Akanda, and the amounts of any such dividends that are declared or paid, are uncertain and depend on a number of factors. The Akanda Board will have the discretion to determine the dividend policy of Akanda, including the amount and timing of dividends, if any, that Akanda may declare from time to time, which may be impacted by any of the following factors:
| ● | Akanda may not have enough cash to pay such dividends or to repurchase shares due to its cash requirements, capital spending plans, cash flow or financial position; |
| ● | decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the Akanda Board, which could change its dividend practices at any time and for any reason; |
| ● | the amount of dividends that Akanda may distribute to its stockholders is subject to restrictions under Canadian law and is limited by restricted payment and leverage covenants in any of Akanda’s credit facilities or other indebtedness and, potentially, the terms of any future indebtedness that Akanda may incur; and |
| ● | certain limitations on the amount of dividends subsidiaries of Akanda can distribute to Akanda, as imposed by law, regulators or agreements. |
Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.
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ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company |
Akanda Corp. was incorporated in the Province of Ontario, Canada on July 16, 2021 in connection with the plan of Halo to reorganize its medical cannabis market focused international business assets. In September 2021, we entered into a share purchase agreement with Halo, a publicly-traded, vertically integrated multinational cannabis company (NEO: HALO) (OTCQX: HCANF) (Germany: A9KN). Pursuant to this agreement, we acquired all the issued and outstanding equity interests of Cannahealth Limited, a Republic of Malta company (“Cannahealth”), from Halo (the “Cannahealth Acquisition”).
At the closing of the Cannahealth Acquisition on November 3, 2021, Cannahealth owned all the issued and outstanding equity interests of Canmart and Bophelo Holdings, which owned all the issued and outstanding equity interests of Bophelo. As a result of the Acquisition, both Bophelo and Canmart became our indirect wholly-owned subsidiaries. As consideration for this Acquisition, we issued 233 Common Shares to Halo at a price of $56,250.00 per share, resulting in Halo owning approximately 68.3% of all our outstanding Common Shares at the closing of the Cannahealth Acquisition.
On November 12, 2021, Halo transferred 37 Common Shares to an unaffiliated party, 1306077 B.C. LTD. (the “Halo Transferee”), which resulted in Halo owning 49.6% of our issued and outstanding Common Shares (the “Halo Transfer”) at the time. On 14 March 2022, and pursuant to a convertible debenture agreement between Akanda and Halo, Akanda issued 29 Common Shares to Halo to settle the principal amount and accrued interest (at the time of conversion) of $6,582,980 owing to Halo in terms of the convertible debenture agreement.
On April 20, 2022, Akanda, Cannahealth, The Flowr Corporation (“Flowr”) and Holigen Holdings Limited (“Holigen”), a wholly-owned subsidiary of Flowr entered into a share purchase agreement (the “Holigen Agreement”) whereby Cannahealth would acquire 100% of the ordinary shares of Holigen, which is the holding company of RPK Biopharma, Unipessoal, LDA (“RPK”), a cultivator and manufacturer of medical cannabis products based in Portugal (the “Holigen Acquisition”). The Holigen Acquisition closed on April 29, 2022.
The Purchase Price for the Holigen Acquisition was comprised of (i) of $3,000,000 in cash and (ii) 33 Common Shares, no par value per share, of Akanda (the “Akanda Shares”). The Akanda Shares were issued pursuant to Regulation S of the Securities Act. Concurrent to the closing of the Holigen Acquisition, Akanda purchased 14,285,714 Common Shares of Flowr for an aggregate purchase price of CAD$999,999.98.
RPK’s operations consisted of a 20,000 square foot indoor EU GMP certified grow facility located near Sintra, Lisbon, Portugal, dedicated to the cultivation of high-THC premium cannabis as well as a 180+ acre outdoor facility located in Aljustrel. In 2020, Holigen grew more than 20 high-THC strains at the Aljustrel facility making it the largest outdoor medical cannabis grow in the EU.
On July 15, 2022, our indirect wholly-owned subsidiary Bophelo, a Lesotho company, was placed into liquidation by the High Court of Lesotho (the “Lesotho Court”) pursuant to an unauthorized application and request (the “Liquidation Application”) that was filed by Louisa Mojela, our former Executive Chairman, who was terminated as Executive Chairman of Akanda in July 2022, and the Mophuti Matsoso Development Trust, which we believe was established by Ms. Mojela. Mr. Chavonnes Cooper of Cape Town, South Africa, was appointed by the Lesotho Court as liquidator of Bophelo for purposes of maintaining the value of the assets owned or managed by Bophelo. We intended to seek to recover significant loans made to Bophelo to fund the execution of Bophelo’s business plan, including payment of rents and staffing costs in the event that the Lesotho Court does not reverse its determination to place Bophelo in liquidation; however, due to lack of funds and resources, the Company is not at this time actively contesting the matter and cannot give no assurance that it will do so in the future.
Bophelo was focused on the cultivation of cannabis, the production of medical cannabis products including dried flower, oils, and other concentrates and the supply of such medical cannabis products to wholesalers in international markets. As a result of Bophelo’s liquidation, during the year ended December 31, 2022, Bophelo ceased operations and we derecognized its assets and have since determined that it is no longer a significant subsidiary. We will continue to report about Bophelo, until such time as our inquiry into the liquidation confirms that the process is complete.
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On August 9, 2022, we entered into a cooperation agreement with Cansativa GmbH to allow the Cansativa platform to supply the German market with dried flowers from Akanda’s EU-GMP certified indoor grow facility in Sintra, Portugal. All pharmacies in Germany will be able to purchase these products through the Cansativa platform. In 2024, this cooperation agreement was terminated as a result of our exiting our European business.
On September 22, 2023, the Company entered an amended and restated option to purchase agreement with 1107385 B.C. LTD., pursuant to which the Company acquired an option to purchase a Canadian THC and CBD farming facility located at 1900 Ferne Road, Gabriola Island, British Columbia and related operations and licenses, pursuant to which, the key deal terms are as follows:
| ● | Akanda will issue a non-refundable payment equal to US$1,800,000 and if paid in Common Shares of Akanda will be based on formula to calculate the per share price as set forth in the agreement. The initial payment will be broken up into the First Option Payment, the Second Option Payment and the Third Option Payment, upon signing, 15 days after signing, 30 days after signing respectively. |
| ● | This buys Akanda the right to develop the property for two years. The Company plans during this time period to develop Tetrahydrocannabinol (THC) and CBD facilities at this site. Additional payments will be made based upon milestones achieved from the development. Additional milestones include THC cultivation, sales of product, CBD cultivation, and Hemp cultivation. In the event all of the milestone payments are made or otherwise pays the full purchase price in the timeframes specified in the option agreement, the Company will have purchased the farming facility. |
Pursuant to the amendment on September 24, 2025, the term contained in the option agreement has been extended to September 25, 2027. The Company plans during this additional two year period to develop Tetrahydrocannabinol (THC) and cannabidiol (CBD) facilities at this site. In exchange for such extension, the Company shall pay to 1107385 a total of $250,000, of which:
| ● | $150,000 was paid in September 2025; and |
| ● | $100,000 shall be paid on the 12-month anniversary of the Amendment. |
To date, Akanda has made the first three option payments, an additional $750,000 milestone payment as a result of our obtaining a hemp license from Health Canada in September 2024 and extension payment of $150,000. We also anticipate making additional payments once the remaining milestones are achieved, of which we can give no assurance of success. To date, we have not yet cultivated any product from this farming facility.
On February 28, 2024, the Company entered into a share purchase agreement with Somai, Cannahealth and Holigen to sell all the shares of RPK to Somai for a consideration of $2,000,000. In addition, Somai agreed to assume up to 1,000,000 Euros of current liabilities and RPK’s debt with the senior secured lender bank, Caixa Agricola. In total, Somai agreed to assume approximately 4,000,000 Euros of debt. On March 24, 2024, the Company completed the transaction with Somai for the sale of RPK. On June 12, 2021, we entered into a finder’s fee agreement with Cannera Holdings LTD, a British Columbia corporation, pursuant to which we agreed to pay to it a finder’s fee of 5% of the gross sales price of RPK payable at closing for identifying and introducing or otherwise assisting us with completing the sale of RPK. On February 28, 2024, we paid an invoice of $425,000 to Cannera.
On March 5, 2025, the Company announced that after evaluating the current state of the Company’s business of importing and distributing cannabis-based products in the United Kingdom through its Canmart Ltd. (“Canmart”) subsidiary, the Company determined to discontinue and cease its U.K operations and shut down Canmart. The Company came to this conclusion after receiving notification from Canmart’s directors that they intend to resign and the difficulty in finding qualified replacements, determining that the expense and timing of renewing its license to operate in the U.K. when compared to projected near-term future revenues is not cost effective, and evaluating the continued potential exposure to Canmart’s existing lawsuits, among other things. The Company then filed for creditor’s voluntary liquidation and had the winding up commenced on May 30, 2025. As a result of Canmart’s liquidation, during the year ended December 31, 2025, Canmart ceased operations and we derecognized all its assets and liabilities and have since determined that it is no longer a significant subsidiary.
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Our principal executive offices and mailing address are located at c/o Gowling WLG (Canada) LLP, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada, and our telephone number is +1 (416) 862-7525.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find information on our website akandacorp.com. The information contained on our website is not a part of this annual report.
Reverse Stock Splits
On August 26, 2025, we implemented a 1-for-3.125 reverse stock split of our Common Shares. Every 3.125 shares of our issued and outstanding Common Shares were automatically converted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock split affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding Common Shares, except for adjustments that resulted from the treatment of fractional shares.
On January 12, 2026, we implemented a 1-for-5 reverse stock split of our Common Shares. Every 5 shares of our issued and outstanding Common Shares were automatically converted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock split affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding Common Shares, except for adjustments that resulted from the treatment of fractional shares.
On April 13, 2026, we implemented a 1-for-4.5 reverse stock split of our Common Shares. Every 4.5 shares of our issued and outstanding Common Shares were automatically converted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock split affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding Common Shares, except for adjustments that resulted from the treatment of fractional shares.
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January 2026 Convertible Note Transaction
On January 21, 2026, the Company entered into a Securities Purchase Agreement dated January 20, 2026 (the “January Purchase Agreement”) with certain institutional investors (the “January Investors”) to issue and sell to each of the January Investors a convertible promissory note (each, individually, a “January Note” and collectively, the “January Notes”), for aggregate gross proceeds to the Company of $7.0 million, before deducting fees to the Placement Agent (as defined below) and other expenses payable by the Company in connection with the offering (the “January Offering”). The closing of the January Offering occurred on January 21, 2026.
The Placement Agent acted as placement agent for the January Offering and was paid $70,000 in cash fees in relation to the January Offering.
The maturity date of each January Note is the 12-month anniversary of the issuance date of such January Note, and is the date upon which the principal amount, as well as any other fees, shall be due and payable. The January Notes bear interest at a rate of 10% per annum. For a detailed description of the transaction, please refer to Note 29 of the Audited Consolidated Financial Statements as of and for the years ended December 31, 2025 and 2024 included elsewhere in this Form 20-F.
IR Agency Consulting Agreements
On January 27, 2026, the Company entered into a six-month consulting agreement with IR Agency to provide marketing services effective February 1, 2026. IR Agency is a marketing/advertising agency that conducts informational awareness campaigns for publicly traded companies through its multi-channel distribution model, which targets potential interested parties. Although the term of each IR Agency consulting agreement is six months, they are paid for the services calculated based on an informational awareness campaign’s expected cost for a projected timeframe and only continue until the exhaustion of the funds rather than the estimated term.
The Company previously had a six-month consulting agreement with IR Agency, dated September 22, 2025, to conduct a similar informational awareness campaign. The Company has paid IR Agency an aggregate of $6,725,000, inclusive of $2.3 million from the proceeds of the January Notes, $3.5 million from the proceeds from the sale of convertible notes in September 2025, and $925,000 pursuant to a 2024 consulting agreement, for these marketing services.
As part of the informational awareness campaign, IR Agency disseminated information about the Company through a SMS network of over 2.3 million subscribers utilizing the subscribers’ mobile networks, its email distribution list reaching roughly 46,713 recipients per email, digital newsletter advertisements on 9 investor-focused publications, push notifications on targeted mobile phone applications reaching 12,370 user per notification (e.g., Stock News app), and traditional and social media platforms (e.g., WhatsApp and Telegram). Such services provided by IR Agency were promotional in nature only, were curated to enhance the Company’s public visibility, and did not provide investment advice or deliver performance guarantees.
Acquisition of First Towers and Related Transactions
On March 5, 2025, we entered into a Share Exchange Agreement (the “SEA”) with First Towers and the common shareholders of First Towers (the “Shareholders”). Subject to the terms and conditions set forth in the SEA, as amended as of August 19, 2025, the parties agreed to enter into a business combination transaction (the “First Towers Transaction”), pursuant to which, among other things, all of the common shares of First Towers were exchanged for either (a) our (i) newly authorized Class A Special Shares of the Company (the “Class A Special Shares”), that convert into an aggregate number of common shares of the Company equal to 19.9% of the common shares of the Company issued and outstanding at the closing of the Transaction and (ii) newly authorized Class B Special Shares of the Company (the “Class B Special Shares” and, with the Class A Special Shares, the “Special Shares”), that convert into the remaining Purchaser Shares otherwise issuable to the Shareholders under the amended SEA, or (b) cash payable over time and evidenced by a promissory note (the “Consideration Note”), and First Towers continued as a wholly owned subsidiary of the Company.
The Company’s Board of Directors and its executive officers as of immediately prior to the closing of the Transaction remained, while management of First Towers, as a wholly-owned subsidiary of the Company, included Christopher Cooper, President, Francisco Juarez, VP and Chief Operating Officer, and Edgar Contreras, Country Manager.
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In connection with the Transaction, at the closing, the Company entered into a Debt Settlement Agreement (the “PGC DSA”) and a Convertible Promissory Note (the “PGC Note”) with PGC Finco Inc. (“PGC”), and a Debt Settlement Agreement (the “Dunstan DSA”) and a Convertible Promissory Note (the “Dunstan Note”) with Dunstan Holdings Ltd. (“Dunstan”).
Pursuant to the PGC DSA, in satisfaction of all indebtedness of First Towers to PGC through the Closing, the Company assumed indebtedness of First Towers in the aggregate principal amount of US$4,153,078 which is evidenced by the PGC Note, and the Company paid to PGC a cash payment of $500,000 and issued to PGC, 24,762 (post-reverse stock split) Class B Special Shares.
Pursuant to the Dunstan DSA, in satisfaction of all indebtedness of First Towers to Dunstan through the Closing, the Company assumed indebtedness of First Towers in the aggregate principal amount of US$756,917 which is evidenced by the Dunstan Note, and the Company issued to PGC 7,787 (post-reverse stock split) Class B Special Shares.
Each of the PGC Note and the Dunstan Note (collectively, the “Notes”) has a maturity date of August 19, 2031, has an interest rate of 8-1/2% per annum payable semiannually in arrears, and are secured by all of the assets of the Company. The Notes are subject to customary events of default.
Each Note may be converted from time to time by either the Company or the holder of the Note, into common shares of the Company, subject to first obtaining approval from the shareholders of the Company at the Second Shareholder Meeting. The conversion price shall be a price per share equal to the greater of (a) $6.12 and (b) a ten percent discount to the seven-trading day VWAP immediately prior to receipt of the conversion notice.
Also in connection with the Transaction, at the closing, the Company entered into the Consideration Note with a Shareholder. The Consideration Note was issued in the principal amount of US$14,133,966. It has a maturity date of August 19, 2027 and has an interest rate of 16% per annum payable quarterly. In addition, the Company paid to the holder of the Consideration Note a commitment fee of $424,018.98.
The Consideration Note is secured by all of the assets of the Company pursuant to a General Security Agreement dated as of August 19, 2025, but such security interest has been subordinated to the Notes and the security interest held by PGC and Dunstan. Since its issuance, the Company prepaid approximately $8.5 million of the Consideration Note.
| B. | Business Overview |
Our Cannabis Business
Background
Our cannabis segment relates to cannabis cultivation, manufacturing and distribution company. We have a limited operating history and minimal revenues to date. We expect to expand our cultivation operations and develop sales channels of our cannabis products.
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1900 Ferne Road, Gabriola Island, British Columbia
On September 19, 2023, Akanda entered an option to purchase agreement for Canadian farming property in British Columbia, including related operations and licenses, from 1107385. On September 22, 2023, Akanda entered an amended and restated purchase agreement with 1107385 for the property. We plan to develop THC and CBD facilities at this site. We agreed to issue a non-refundable payment equal to $1,800,000, broken up into three payments, and if paid in our Common Shares will be based on a formula to calculate the per share price as set forth in the agreement. On September 22, 2023, we paid the first payment by issuing 156 Common Shares. On April 4, 2024, we paid the second payment of $600,000 and the third payment of $600,000. Additional payments to the seller will be made based upon milestones achieved from the development, including THC cultivation, sales of product, CBD cultivation, and hemp cultivation. On September 5, 2024, Health Canada approved a hemp license for Akanda’s subsidiary, 1468243 B.C. LTD, which triggered another milestone. As a result, Akanda was required to pay an additional $750,000 to the seller within ten business days of the milestone event and made the payment on September 16, 2024. On September 24, 2025, Akanda entered into an amended option agreement pursuant to which the option term was extended to September 25, 2027. We agreed to pay an extension fee of $250,000. On September 25, 2025, we paid the first payment of $150,000. To date, we have not yet cultivated any product from this land.
Competition
CBD
The industry in which we operate is subject to intense and increasing competition. The Canadian hemp industry has stabilized around 29,309 acres in 2023, and Canada has established a global leadership position in producing hemp grain for food. The Hemp industry maintains that hemp could become Canada’s next “canola”. Innovation and technological development in this industry has been almost exclusively privately funded and enabled to date. CBD competitors include Charlotte’s Web, Cresco Labs, and the Valens Company.
THC
Some of the larger competitors in this segment include Aurora Cannabis, Canopy Growth, Aphria, CannTrust Holdings, and Aleafia Health. We believe this market is worthwhile to enter as long as we can keep costs down and deliver high yields. According to Health Canada, as of 2023, there was 63.2 million square feet of outdoor area licensed for cannabis production and 16.3 million square feet of greenhouse and indoor areas for cannabis production. These numbers are down from the peak of 76.7 million square feet of outdoor area in 2021 and the peak of 23.9 million square feet of indoor area in 2020.
Research and Development
We do not have any research and development policies nor have we had any for the last three fiscal years.
Regulation
Regulatory Framework in Canada
On October 17, 2018, the Cannabis Act (S.C. 2018, c. 16) (the “Cannabis Act”) and the regulations enacted under the Cannabis Act, which set out the rules and standards that apply to the production, distribution, sale, importation and exportation of cannabis by federal license holders (the “Cannabis Regulations”), came into force, legalizing the sale of cannabis for adult recreational use. Cannabis in Canada is subject to a complex regulatory framework arising from federal, provincial, and territorial legislation. The Cannabis Act and the Cannabis Regulations provide the framework for legal access to medical and non-medical cannabis, and control and regulate its production, distribution, sale, import and export. The provinces and territories of Canada have enacted legislation to control and regulate how non-medical cannabis is distributed and sold within their respective jurisdictions.
On October 17, 2019, October 17, 2020 and December 2, 2022, subsequent amending regulations titled the came into force that, among other things, expanded the scope of the Cannabis Act and Cannabis Regulations to enable the sale of certain categories of cannabis, including cannabis extracts, topicals and edibles, and set THC content limits for certain categories of cannabis products.
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Prior to the Cannabis Act and the Cannabis Regulations coming into force, only the sale of medical cannabis was permitted and it was regulated by the Access to Cannabis for Medical Purposes Regulations (the “ACMPR”) made under the Controlled Drugs and Substances Act (Canada) (the “CDSA”). The Cannabis Act and the Cannabis Regulations replaced the CDSA and the ACMPR as the governing laws and regulations in respect of the cultivation, processing, sale and distribution of cannabis (including cannabis oil extract) in Canada.
Canada’s regulatory framework for cannabis is constantly evolving and both the Canadian Ministry of Health for Canada (“Health Canada”), which has regulatory oversight over and administration of the Cannabis Act, and provincial and territorial regulators frequently release and update guidance to assist the industry in interpreting and applying the applicable laws to their operations.
Licensing
The Cannabis Regulations establish six classes and various sub-classes of licenses that authorize specific activities, namely: (1) cultivation (standard cultivation, micro-cultivation, nursery); (2) processing (standard processing, micro-processing); (3) sales (sale for medical purposes); (4) analytical testing; (5) research; and (6) and cannabis drug license. Licensing requirements and authorized activities vary by class and sub-class, and authorized activities can also be narrowed by conditions described in individual licenses when they are issued.
Health Canada is responsible for reviewing and approving all federal licensing applications. While Health Canada does provide service standards for new applications, renewals, and amendments, they are not guaranteed and may not always be met. The volume of applications in queue or under review by Health Canada, the complexity of an application or amendment, and the quality of the submission, among other factors, can impact the duration of the review process, creating uncertainty in timelines. After a license is issued, it is the holder’s responsibility to comply with all applicable requirements in the Cannabis Act and Cannabis Regulations, including periodic inspections by Health Canada to ensure continued compliance.
Security Clearances
Certain people associated with cannabis licensees, including individuals occupying a “key position” such as directors, officers, large shareholders, and individuals identified by the Minister of Health (the “Minister”), must hold a valid security clearance issued by the Minister. The Minister considers many factors and may refuse to grant security clearances to individuals with, among other things, organized crime associations or past convictions for, or in association with, drug trafficking, corruption, or violent offences. Individuals who have a history of nonviolent, lower-risk criminal activity (for example, simple possession of cannabis, or small-scale cultivation of cannabis plants) are not precluded by legislation from participating in the legal cannabis industry, and the granting of security clearance to such individuals is at the discretion of the Minister.
Cannabis Tracking System
The Cannabis Tracking and Licensing System (“CTLS”) was established by Health Canada to, among other things, track cannabis throughout the supply chain to help prevent diversion of cannabis into, and out of, the illicit market. Under the CTLS, holders of a cultivation, processing and/or sale for medical purposes licenses are required to submit monthly reports to Health Canada setting out inventory levels of finished and unfinished cannabis for each cannabis class.
Cannabis Products
The Cannabis Act differentiates between cannabis depending on its form (referred to as “classes” of cannabis in the Cannabis Act) and only permits the sale of specified classes of cannabis. Upon enactment of the Cannabis Act on October 17, 2018, these classes included dried cannabis, fresh cannabis, cannabis plants, cannabis seeds, and cannabis oil. On October 17, 2019, edible cannabis, cannabis extracts and cannabis topicals were added to the authorized classes of cannabis, also known as “Cannabis 2.0”). Cannabis oil was subsumed into cannabis extracts and ceased to exist as a standalone class as of October 17, 2020.
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Health Products and Cosmetics Containing Cannabis
Health Canada has taken a scientific, evidence-based approach to the oversight of health products containing cannabis that are approved with health claims, including prescription and non-prescription drugs (human and veterinary), medical devices, natural health products (“NHPs”), and veterinary health products. Drugs, NHPs, and veterinary health products may only contain parts of the cannabis plant that are not subject to the Cannabis Act, and Industrial Hemp derivatives that do not contain isolated or concentrated phytocannabinoids or synthetic duplicates thereof (e.g. THC, CBD, etc.). Per Health Canada’s Cosmetic Ingredient Hotlist, the use of cannabis species (hemp) derivatives (other than certain hemp seed derivatives containing no more than 10 parts per million THC) in cosmetics, are permitted, subject to the provisions of the Cosmetic Ingredient Hotlist and the Industrial Hemp Regulations. Cosmetics must not contain isolated or concentrated phytocannabinoids or synthetic duplicates thereof.
Packaging and Labelling
The Cannabis Regulations set out a comprehensive approach to the packaging and labelling of cannabis products. This approach helps to promote informed consumer choice and encourage the safe handling and storage of cannabis. All cannabis products must be packaged in plain packaging that is child-resistant and tamper-evident and displays a variety of information such as the standardized cannabis symbol, THC and CBD potency, and prescribed health warning messages.
Promotion
The Cannabis Act and Cannabis Regulations outline several prohibitions that can potentially apply to anyone who may be involved in the promotion of cannabis, cannabis accessories and services related to cannabis, or related activities. These prohibitions are intended to protect public health and safety, including by protecting the health of young persons by restricting their access to cannabis, and young persons and others from inducements to use cannabis.
Cannabis for Medical Purposes
With the Cannabis Act and the Cannabis Regulations coming into force on October 17, 2018, the medical cannabis regime migrated from the CDSA and the ACMPR to the Cannabis Act and the Cannabis Regulations. The medical cannabis regulatory framework under the Cannabis Act and the Cannabis Regulations remains substantively the same as under the CDSA and the ACMPR, with adjustments to create consistency with rules for non-medical use, improve patient access, and reduce the risk of abuse within the medical access system.
Under Part 14 of the Cannabis Regulations, patients maintain three options for obtaining cannabis for medical purposes: (i) they can continue to access cannabis by registering with licensees holding a license to sell for medical purposes; (ii) they can register with Health Canada to produce a limited amount of cannabis for their own medical purposes; or (iii) they can designate someone else to produce cannabis for them. With respect to (ii) and (iii), starting materials, such as plants or seeds, must be obtained from licensees. Starting materials for personal production, such as plants or seeds, must be obtained from a license holder.
Provincial and Territorial Regulatory Regimes
Provinces and territories of Canada are authorized to license and oversee the distribution and sale of non-medical cannabis to adult consumers in their respective jurisdictions. As a result, regulations pertaining to the sale and distribution of non-medical cannabis vary from province to province and territory to territory.
The Cannabis Act prohibits individuals aged 18 years or older from possessing more than 30 grams of dried cannabis (or its equivalent) in public and from the personal cultivation of more than four plants at any one time. Provinces and territories have the flexibility to increase the minimum age of consumption, lower possession limits, and set added requirements on personal cultivation within their respective jurisdictions. Provinces and territories can also restrict where cannabis can be consumed in public.
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The following chart outlines basic details regarding the current regulatory regime by province and territory. The possession limit of 30 grams remains unchanged in all provinces.
| Province/Territory | Legal Age | Where it is Legal to Purchase | ||
| Alberta | 18 | Private licensed stores or government-operated online store | ||
| British Columbia | 19 | Government-operated stores or online, or private licensed stores | ||
| Manitoba | 19 | Private licensed stores or online | ||
| New Brunswick | 19 | Government-operated stores or online, or private licensed stores | ||
| Newfoundland and Labrador | 19 | Private licensed stores or government-operated online store | ||
| Northwest Territories | 19 | Government-operated stores or online, or private licensed stores | ||
| Nova Scotia | 19 | Government-operated stores or online | ||
| Nunavut | 19 | Government-operated online store | ||
| Ontario | 19 | Private licensed stores or government-operated online store | ||
| Prince Edward Island | 19 | Government-operated stores or online | ||
| Quebec | 21 | Government-operated stores or online | ||
| Saskatchewan | 19 | Private licensed stores or online | ||
| Yukon | 19 | Government-operated online store or private licensed stores |
Industrial Hemp
The regulatory framework for industrial hemp is set out in the Industrial Hemp Regulations. Industrial hemp is defined under the Industrial Hemp Regulations as a cannabis plant – or any part of the plant – in which the concentration of THC is 0.3% (weight by weight) or less in the flowering heads and leaves.
Under this framework, a license from Health Canada is required in order to conduct various activities with industrial hemp. These activities include the cultivation, sale, import, export, cleaning, preparing, and processing of certain parts of the industrial hemp plant. Not every activity that involves industrial hemp falls within the scope of the Industrial Hemp Regulations and may instead fall under the Cannabis Regulations. For example, the extraction of phytocannabinoids from the flowering heads, leaves and branches of the plant requires a processing license under the Cannabis Regulations. Additionally, only seeds of approved industrial hemp varieties which have a THC level lower than 0.3% in their leaves and flowering heads, can be planted.
In addition to obtaining a license, industrial hemp license holders must comply with the Cannabis Act and Cannabis Regulations, and with other applicable federal, provincial and territorial legislation and municipal by-laws.
Inflation and Seasonality
The planned facility in British Columbia is an indoor facility. Seasonality is not expected to have an effect on the harvest month to month or season to season; however, as the property is located in British Columbia, seasonality can be reasonably expected to impact logistics on occasion due to weather. Inflation has increased operating and production costs globally. Increased labor costs, as well electrical and material costs such as fertilizer have had an impact on net revenue.
Our First Towers Business
Background
First Towers is a company incorporated in the province of British Columbia, Canada on February 24, 2017 under the name Canadian Towers and Fiber Optics Inc. On September 3, 2024, it changed its name to First Towers & Fiber Corp. First Towers’ principal office is located at 1170-1040 West Georgia Street, Vancouver, British Columbia V6E 4H1, Canada.
Description of Business
First Towers is focused on tower development and operating a 700+km fiber optic network in the wireless market of Mexico, with an intention to expand to other Latin American countries. First Towers:
| ● | owns the largest 5G dark fiber optic network in Central Mexico. |
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| ● | is in possession of 20-year master lease agreements for both tower development and fiber network. |
| ● | is a preferred partner in providing coverage to the rural regions of Mexico. |
| ● | has a veteran tower development team with 20+ years of experience in telecommunications infrastructure development. |
| ● | has 24 towers deployed to date and an additional 6 under construction, with the opportunity to continue to develop in key Mexican markets. |
First Towers generates revenue from owning telecommunications equipment and towers and leasing the equipment and space to telecommunications companies.
Growth Strategies
First Towers’ development strategy is focused across five states in Central Mexico which feature strong economic and demographic drivers, and where First Towers has regional expertise and relationships, and an established 5G fiber network that can be leveraged for backhaul.
First Towers seeks to increase infrastructure sharing contracts in lieu of build to suit contracts to enable construction of more tower sites in rural and urban areas.
Competitive Strengths
There are many telecommunication infrastructure companies in the marketplace. Competitors in developing telecommunication towers include: Centennial Towers, QMC, Torrecom, MX Towers, MTP, and American Tower. On the fiber optic network side, competitors include: Neutral Networks, Summit1G, National Fiber Networks, Fermaca Networks, and ICOM Construcciones. First Towers strategically differentiates in:
| ● | Existing Infrastructure with anchor telecommunication companies - First Towers has 700+ kms of 5G dark fiber network in central Mexico with a telecommunications giant serving as an anchor with a 20 year leasing contract. |
| ● | Tower Ownership - First Towers owns the telecommunications equipment and towers and shares in revenues with telecommunication companies leasing space on the towers, generating more revenue than traditional build to suit (“BTS”) contracts. |
| ● | Key Locations - First Towers’ opportunities are located in critical areas of economic growth where there is an expected need for over 1,000 new towers over a three-year timeframe. |
| ● | National Need - First Towers is strategically located in Latin America, whose countries have a national need for increased telecommunication infrastructure, with Latin America’s fiber optic networks being two years behind other more developed countries. The Mexico telecom regulator IFT has committed to awarding 5G frequencies to develop this needed infrastructure. |
Industry Overview and Opportunity
Mexico Opportunity
The telecommunication industry in Latin America is worth an estimated US$81 billion, with Mexico being the second largest market and, on a GDP per capita basis, Mexico ranks 11th across the region. Mexico has 93 mobile cellular subscriptions per 100 habitants compared to just 18 fixed phone subscriptions per 100 habitants. Mexico is an OECD nation with an investment-grade sovereign credit rating, controlled public debt, stable inflation and currency offering an attractive market for investment.
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First Towers estimates that several thousand new wireless towers need to be built in Mexico to give at least 4G LTE coverage to 96.4% of Mexico’s population.
First Towers owns and operates 700+kms 5G dark fiber network in central Mexico, where some of the strongest industrial and fastest growing state economies in Mexico are located, with multinational telecommunications giant Telefonica as anchor under a 20-year leasing contract.
Latin America Opportunity
Through relationships in Latin America, First Towers expects to expand into other Latin American countries, as coverage in the Latin American region is also still limited to certain neighborhoods of major cities.
| ● | 4G penetration is still below 70% in Latin America. |
| ● | By 2026, 5G is expected to represent less than 43% of mobile subscriptions in Latin America and the average traffic per smartphone is forecast to be approximately 35GB per month. |
An estimated 244 million people in Latin America, which is close to one third of the population, do not have access to the internet. Deployment of 5G networks represents a significant opportunity as it is projected that the digitalization of industries could develop into a market of more than US$21 billion annually.
Regulatory Background
The regulatory landscape for 5G and 4G in Mexico and Latin America is marked by progress and challenges. Mexico has actively worked on 5G deployment, with spectrum auctions and planning led by the Federal Telecommunications Institute, although high costs and regulatory uncertainty hinder its adoption. Across Latin America, 4G remains dominant, but insufficient spectrum allocation and economic instability slow further expansion. Telecommunication companies like América Móvil, Telefónica, and AT&T are investing heavily in infrastructure, focusing on expanding 5G networks and upgrading 4G services. These companies are also exploring innovative solutions, such as fixed wireless access and digital services, to enhance connectivity and bridge the digital divide. Streamlined regulations and increased investment remain crucial for technological growth in the region.
Market Growth
The dark fiber network market in Mexico is projected to grow at a compound annual growth rate (CAGR) of 10.8% from 2023 to 2030. Revenue in the Mexican dark fiber network market is expected to increase from approximately $156 million in 2022 to $355 million by 2030. Mobile internet users in Latin America exceeded 380 million by the end of 2021, equating to 60% of the population. As of 2023, 4G LTE connections in Latin America reached approximately 565 million, with a quarterly growth rate of 1.9%. While 4G adoption is peaking, it is expected to remain a key technology in the region until 2028, as 5G adoption gradually increases.
Market Activity Timeline
2017
Altán Redes signs PPP with Mexican Government for deployment and operation of wholesale wireless network. Installation begins.
$2.3B initial capital committed to Altán Redes, including $800mm equity from lead investors Morgan Stanley, CDPQ and IFC.
2018
First Towers completed 700km+ fiber network and signs agreement to lease fiber to leading communications provider Telefonica.
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First Towers signs Master Agreement with Altán Redes to construct and own towers.
Altán Redes begins service operations after surpassing initial coverage commitments of 30% of population.
2019
First Towers completes development of its 700km+ fiber network in Central Mexico.
First Towers completes first 6 towers for Altán Redes.
2020
First Towers completes construction of 2 new towers in Q3 2020.
First Towers completes construction of 4 new towers in Q4 2020.
2021
First Towers completes construction of 9 new towers in first half of 2021.
Altán Redes investors increase capital commitment for ongoing network deployment.
Coverage of 63% of population (70mm people) achieved.
2022
First Towers owned 24 towers at the end of 2022, of which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.
First Towers owned 552.98 Kms of fiber at the end of 2022. The fiber was leased by Telefonica (527 Kms) and Marcatel (25.98 Kms).
2023
First Towers owned 24 towers at the end of 2023, of which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.
First Towers owned 558.68 Kms of fiber at the end of 2023. The fiber was leased by Telefonica (527 Kms) and Marcatel (31.68 Kms).
2024
First Towers owned 24 towers at the end of 2023, of which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.
First Towers owned 568.68 Kms of fiber at the end of 2024. The fiber was leased by Telefonica (537 Kms) and Marcatel (31.68 Kms).
2025
First Towers owned 27 towers at the end of 2025, of which 20 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.
First Towers owns 568.68 Kms of fiber at the end of 2025. The fiber is leased by Telefonica (537 Kms) and Marcatel (31.68 Kms).
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Intellectual Property
First Towers’ intellectual property consists primarily of trade secrets. First Towers’ trade secrets consist of research and development and know-how, all of which it seeks to protect, in part, by confidentiality agreements. To protect First Towers’ intellectual property, First Towers relies on a combination of laws and regulations, as well as contractual restrictions. First Towers does not own or have any rights to any patents or trademarks. First Towers also relies on the protection of laws regarding unregistered copyrights for certain content First Towers creates and trade secret laws to protect First Towers’ proprietary technology.
Government Regulation
First Towers is subject to local, state, federal and international laws, statutes, rules, policies, and regulations (collectively “Regulations”) that relate directly or indirectly to First Towers’ operations. These include privacy and data protection regulations. First Towers’ business operations involve the permitting, contracting, construction, and development of fiber optic networks and towers that transmit both public information, as well as personal or sensitive information. As a result, First Towers’ business is subject to complex and evolving Latin American and international laws and regulations regarding construction, environmental permitting, labor, frequency usage, other telecommunication-related matters. Other Regulations that First Towers is subject to, include the following: licensing, permitting, and zoning requirements for the operations of First Towers’ offices and other facilities; health, safety, and sanitation requirements; working conditions, labor, minimum wage and hour, citizenship, immigration, visas, harassment and discrimination, and other labor and employments laws and regulations; marketing activities; and environmental protection regulations. First Towers is also subject to common business and tax rules and regulations pertaining to the operation of its business.
Human Capital Resources
Our Commitments and Values
Our Company’s motto of “Grow. Move. Heal.” relays Akanda’s vision to create a climate embodying positive change in the cannabis industry. Our Company is committed to building a quality cultivation facility, connecting consumers in Canada with diverse products including cultivated cannabis products. We create an atmosphere of positive change by relying on diverse opinions and perspectives, leveraging cross-cultural competencies, and achieving the full potential of the business.
We intend to continue to focus on developing a culture of compliance, which includes training for the Company’s employees on applicable corporate policies, including our Code of Conduct, Insider Trading and Trading Window Policy, and Corporate Governance Guidelines.
As a result of the discontinuance of our Canmart operations and our transition to cultivating cannabis products at our British Columbia facilities, Akanda ceased having any full time employees and had a total of 2 part-time executives, since it had not yet begun cultivation operations at its British Columbia location. In August 2025, we increased our full-time employee headcount with the assumption of six employees from First Towers. As of June 8, 2026, we had two part-time executives and six full-time employees. None of our employees are represented by labor unions or subject to collective bargaining agreements.
Our human capital resource management approach is based on the following:
| ● | Talent Acquisition and Development. We rely on talented employees and will need to more knowledgeable and passionate talent as our operations expand throughout our subsidiaries in both Mexico and Canada. |
| ● | Diversity and Inclusion. We are committed to creating a diverse and inclusive workplace, where all employees feel valued, respected, and supported. We are focused on strategies for increasing diversity, promoting inclusivity, and reducing biases across the organization. Diversity and inclusion is a priority for our Company, and Akanda wants talented people from a variety of backgrounds both in our team and in our subsidiaries’ teams. |
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| ● | Health and Safety. We are committed to providing a safe and healthy workplace for all employees. |
| ● | Compensation and Benefits. We strive to provide competitive compensation and benefits that align with industry standards and reflect the value that our employees bring to the organization. |
| ● | Employee Engagement. We want our employees to be satisfied and engaged in their career with Akanda, as we believe that engaged employees are more productive, innovative, and committed to the Company’s success as a whole. |
| C. | Legal Entity Structure |
The following chart reflects our legal entity structure (including the jurisdiction of formation or incorporation of the various entities).
| [1] | Structured entity. See Note 3 of the Audit Consolidated Financial Statements included under Item 18 of this Annual Report on Form 20-F for further information. |
As of June 8, 2026, we no longer operate in Europe and, accordingly, our Malta and UK subsidiaries no longer have any operations or material assets.
| D. | Property, Plants and Equipment |
On September 19, 2023, Akanda entered an option to purchase agreement for Canadian farming property in British Columbia, at 1900 Ferne Road, Gabriola Island, British Columbia, including farming land and related operations and licenses, from 1107385. The agreement was amended and restated on September 22, 2023 and provides the Company a two-year option to purchase. We plan to develop THC and CBD facilities at this site. Additional payments to the seller will be made based upon milestones achieved from the development, including THC cultivation, sales of product, CBD cultivation, and hemp cultivation. On September 24, 2025, the agreement was amended and provides a two-year extension to develop THC and CBD facilities. Additional payments to the seller will be made in exchange for the extension period. To date, three option payments have been made, an additional milestone was achieved and paid in September 2024 with the issuance of a hemp license, and first extension payment paid in September 2025.
First Towers’ corporate headquarters is located at 1170-1040 West Georgia Street, Vancouver, British Columbia V6E 4H1 Canada. First Towers also owns towers and rights-of-way in several Mexican states.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
Our fiscal year begins on January 1 and ends on December 31. Unless otherwise noted, references to year pertain to our fiscal year. For example, 2025 refers to fiscal 2025 which is the period from January 1, 2025 and to December 31, 2025.
Our Audited Financial Statements for the years ended December 31, 2025 and 2024, respectively, for Akanda Corp. as a group (the “Akanda Group”), have been prepared in accordance with International Financial Reporting Standards (IFRS) and are presented in US dollars except where otherwise indicated. Our historical results are not necessarily indicative of the results that should be expected in any future period.
We have derived the consolidated statements of operations data for Akanda Group for the years ended December 31, 2025 and 2024, respectively, and the consolidated financial position information as at December 31, 2025 and 2024, respectively, from the Akanda Group’s Audited Financial Statements included under Item 18 of this Annual Report on Form 20-F.
Akanda was incorporated in the Province of Ontario, Canada on July 16, 2021 in connection with the plan of Halo to reorganize its medical cannabis market focused international business assets. On November 3, 2021, Akanda acquired Cannahealth, which owned all the issued and outstanding equity interests of Canmart and Bophelo Holdings, which, in turn, owned all the issued and outstanding equity interests of Bophelo. As a result of the Acquisition, both Bophelo and Canmart became our indirect wholly-owned subsidiaries. On April 29, 2022, the Company, through its wholly owned subsidiary, Cannahealth acquired Holigen, which owned all the issued and outstanding equity interests of RPK. As a result of the acquisition, RPK became our indirect wholly-owned subsidiary. We have consolidated all our then-subsidiary companies, Cannahealth in Malta, Bophelo in the UK, Canmart in the UK, Holigen in Portugal, RPK in Portugal and 1371011 B.C. Ltd and 1468243 BC Ltd in Canada, in the Akanda Group Audited Financial Statements and financial information presented on December 31, 2025.
As a result of Bophelo’s liquidation, during the year ended December 31, 2022, Bophelo ceased operations and we derecognized its assets and have since determined that it is no longer a significant subsidiary. We will continue to report about Bophelo, until such time as our inquiry into the liquidation confirms that the process is complete. In March 2024, we sold RPK.
On August 19, 2025, Akanda acquired First Towers in exchange for newly authorized Class A Special Shares and Class B Special Shares and cash payable over time as evidenced by a promissory note, and the restructuring and assumption of certain indebtedness of First Towers.
On August 26, 2025, January 12, 2026 and April 13, 2026, Akanda Group implemented a 1-for-3.125 Reverse Stock Split, a 1-for-5 Reverse Stock Split and a 1-for-4.5 Reverse Stock Split on its common shares, respectively. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded to the nearest whole number. All share and per share data in this management’s discussion and analysis and the Audited Consolidated Financial Statements for the years ended December 31, 2025 and 2024 have been retroactively restated to reflect the effect of the Reverse Stock Split.
As a result of Canmart’s liquidation, during the year ended December 31, 2025, Canmart ceased operations and we derecognized all its assets and liabilities and have since determined that it is no longer a significant subsidiary.
| A. | Operating Results |
Results of Operations
The discussion below summarizes Akanda Group’s consolidated historical operation results.
During the year ended December 31, 2025, Akanda Group evaluated the current state of Canmart and determined to discontinue and cease its UK operation. As a result, Akanda Group accounted for the operating results of Canmart, which was a net loss of $26,013, as a discontinued operation during the year ended December 31, 2025 and has reclassified the operating results of Canmart as a discontinued operation for the year ended December 31, 2024.
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Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024.
The following table sets forth key components of Akanda Group’s results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
| Years ended | |||||||||
| December 31, | |||||||||
| 2025 | 2024 | ||||||||
| Sales | $ | 258,075 | $ | — | |||||
| Cost of sales | 414,098 | — | |||||||
| Gross Profit (Loss) | (156,023 | ) | — | ||||||
| Operating expenses | |||||||||
| Depreciation and amortization | 433,693 | 137,271 | |||||||
| Consulting and professional fees | 1,463,786 | 2,377,926 | |||||||
| Personnel expenses | 624,710 | 495,699 | |||||||
| General and administrative expenses | 2,305,195 | 1,019,287 | |||||||
| Total operating expenses | 4,827,384 | 4,030,183 | |||||||
| Operating loss | (4,983,407 | ) | (4,030,183 | ) | |||||
| Other (expense) income: | |||||||||
| Finance income | — | 2,953 | |||||||
| Finance expense | (925,092 | ) | (81,083 | ) | |||||
| Foreign exchange gain (loss), net | 273,606 | (132,842 | ) | ||||||
| Transaction costs | (350,000 | ) | — | ||||||
| Change in fair value of financial liabilities measured at FVTPL | 1,750,820 | — | |||||||
| Gain (loss) on debt settlement | 1,914,956 | (219,719 | ) | ||||||
| Other income | — | 74,455 | |||||||
| Gain on sale of subsidiary | — | 198,780 | |||||||
| Write-off of AP, net | — | 475,816 | |||||||
| Write-off of holdback payable | — | 400,000 | |||||||
| Write-off of loan receivable | (235,686 | ) | — | ||||||
| Impairment loss | (44,812,112 | ) | — | ||||||
| (42,383,508 | ) | 718,360 | |||||||
| Net loss from continuing operations | (47,366,915 | ) | (3,311,823 | ) | |||||
| Gain (loss) from discontinued operations | 507,604 | (784,206 | ) | ||||||
| Net loss | $ | (46,859,311 | ) | $ | (4,096,029 | ) | |||
| Translation adjustment | (175,651 | ) | (101,188 | ) | |||||
| Comprehensive loss | $ | (47,034,962 | ) | $ | (4,197,217 | ) | |||
| Net loss attributable to: | |||||||||
| Shareholders of the Company | $ | (45,653,948 | ) | $ | (4,096,029 | ) | |||
| Non-controlling interest | (1,205,363 | ) | — | ||||||
| $ | (46,859,311 | ) | $ | (4,096,029 | ) | ||||
| Net comprehensive loss attributable to: | |||||||||
| Shareholders of the Company | $ | (46,242,254 | ) | $ | (4,197,217 | ) | |||
| Non-controlling interest | (792,708 | ) | — | ||||||
| $ | (47,034,962 | ) | $ | (4,197,217 | ) | ||||
| Loss per share from continuing operations – basic and diluted | $ | (669.58 | ) | $ | (223.48 | ) | |||
| Loss per share – basic and diluted | $ | (662.22 | ) | $ | (276.40 | ) | |||
| Weighted average common shares outstanding | 68,941 | 14,819 | |||||||
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Revenue
The revenue of $258,075 for the year ended December 31, 2025 as compared to $nil for 2024 came from the Company’s First Towers’s operations in Mexico. The revenue increase in 2025 was mainly the result of the acquisition of First Towers during the year. First Towers generate revenue from leasing its fiber optic networks and telecommunication towers.
Cost of Sales
Cost of sales increased from $nil in 2024 to $414,098 in 2025. The increase is directly related to the increase in sales activities and costs on maintenance and services on telecom towers during the current year since the acquisition of First Towers, as compared to no sales in the prior year when we did not own First Towers.
Amortization and Depreciation
Amortization and depreciation expenses increased from $137,271 for 2024 to $433,693 for the year ended December 31, 2025. The increase in the amortization and depreciation expenses recorded during the year ended December 31, 2025 was mainly attributable to the depreciation of First Tower assets held in Mexico and leased assets in the current year as compared in the prior year.
Consulting and Professional Fees
The consulting and professional fees incurred decreased from $2,377,926 in 2024 to $1,463,786 for the year ended December 31, 2025. This decrease in consulting and professional fees resulted from lower fees incurred during the current year as compared to the prior year. Consulting and professional fees incurred were mainly related to the engagement of various professional advisors and consultants in relation to Akanda’s completion of the First Towers acquisition and related financings.
Personnel Expenses
The Akanda Group incurred personnel expenses of $624,710 for the year ended December 31, 2025 compared to $495,699 for 2024. The increase in personnel expenses was due to the change in management and increase in key personnel as a result of the acquisition of First Towers during the current year.
General and Administration Expenses
The Akanda Group incurred general and administration expenses of $2,305,195 and $1,019,287 for the years ended December 31, 2025 and 2024, respectively. These costs consisted mainly of IR related expenses and a broad range of site related operational expenses such as utilities, fuel costs, import duties, security expenses, repairs and maintenance and consumables and office related operational expenses for its day to day business activities. The increased in costs was also the result of the acquisition of First Towers during the current year.
Interest Expense
The Company incurred interest expenses of $925,092 for the year ended December 31, 2025 compared to interest expense of $81,083 for 2024. The increase in expenses during the year ended December 31, 2025 was mainly due to a large amount of interest accrued from secured promissory notes and loans assumed by the Company as a result of the acquisition of First Towers during the current year as compared to the prior year.
Interest income
Interest income for the year ended December 31, 2025 was $nil compared to $2,953 for 2024. The decrease was mainly due to the elimination of the interest receivable for a bridge loan the Company made to First Towers in 2024 as a result of its acquisition during the current year and derecognition of Canmart’s interest receivable for a bridge loan to Cellen Life Sciences Limited and Cellen Biotech Limited pursuant to the Company ceasing its UK operation.
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Foreign Currency Translation
The foreign exchange gain (loss) is recognized on the translation of the consolidated financial statements from their functional currencies to United States Dollar. The Euro is the functional currency for our former Cannahealth, Holigen and RPK businesses, Great British Pounds is the functional currency for our former Canmart business, Mexican Peso is the functional currency of our CT Mexico and CT&FO Mexico subsidiaries, and Canadian dollars is the functional currency of Akanda, 1371011 B.C. Ltd. and First Towers while the United States Dollar is its reporting currency. The exchange gains and losses have not been incurred on any transactions or balances held by these companies in a different currency.
Net Loss and Total Comprehensive Loss
For the years ended December 31, 2025 and 2024, the group incurred a net loss of $46,859,311 and $4,096,029, respectively, and a comprehensive loss of $47,034,962 and $4,197,217, respectively, which consisted primarily of depreciation and amortization of $433,693 and $137,271, respectively, consulting and professional fee expenses of $1,463,786 and $2,377,926, respectively, personnel expenses of $624,710 and $495,699, respectively, general and administrative expenses of $2,305,195 and $1,019,287, respectively, and gain (loss) from discontinued operation gain of $507,604 and loss of $784,206, respectively. The significant increase in losses for the year ended December 31, 2025 was mainly due to impairment loss of $44,812,112 recognized during the current year as compared to no impairment incurred in the prior year.
Off-Balance Sheet Arrangements
Akanda did not have, during the reporting period, and we do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.
| B. | Liquidity and Capital Resources |
Cash Flows
The Akanda Group’s principal liquidity requirements are for corporate operating expenses, working capital and capital expenditures. Historically, we have funded our liquidity requirements primarily through shareholder loans, loans from third parties and from the issuance of shares. We did not have, during the reporting period, and we do not currently have any contractual obligations for ongoing capital expenditures.
The following table summarizes our cash flows from operating, investing and financing activities for the years ended December 31, 2025 and 2024:
| Year Ended December 31, 2025 | ||||||||||||
| 2025 | Change | 2024 | ||||||||||
| Cash used in operating activities | $ | (6,729,048 | ) | $ | (2,748,683 | ) | $ | (3,980,365 | ) | |||
| Cash used in investing activities | $ | (7,451,887 | ) | $ | (6,435,722 | ) | $ | (1,016,165 | ) | |||
| Cash provided by financing activities | $ | 11,678,315 | $ | 2,688,881 | $ | 8,989,434 | ||||||
Cash Flows from Operating Activities
For the year ended December 31, 2025, Akanda Group’s cash flow from operating activities decreased by $2,748,683 due to higher corporate expenses incurred as a result of corporate activities such as the acquisition of First Towers, gain on debt settlement, change in fair value of financial assets at FVTPL, and impairment loss recognized during the current year as well as changes in working capital relating to decrease in accounts receivable, increase in prepayments, decrease in trade and other payables and increase in due to related parties.
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Cash Flows from Investing Activities
Cash used in investing activities was $7,451,887 for the year ended December 31, 2025, which were mainly attributable to cash paid as part of consideration for the acquisition of First Towers, additional purchases or costs for fiber optic projects, telecommunication towers and computer equipment and additional cost for farmland. The cash used in investing activities during the year ended December 31, 2024 were attributable to acquisition costs of farmland and additional purchases of computer equipment, furniture and fixtures and leasehold improvements, cash surrendered upon disposal of RPK, cash lent out for a bridge loan entered in the current year and loan receivable, partially offset by cash proceeds from the sale of RPK.
Cash Flows from Financing Activities
Cash provided by financing activities was $11,678,315 for the year ended December 31, 2025, which was mainly attributable to the proceeds from private placement offering and notes financing, as discussed below, and partially offset by repayment of loans, lease payments and advances to related parties. Cash provided by financing activities during the year ended December 31, 2024 was mainly attributable to the proceeds from public offerings and short term loans and partially offset by repayment of loans and lease payments.
Share Capital and Financings
During the year ended December 31, 2025, Akanda Group completed the following financings:
| (i) | On March 26, 2025, pursuant to a series of subscription agreement entered with investors on March 21 and 24, 2025, Akanda Group completed its private offering with the issuance of 3,250 common shares at a subscription price of $98.44 per share for gross proceeds of $320,000. |
| (ii) | On September 12, 2025, the Company closed the Securities Purchase Agreement entered on September 11, 2025 with certain institutional investors to issue and sell to each of the September Investors a convertible promissory note for gross proceeds of $12,000,000. |
| The Company issued 408,427 common shares pursuant to the conversion of an aggregate principal amount of $10,737,400, under the terms of the convertible promissory note. |
During the year ended December 31, 2024, Akanda Group completed the following financings:
| (i) | On February 2, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on February 1, 2024, the Company announced closing of registered direct offering with the issuance of 49 common shares at a purchase price of $2,283.75 per share and prefunded warrants to purchase 260 common shares at a price of $2,283.19 per share for gross proceeds of $708,000. The prefunded warrants were immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
| (ii) | On March 4, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on March 1, 2024, the Company announced closing of registered direct offering with the issuance of 65 common shares at a purchase price of $1,155.60 per share and prefunded warrants to purchase 64 common shares at a price of $1,155.04 per share for gross proceeds of $150,000. The prefunded warrants were immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
| (iii) | On March 5, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on March 4, 2024, the Company announced closing of registered direct offering with the issuance of 65 common shares at a purchase price of $949.05 per share and prefunded warrants to purchase 66 common shares at a price of $948.49 per share for gross proceeds of $125,000. The prefunded warrants were immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
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| (iv) | On March 27, 2024, pursuant to an underwriting agreement entered with Univest Securities, LLC (“Univest”) as the underwriter on March 25, 2024, the Company announced closing of underwritten public offering with the issuance of 548 common shares at a purchase price of $684.56 per share and prefunded warrants to purchase 8,866 common shares at a price of $684.00 per share for gross proceeds of $5,000,000. The prefunded warrants are immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
| (v) | On May 17, 2024, pursuant to the securities purchase agreement entered with DRNK Beverage Corp. on the same day, the Company announced the 1st closing of registered direct offering with the issuance of 442 common shares at a purchase price of $579.94 per share and prefunded warrants to purchase 3,867 common shares at a price of $579.38 per share for gross proceeds of $2,500,000. The prefunded warrants are immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
| (vi) | On May 20, 2024, pursuant to the securities purchase agreement entered with DRNK Beverage Corp. on May 17, 2024, the Company announced the 2nd closing of registered direct offering with the issuance of 442 common shares at a purchase price of $579.94 per share, and prefunded warrants to purchase 2,143 common shares at a price of $579.38 per share for gross proceeds of $1,500,000. The prefunded warrants are immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
| (vii) | On October 3, 2024, pursuant to an underwriting agreement entered with Univest as the underwriter on October 2, 2024, the Company announced closing of underwritten public offering with the issuance of 1,841 common shares at a purchase price of $140.625 per share, and prefunded warrants to purchase 8,825 common shares at a price of $140.611 per share for gross proceeds of $1,500,000. The prefunded warrants are immediately exercisable for $0.014 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance with their terms. |
Short Term Loan
During the year ended December 31, 2024, Akanda Group received additional loans of $110,236 for its capital as well as working capital needs, of which $44,954 was advances from related parties. No new short term loans were received during the year ended December 31, 2025 or in 2026 through the date of this Annual Report on Form 20-F.
Disclosure of Contractual Arrangements
On December 31, 2025, Akanda Group was committed to minimum lease payments as follows:
| Less than | 1 – 5 | Over | ||||||||||
| Contractual Obligation | One Year | Years | 5 Years | |||||||||
| Office lease | $ | 144,000 | $ | — | $ | — | ||||||
| Tower leases | 69,739 | 239,495 | 33,944 | |||||||||
| $ | 213,739 | $ | 239,495 | $ | 33,944 | |||||||
The amounts above are undiscounted and include the total amounts due, including the interest component, that has been reclassified to accounts payable.
On December 31, 2024, Akanda Group was committed to minimum lease payments as follows:
| Less than | 1 – 5 | Over | ||||||||||
| Contractual Obligation | One Year | Years | 5 Years | |||||||||
| Office lease | $ | 40,000 | $ | — | $ | — | ||||||
The amounts above are undiscounted and include the total amounts due, including the interest component, that has been reclassified to accounts payable.
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Subsequent to the year ended December 31, 2025, the Company:
| i. | Implemented a Reverse Stock Split: |
| a. | On January 12, 2026, the Company implemented a 1-for-5 Reverse Stock Split on its ordinary shares. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole number. All share and per share data in these consolidated financial statements have been retroactively restated to reflect the effect of the reverse stock split. |
| b. | On April 13, 2026, the Company implemented a 1-for-4.5 Reverse Stock Split on its ordinary shares. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole number. All share and per share data in these consolidated financial statements have been retroactively restated to reflect the effect of the reverse stock split. |
| ii. | Issued the following shares: |
| a. | On January 14, 2026, pursuant to the conversion of September Note, the Company issued 26,217 common shares at conversion price of $15.26 for an aggregate principal amount of $399,957. |
| b. | On January 16, 2026, pursuant to the conversion of September Note, the Company issued 26,217 common shares at conversion price of $15.26 for an aggregate principal amount of $399,957. |
| c. | On January 22, 2026, pursuant to the final conversion of September Note, the Company issued 41,208 common shares at conversion price of $15.26 for an aggregate principal amount of $628,642. |
| iii. | Closed a $7,000,000 Convertible Note Offering: |
On January 21, 2026, the Company entered into a Securities Purchase Agreement dated January 20, 2026 (the “January Purchase Agreement”) with certain institutional investors (the “January Investors”) to issue and sell to each of the January Investors a convertible promissory note (each, individually, a “January Note” and collectively, the “January Notes”), for aggregate gross proceeds to the Company of $7.0 million (the “Purchase Price”), before deducting fees to the Placement Agent (as defined below) and other expenses payable by the Company in connection with the offering (the “January Offering”). The closing of the January Offering occurred on January 21, 2026.
The Company used the net proceeds from the sale of the January Notes for (i) marketing purposes of approximately $2.3 million, (ii) working capital and general corporate purposes of approximately $2.6 million and (iii) the repayment of certain indebtedness of up to $2.1 million.
The maturity date of each January Note is the 12-month anniversary of the issuance date of such January Note, and is the date upon which the principal amount, as well as any other fees, shall be due and payable. The January Notes bear interest at a rate of 10% per annum.
Each January Investor has the right, at any time, to convert all or any portion of the then outstanding and unpaid principal amount and interest if any (including any costs, fees, and charges) into the Company’s Common Shares, at a conversion price (the “Conversion Price”) equal to the lower of (i) $5.715 per share (the “Initial Conversion Price”), (ii) 85% of the VWAP (as defined in the January Notes) of the Common Shares during the five consecutive Trading Day (as defined in the January Notes) period ending and including the Trading Day immediately preceding the delivery of the Conversion Notice (as defined in the January Notes); or (iii) 85% of the Closing Sale Price (as defined in the January Notes) on the Trading Day prior to the Conversion Notice being submitted; provided, however, that in no event shall the Conversion Price equal a price per share that is less than $1.125. As of the filing date of this Annual report on Form 20-F, none of the January Note has been converted and it continues to accrue interest on the total principal amount.
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In addition, the Company paid the placement agent $70,000 in cash fees in relation to the January Offering at the closing.
| C. | Research and Development, Patents and Licenses |
Not applicable.
| D. | Trend Information |
Because we ceased our European operations and should still be considered in the startup phase, we are unable to identify any recent trends in revenue or expenses. Thus, we are unable to identify any known trends, uncertainties, demands, commitments or events involving our business that are reasonably likely to have a material effect on our revenues, income from operations, profitability, liquidity or capital resources, or that would cause the reported financial information in this Annual Report on Form 20-F to not be indicative of future operating results or financial condition.
| E. | Material Accounting Policies and Estimates |
Please refer to Note 3 of Akanda Group’s audited consolidated financial statements included in Item 18 of this Annual Report on Form 20-F.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The following table sets forth our directors and senior management, their age and the positions they held as of June 8, 2026.
| Name | Age | Position | ||
| Katharyn Field | 42 | Interim Chief Executive Officer and Executive Director | ||
| Gurcharn Deol | 56 | Chief Financial Officer | ||
| Christopher Cooper | 55 | Director, and President of First Towers | ||
| Jatinder Dhaliwal(1) | 35 | Director | ||
| David Jenkins(1) | 43 | Director | ||
| Usama Chaudhry(1) | 34 | Director | ||
| Francisco Juarez | 47 | VP and Chief Operating Officer of First Towers | ||
| Edgar Contreras | 52 | Country Manager of First Towers |
| (1) | Independent Director. |
Biographical Information
The following is a summary of certain biographical information concerning our executive officers and directors.
Katharyn Field has served as our Executive Director since July 2022 and Interim Chief Executive Officer since February 2023. Ms. Field is also currently CEO and Chairman of Halo, a position she has held since June 2022. Ms. Field is currently a director of LogProstyle and since February 2025 has been President of iSpecimen Inc., which are both publicly traded companies. She is also CFO of Zequor, Inc., a private AI infrastructure company, since September 2025. From February 2020 to June 2022, Ms. Field served as the president of Halo Collective Inc., a cannabis company, and from April 2019 through February 2020, she served as its Chief Strategy Officer. Ms. Field’s resume includes positions at the Brookings Institution, from October 2005 to May 2009 and Bain & Company from September 2011 to March 2013. In 2014, she entered the cannabis industry and led the procurement, build out, and sale of one of five original vertically integrated companies with state licenses in Florida. Subsequently, Ms. Field operated a strategy consulting practice focused on cannabis and also worked at MariMed from May 2018 to January 2019 as Executive Vice President of Corporate Development. Ms. Field also completed an internship in the public liaison’s office of The White House during the George W. Bush administration. Ms. Field holds an MBA from Columbia Business School and a BA with honors from Stanford University.
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Gurcharn Deol has served as our Chief Financial Officer since December 4, 2023. Mr. Deol is a multi-industry executive with over 35 years of public company management experience. Mr. Deol is currently a director of Green Battery Metals Corp, Trilogy AI Corp and Bayridge Resources Corp., which are all public companies trading on the Canadian Stock Exchanges. Mr. Deol’s recent experiences include being a director or in management of numerous Canadian private and public companies including CEO of Bayridge Resources Inc., a director of Trilogy AI Corp (new name for Ambari Brands Inc.), Green Battery Minerals Inc., Argyle Resources Corp and Neotech Metals Inc. He has been involved in initial IPOs being established which required taking private companies in Canada through the regulatory process of going public. Mr. Deol holds a B.A., M.A., PhD in Physiological and Counseling Psychology.
Christopher Cooper has served as one of our directors since April 2024. Mr. Cooper has over 20 years of business experience in all facets of corporate development, senior management, finance and operations, in both the private and public sectors. His experience includes spearheading growth strategies, financial reporting, quarterly and annual budgets, overseeing corporate administration, while achieving company objectives and maintaining internal cost controls. Mr. Cooper’s current primary occupation is a business consultant, and he serves as the president of Number 2 Capital Corp. He is also a co-founder and director of First Towers and was its Chief Executive Officer until the First Towers Transaction. Mr. Cooper has been serving as a director and CEO of Reparo Energy Partners Corp. since 2003, a director and CFO of Sweet Earth Holdings Corp since 2020, and an officer of Navco Pharmaceuticals Inc. since 2023. He has been the interim CEO of Shuttle Pharmaceuticals Holdings Inc. (Nasdaq: SHPH) since March 2025 and became its Co-CEO in May 2026. Mr. Cooper presently serves as a director of the following publicly traded companies: Planet Ventures Inc., Coloured Ties Capital, Manning Ventures Inc., Xcite Resources Inc., Atco Mining Inc., Starlo Ventures Ltd., American Salars Lithium Inc., and Goldhaven Resources Corp. He has previously been a director of Bullion Gold Resources Corp., StartMonday Technology Corp., Anthem United Inc., Aroway Energy Inc., Edge Resources Inc., Fusion Gold Ltd., Harry Manufacturing Inc., Inform Resources Corp., Leocor Ventures Inc., Magnitude Mining Ltd., Valens Groworks Corp., Level 14 Ventures Ltd., New Leaf Ventures Inc., Savannah Minerals Corp., Global Helium Corp., and Spod Lithium Corp. Mr. Cooper was also a director of Counterpath Corporation (Nasdaq: CPAH) from 2005 to 2021, a Nasdaq listed company which was acquired by Alianza, Inc. in March 2021 for USD$25.6 million. Mr. Cooper was a director of Alpha Lithium Corporation from 2018 to 2023, which was acquired by Tecpetrol in October 2023 for approximately CAD$313 million. Mr. Cooper received his Bachelor of Business Administration from Hofstra University and his Master’s in Business Administration from Dowling College in New York.
Jatinder Dhaliwal has served as one of our directors and as a member of our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee since July 2022. Mr. Dhaliwal is a registered pharmacist and has significant capital markets experience, having served as CEO and director of multiple publicly traded cannabis companies. Mr. Dhaliwal is currently a director and Chief Executive and Financial Officer at Binovi Technologies Corp., a position that he has held since January 2022; a director at LQR House Inc., a position that he has held since August 2023; a director at Virpax Pharmaceutical Inc, a position that he has held since July 2024; was a director and Chief Executive at Kiaro Holdings Corp., a position that he held from August 2022 to May 2023; was a director at Makara Mining Corp., a position that he held from August 2021 to March 2022; a director and CEO at Global Health Clinics Ltd., a position that he has held since March 2019; a director and CEO at EGF Theramed Health Corp., a position that he held from January 2022 to August 2022; a director at Ravenquest Biomed Inc, a position that he has held since November 2019; and a director at Intact Gold Corp., a position that he held from November 2019 to June 2020. Mr. Dhaliwal holds a Bachelor of Pharmacy from the University of British Columbia and a Bachelor of Science in Biology from the University of Victoria.
David Jenkins has served as one of our directors and as a member of our Audit Committee and our Compensation Committee since February 2023. Mr. Jenkins is currently a director at Binovi Technologies Corp., a position that he has held since December 2021; a director at Kiaro Holdings Corp. (TSXV: KO), a position that he has held since August 2022 and intern CEO and CFO of Kiaro since June 2023; a director at Levitee Labs, a position that he has held since January 2022; a director at Pontus Protein Ltd. (TSXV: HULK), a position that he has held since March 2022; a director at Boundary Gold & Copper Mining Ltd., a position that he has held since July 2020; a director at Montego Resources Inc., a position that he has held since January 2020; and a director at Quantum Battery Metals Corp., a position that he has held since January 2020.
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Usama Chaudhry has served as one of our directors since 2025. He is a seasoned executive with a broad expertise in corporate management, currently serving on several public company boards. He is the principal of Chaudhry U Consulting Inc., since 2016, and he has been the CFO and a director of Peakbirch Logic since June 2019, of EGF Theramed Health Corp. (OTCPink: EVAHF) since February 2020 and of Global Health Clinics Ltd. (OTCPink: LRSNF) since January 2020. He was the CFO of Virpax Pharmaceuticals, Inc. (OTCPink:VRPX) from November 2024 to April 2025. He is also a director of Binovi Technologies Corp. (OTC Expert Market: BNVIF) and Vantex Resources Ltd. (OTCPink: VANTF). His specialty areas encompass corporate development, investor relations, financial reporting, and corporate governance. He excels at aligning strategic objectives with rigorous cost control measures to enhance organizational performance. Mr. Chaudhry earned his Bachelor of Commerce degree, majoring in accounting, from the University of Northern British Columbia.
Francisco Juarez is a co-founder of First Towers and its Chief Operating Officer and a director since 2018. He is also a director and founder of IGS Corp. since 2008. He brings over 15 years of experience creating business models for companies to become the best business partner for their clientele.
Edgar Contreras has 30 years of experience as a corporate lawyer, specializing in the telecommunication industry since 2002. He is regarded as an expert in negotiating the purchase of strategic telecommunication sites, money flow, and income. Mr. Contreras has worked with leading companies, such as American Tower and Nokia, on operational matters and serves as operations director for Mexico’s APWireless, a leader in the world for the purchase of money flow on telecommunication sites. His extensive experience has included the construction of more than 1,000 BTS sites in Mexico and over 5,000 negotiations rentals of telecommunication siting locations. Mr. Contreras previously owned and operated Nextel de Mexico, which accomplished 100 property leases to install telecommunications infrastructure in only 3 months. Mr. Contreras previously managed First Towers’ fiber optic business prior to becoming its National Manager.
| B. | Compensation |
Compensation of our Executive Officers and Directors
The following table sets forth information concerning the compensation of our executive officers and members of our Board of Directors for the fiscal years ended December 31, 2025 and 2024.
| Year | Salary ($) |
Stock awards ($) |
Option awards ($) |
Non-equity incentive plan compensation ($) |
Change in pension value and nonqualified deferred compensation earnings |
All other compensation ($) |
Total ($) |
||||||||||||||||||||||||
| Katharyn Field | 2025 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| (Interim CEO and Executive Director) | 2024 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| Jatinder Dhaliwal | 2025 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| (Director) | 2024 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| David Jenkins | 2025 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| (Director) | 2024 | 96,000 | — | — | — | — | — | 96,000 | |||||||||||||||||||||||
| Christopher Cooper | 2025 | 196,000 | — | — | — | — | — | 196,000 | |||||||||||||||||||||||
| (Director and President of First Towers) | 2024 | 20,000 | — | — | — | — | — | 20,000 | |||||||||||||||||||||||
| Usama Chaudhry | 2025 | 69,333 | — | — | — | — | — | 69,333 | |||||||||||||||||||||||
| (Director) | 2024 | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Gurcharn Deol | 2025 | 27,053 | — | — | — | — | — | 27,053 | |||||||||||||||||||||||
| (Chief Financial Officer) | 2024 | 27,594 | — | — | — | — | — | 27,594 | |||||||||||||||||||||||
| Francisco Juarez | 2025 | 19,329 | — | — | — | — | — | 19,329 | |||||||||||||||||||||||
| (VP and Chief Operating Officer of First Towers) | 2024 | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Edgar Contreras | 2025 | 34,909 | — | — | — | — | — | 34,909 | |||||||||||||||||||||||
| (Country Manager of First Towers) | 2024 | — | — | — | — | — | — | — | |||||||||||||||||||||||
| Total | 2025 | 634,624 | — | — | — | — | — | 634,624 | |||||||||||||||||||||||
| 2024 | 335,594 | — | — | — | — | — | 335,594 | ||||||||||||||||||||||||
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Director Compensation
We have five directors. We currently do not pay our directors who are executive officers additional compensation. We expect to compensate our non-executive directors for their director services. which will be settled in cash or partly in equity awards at the election of the non-executive director. Total non-executive director compensation is as follows:
| ● | an annual retainer of $75,000 ($112,500 for the lead independent director); |
| ● | an initial equity award equal to the value of $100,000; |
| ● | an additional $5,000 per annum for any non-executive director serving on a board committee ($6,000 if serving as chair of a board committee other than the audit and risk committee and $10,000 if serving as chair of the audit and risk committee). |
Executive Employment Agreements, Arrangements or Plans
There are currently no executive employment agreements entered into and currently in place between the Company or any subsidiary of the Company, and its executive officers. All payments of compensation to the executive officers of the Company are based on Board approval and not as a result of any employment agreement.
Stock Option Plan
The Company has a 2021 Equity Incentive Plan (the “2021 Plan”) whereby it may grant options for the purchase of Common Shares, or Restricted Share Units, to any director, consultant, employee or officer of the Company or its subsidiaries. The aggregate number of shares that may be issuable pursuant to options granted under the Plan will not exceed 20% of the issued Common Shares of the Company. The options are non-transferable and non-assignable and may be granted for a term not exceeding 5 years. The exercise price of the options will be determined by our Board of Directors at the time of grant but may not be less than the closing price of such shares on Nasdaq on the trading date immediately preceding the date of grant, subject to all applicable regulatory requirements.
Please refer to Note 17 of Akanda Group’s audited financial statements included in Item 18 of this Annual Report on Form 20-F for a discussion of Restricted Share Units issued in Fiscal 2025.
On March 22, 2024, the shareholders of the Company approved the 2024 Equity Incentive Plan (the “2024 Plan”, together with the 2021 Plan, the “Stock Option Plan”) whereby it may grant options for the purchase of Common Shares, or Restricted Share Units, to any director, consultant, employee or officer of the Company or its subsidiaries. The aggregate number of shares that may be issuable pursuant to options granted under the 2024 Plan will not exceed 30% of the issued Common Shares of the Company. The options are non-transferable and non-assignable and may be granted for a term not exceeding 10 years. The exercise price of the options will be determined by our Board of Directors at the time of grant but may not be less than the closing price of such shares on Nasdaq on the trading date immediately preceding the date of grant, subject to all applicable regulatory requirements.
| C. | Board Practices |
Introduction
Our business and affairs are managed under the direction of our Board of Directors. Our Board of Directors is composed of five directors. When considering whether directors have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board of Directors to effectively satisfy its oversight responsibilities in light of our business and structure, the Board of Directors focuses primarily on each person’s background and experience as reflected in the information discussed in the directors’ respective biographies set forth above. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.
Election of Directors
Each of our officers holds office until his or her successor is appointed. Directors are elected to serve until the close of the next annual meeting of shareholders or until their successors have been elected or appointed.
We do not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. Our Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. The Board of Directors, with the help of its nominating and corporate governance committee, will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
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Corporate Governance
We are a “foreign private issuer” under the federal securities laws of the United States and The Nasdaq Stock Market listing standards. Under the federal securities laws of the United States, foreign private issuers are subject to different disclosure requirements than U.S.-domiciled registrants. We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act, the rules adopted by the SEC and the Nasdaq listing standards.
Under the SEC rules and the Nasdaq listing standards, a foreign private issuer is subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and the Nasdaq permit a foreign private issuer to follow its home country practice in lieu of their respective rules and listing standards. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on Nasdaq, may provide less protection than is accorded to investors under the Nasdaq Rules applicable to U.S. domestic issuers.
In particular, as a foreign private issuer, in accordance with and pursuant to the authority contained in Nasdaq Listing Rule 5615(a)(3), we may follow certain Canadian law and corporate practice in lieu of certain corporate governance provisions set out under the Nasdaq Rule 5600 Series, the requirement in Listing Rule 5250(b)(3) to disclose third party director and nominee compensation, and the requirement in Listing Rule 5250(d) to distribute annual and interim reports. Of particular note, the following rules under the Nasdaq Listing Rule 5600 Series may differ from Canadian law requirements:
| ● | Nasdaq Listing Rule 5605(b)(1) requires that at least a majority of the Company’s Board of Directors shall be independent directors, and Nasdaq Listing Rule 5605(b)(2) requires that independent directors regularly meet in executive session, where only independent directors are present. We have three independent directors. Our independent directors meet regularly with other members of the Board and meet in executive session at least two (2) times per year. |
| ● | Nasdaq Listing Rule 5620(c) sets out a quorum requirement of at least 33-1/3% of the outstanding shares with respect to meetings of shareholders. In accordance with Canadian law and generally accepted business practices, our bylaws (the “Bylaws”) provide that a quorum is met when at least two persons are present in person and are holding or representing by proxy not less than 10% of the votes attached to all shares entitled to vote at the meeting of shareholders. The quorum requirement provided in our Bylaws is consistent with applicable Canadian laws and corporate practice. |
| ● | Nasdaq Listing Rule 5605(c)(2)(A) requires that the Company shall have an audit committee composed entirely of not less than three directors, each of whom must be independent. Our audit and risk committee is comprised of three directors, and each member of the audit and risk committee meets the independence requirements of Nasdaq Listing Rule 5605(a)(2) and Rule 10A-3(b)(1) under the Exchange Act. |
| ● | Nasdaq Listing Rule 5605(d)(2)(A) requires, among other things, that the Company’s compensation committee include at least two members, each of whom is an independent director as defined under Nasdaq Listing Rule 5605(a)(2). Our compensation committee is comprised of two directors, and each member of the compensation committee meets the independence requirements of Nasdaq Listing Rule 5605(a)(2). |
| ● | Nasdaq Listing Rule 5605(e) requires that the nominations committee include solely independent directors or is constituted by a majority of independent directors in a vote in which only independent directors participate. Our nominating committee is comprised of two directors, who meets the independence requirements of Nasdaq Listing Rule 5605(a)(2). |
We followed home country rules with regard to the requirement to hold an annual shareholders meeting no later than one year after the Company’s fiscal year end, under Nasdaq Listing Rule 5620. With regard to the underwritten public offering on March 27, 2024, we followed home country rules with regard to the requirement for shareholder approval for transactions other than “public offerings” under Nasdaq Listing Rule 5635. We may in the future elect to follow additional home country practices in Canada with regard to certain corporate governance matters.
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Indemnification of Directors and Officers
In accordance with the Business Corporations Act (Ontario) and pursuant to the Bylaws of the Company, subject to certain conditions, the Company shall indemnify a director or officer, a former director or officer, or another individual who acts or acted at the Company’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Company or other entity. The Company shall not indemnify an individual unless the individual:
| ● | acted honestly and in good faith with a view to the best interests of the Company or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Company’s request; and |
| ● | in the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful. |
| ● | An individual referred to above is entitled to an indemnity from the Company in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the Company or other entity as described above, if the individual seeking an indemnity: |
| o | acted honestly and in good faith with a view to the best interests of the Company or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Company’s request; |
| o | in the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful; and |
| o | was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done. |
Committees of the Board
Audit Committee
Jatinder Dhaliwal, David Jenkins and Usama Chaudhry currently serve as the members of our audit committee. Our board of directors has determined that each of them meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act. David Jenkins serves as the chairman of the audit committee.
Our audit committee is responsible for, among other things:
| ● | appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; |
| ● | discussing with our independent registered public accounting firm their independence from management; |
| ● | reviewing, with our independent registered public accounting firm, the scope and results of their audit; |
| ● | approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; |
| ● | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm any financial statements that we file with the SEC; |
| ● | overseeing our financial and accounting controls and compliance with legal and regulatory requirements; |
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| ● | reviewing our policies on risk assessment and risk management; |
| ● | reviewing related person transactions; and |
| ● | establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters. |
Compensation Committee
Jatinder Dhaliwal and David Jenkins currently serve as the members of our compensation committee. Our board of directors has determined that each of Jatinder Dhaliwal and David Jenkins meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act. Jatinder Dhaliwal serves as the chairman of the compensation committee.
Our compensation committee is responsible for, among other things:
| ● | determining and recommending to the Board of Directors for approval, the corporate goals and objectives, evaluating the performance and reviewing and approving the compensation of our executive officers; |
| ● | reviewing or making recommendations to our Board of Directors regarding our incentive compensation and equity-based plans, policies and programs; |
| ● | reviewing all employment agreement and severance arrangements for our executive officers; |
| ● | reviewing and making recommendations to our Board of Directors regarding the compensation of our directors; and |
| ● | retaining and overseeing any compensation consultants. |
Nominating Committee
Jatinder Dhaliwal currently serves as the Chairman and sole member of our nominating and corporate governance committee. Our board of directors has determined that Jatinder Dhaliwal meets the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Our nominating and corporate governance committee is responsible for, among other things:
| ● | identifying individuals qualified to become members of our Board of Directors consistent with criteria approved by our Board of Directors; |
| ● | overseeing succession planning for our executive officers; |
| ● | periodically reviewing our Board of Directors’ leadership structure and recommending any proposed changes to our Board of Directors; |
| ● | overseeing an annual evaluation of the effectiveness of our Board of Directors and its committees; |
| ● | developing and recommending to our Board of Directors a set of corporate governance guidelines; |
| ● | developing and recommending to our Board of Directors our ESG initiatives and programs. |
Board Leadership Structure and Risk Oversight
Our Board of Directors oversees our business and considers the risks associated with our business strategy and decisions. Our Board of Directors currently implements its risk oversight function as a whole. Each of the Board committees also provides risk oversight in respect of its areas of concentration and report material risks to the Board for further consideration.
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Conflicts of Interest
There are potential conflicts of interest to which the directors, officers, and insiders of our Company will be subject in connection with the operations of our company. Some of the directors, officers and insiders are engaged in and will continue to be engaged in corporations or businesses which may be in competition with the business of our Company. Accordingly, situations may arise where the directors, officers and insiders will be in direct competition with our Company. The directors and officers of our Company have a fiduciary obligation to act in the best interests of our company, avoid conflicts of interest and to disclose to all other board members any relevant information about potential conflicts. They have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to our company may result in a breach of their obligations to the other companies, and in certain circumstances this could expose our Company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of our Company. Such conflicting legal obligations may expose our company to liability to others and impair our ability to achieve our business objectives. Conflicts, if any, will be subject to the procedures and remedies as provided under the Code of Ethics and Related Party Transaction Policy and applicable securities laws, regulations and policies. For additional information, please see Item 7.B. – Related Party Transactions.
Terms of Office
Each of our officers holds office until his or her successor is appointed. Directors are elected to serve until the close of the next annual meeting of shareholders or until their successors have been elected or appointed.
Director Independence
We use the definition of “independence” under applicable Nasdaq Listing Rules to make determinations regarding director independence. Under such definitions, the Company’s Board of Directors has affirmatively determined that each of Jatinder Dhaliwal, Usama Chaudhry and David Jenkins is independent.
Shareholder Communications
We do not have a formal policy regarding shareholder communications with our Board of Directors. A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our Chief Financial Officer, at c/o Gowling WLG (Canada) LLP, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada.
| D. | Employees |
As a result of the discontinuance of our Canmart operations and our transition to cultivating cannabis products at our British Columbia facilities, Akanda ceased having any full time employees and had a total of 2 part-time executives, since it had not yet begun cultivation operations at its British Columbia location. In August 2025, we increased our full-time employee headcount with the assumption of six employees from First Towers. As of June 8, 2026, we had two part-time executives and six full-time employees. None of our employees are represented by labor unions or subject to collective bargaining agreements.
| E. | Share Ownership |
See Item 6.B. – “Compensation” and Item 7 – “Major Shareholders and Related Party Transactions.”
| F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders |
Share Ownership
The following table sets forth information about the beneficial ownership of our Common Shares as of June 8, 2026 by:
| ● | each of our executive officers and directors; |
| ● | all of our executive officers and directors; and |
| ● | each person or entity (or group of affiliated persons or entities) known by us to be the beneficial owner of 5% or more of our Common Shares. |
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To our knowledge, each shareholder named in the table has sole voting and investment power with respect to all of our Common Shares shown as “beneficially owned” (as determined by the rules of the SEC) by such shareholder, subject to applicable community property laws and except as otherwise set forth in the footnotes to the table. The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power.
Percentages of beneficial ownership (as determined in accordance with Rule 13d-3 under the Exchange Act) are based on approximately 540,841 Common Shares outstanding as of June 8, 2026.
Common Shares which may be acquired upon conversion of convertible securities or exercise of stock options or warrants which are currently exercisable or convertible or which become exercisable or convertible within 60 days after the date indicated in the table are deemed beneficially owned by the holder thereof.
Except as noted in the footnotes to the table below, the address for all of the shareholders in the table below is c/o Akanda, c/o Gowling WLG (Canada) LLP, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada.
| Percentage of Common Shares Beneficially Owned(1) | ||||||||
| Name of Beneficial Owner | Number of Common Shares Beneficially Owned | Percentage | ||||||
| Executive Officers and Directors: | ||||||||
| Katharyn Field | — | — | ||||||
| Gurcharn Deol | — | — | ||||||
| Christopher Cooper(2) | 23,974 | 6.49 | % | |||||
| Jatinder Dhaliwal | — | — | ||||||
| David Jenkins | — | — | ||||||
| Usama Chaudhry | — | — | ||||||
| Francisco Juarez(3) | 15,670 | 4.24 | % | |||||
| Edgar Contreras(4) | 3,688 | 1.00 | % | |||||
| All executive officers and directors as a group (6 persons)(2)(3)(4) | 43,334 | 11.73 | % | |||||
| (1) | Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. A person is deemed to be the beneficial owner of any Common Shares if that person has or shares voting power or investment power with respect to those shares or has the right to acquire beneficial ownership at any time within 60 days. Includes an aggregate of 212,265 Class B Special Shares issued to the former holders of First Towers, which convert into our common shares on a one-for-one basis pursuant to the terms thereof. |
| (2) | Includes (a) options to purchase 2,237 of our common shares, and (b) 19,853 common shares underlying our Class B Special Shares Mr. Cooper, Mr. Cooper’s spouse and an entity owned by him are entitled to, as a result of the acquisition of First Towers, of which they were shareholders. |
| (3) | Includes (a) options to purchase 2,237 of our common shares, and (b) 12,269 common shares underlying our Class B Special Shares Mr. Juarez is entitled to, as a result of the acquisition of First Towers, of which he was a shareholder. |
| (4) | Includes (a) options to purchase 2,237 of our common shares, and (b) 1,325 common shares underlying our Class B Special Shares Mr. Contreras is entitled to, as a result of the acquisition of First Towers, of which he was a shareholder. |
For additional information about our principal shareholders, please see Item 7.B. – Related Party Transactions.
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| B. | Related Party Transactions |
First Towers Transaction
Chris Cooper, a member of our Board of Directors, was the co-founder, CEO and a director of First Towers. Mr. Cooper recused himself from all Board matters of Akanda relating to First Towers and the First Towers Transaction. As a result of the First Towers Transaction, Mr. Cooper and his affiliates received the same proportionate consideration as all other shareholders of First Towers. As a result of the closing of the First Towers Transaction, he, his spouse and an affiliate received an aggregate of 1,882 Class A Special Shares that convert into our common shares on a one-for-one basis, and are to receive subject to shareholder approval, an aggregate of 19,853 Class B Special Shares that convert into our common shares on a one-for-one basis. Mr. Cooper also had certain stock options he owned in First Towers convert into 2,237 stock options of the Company. Mr. Cooper remains a member of our Board of Directors, and further is the president and a director of our First Towers subsidiary.
On November 21, 2024, the Company entered into a Bridge Loan Agreement with First Towers, pursuant to which the Company agreed to loan to First Towers $350,000. Interest of the prime rate (as defined in the Loan Agreement) plus 2% will accrue and be calculated daily on the principal amount of the Loan on the basis of the actual number of days the Loan is outstanding in a year of 365 or 366 days, as applicable, and will be compounded and payable monthly in arrears on the first business day of each month. During the year ended December 31, 2024, the Company recorded an accrued interest receivable of $2,953. As at December 31, 2024, the loan receivable balance including interest was $352,953. Through May 2025, First Towers has borrowed an aggregate of $423,000 under such facility. This loan was terminated in consolidation as of the closing of the First Towers Transaction on August 21, 2025.
Transactions with Key Management Personnel
The Company has identified its Board of Directors, Chief Executive Officer (“CEO”), and its Chief Financial Officer (“CFO”) as its key management personnel who have the authority and responsibility for planning, directing and controlling the Company’s main activities.
| For the fiscal year ended December 31, | 2025 | |||
| Key Management Remuneration | $ | 679,005 | ||
| Stock-based compensation | — | |||
| $ | 679,005 | |||
The Key Management remuneration is included in Professional and Consulting fees and Personnel Expenses in the Statement of Operations.
As of December 31, 2025, the Company has balances payable to related parties of $640,546 (2024 — $302,232) as below:
| a. | Included within accounts payable and accrued liabilities at December 31, 2025 is remuneration payable to key management totaling $640,546 (2024 — $244,933), which includes amounts owing to the following current and former directors and officers of the Company: |
| ● | current directors and officers: |
| i. | $32,000 owing to J Dhaliwal (2024 — $8,000); |
| ii. | $2,298 owing to G Deol (2024 — $2,192); |
| iii. | $8,000 owing to K Field (2024 — $72,000); |
| iv. | $259,435 owing to D Jenkins (2024 — $160,241); |
| v. | $192,175 owing to C Cooper (2024 — $2,500); |
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| vi. | $69,333 owing to U Chaudhry (2024 — $nil); |
| vii. | $17,555 owing to E Contreras (2024 — $nil); |
| viii. | $18,382 owing to F Juarez (2024 — $nil); and |
| ix. | $41,368 owing to D Gordon (2024 — $nil). |
| b. | The former director and officer of RPK, Kiranjit Sidhu is also the owner of Catalyst Capital LLC (“Catalyst”). |
| i. | On November 14, 2022, the Company received a loan of £25,000 ($30,224) from Catalyst. The loan is unsecured and bears interest of £200 per week. The loan has matured on January 31, 2023 and is due on demand. Any unpaid amount is charged with late fees of £200 for each week the payment is late. During the year ended December 31, 2024, the Company paid this loan in full as part of the debt settlement entered in April 2024. |
| ii. | On January 17, 2023, the Company received an additional loan of €45,000 ($48,666) from Catalyst. The loan is unsecured and bears interest of 0.75% per day, compounding daily. The loan has matured on February 1, 2023 and is due on demand. Any unpaid amount is charged with late fees of 1% compounding interest for each day the payment is late. During the year ended December 31, 2023, the lender has willingly forgone any interest arising from this loan. During the year ended December 31, 2024, the Company paid this loan in full as part of the debt settlement entered in April 2024. |
| iii. | On February 5, 2023, the Company entered into another independent contractor agreement with Mr. Sidhu, pursuant to which, he agreed to provide services regarding the business operations, business development, legal and strategic matters to the Company for $650,000. The payment for the services was partially settled by the issuance of 28 RSUs converted to 28 Common Shares in May 2023 and 24 RSUs converted to 24 Common Shares in July 2023. As of December 31, 2023, the balance of the payable was $350,395, and was recorded under due to related parties’ account. During the year ended December 31, 2024, the Company paid this payable in full as part of the debt settlement entered in April 2024. |
| iv. | On April 4, 2024, the Company entered into debt settlement agreement with Mr. Sidhu to settle up all amounts owing of $487,295, which includes outstanding loans and other consulting payables. Pursuant to the agreement, Mr. Sidhu agreed to accept $136,757 in full settlement of the outstanding debt. On April 10, 2024, the Company paid the agreed amounts and recognized a gain on debt settlement of $353,159 in the consolidated statements of loss and comprehensive loss. |
| c. | The Company has the following loans outstanding to 1248787 B.C. Ltd. (“1248787”), a company controlled by Jatinder Dhaliwal, a director of the Akanda: |
| i. | On August 18, 2023, the Company received a loan of C$24,000 ($17,714) from 1248787. The loan is unsecured, bears interest of 18% per annum and payable within 12 months. During the year ended December 31, 2025, the Company recorded interest expense of $1,076 (2024 — $3,157) and paid the loan in full. |
| ii. | On September 27, 2023, the Company received a loan of C$3,000 ($2,219) from 1248787. The loan is unsecured, bears interest of 18% per annum and payable within 12 months. During the year ended December 31, 2025, the Company recorded interest expense of $134 (2024 — $395) and paid the loan in full. |
| iii. | On October 13, 2023, the Company received a loan of C$40,000 ($29,258) from 1248787. The loan is unsecured, bears interest of 18% per annum and payable within 12 months. During the year ended December 31, 2025, the Company recorded interest expense of $1,793 (2024 — $5,259) and paid the loan in full. |
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| d. | The Company has the following loans transactions with Halo, a company controlled by Katharyn Field, the executive director and interim CEO of Akanda: |
Unsecured debenture
On January 26, 2023, the Company issued a promissory note to Halo for a principal amount of $328,000. The note bears an interest rate of 7% per annum and matured on June 25, 2023. During the year ended December 31, 2023, the Company entered into a note conversion agreement and settled this loan through the issuance of 103 common shares.
During the year ended December 31, 2023, the Company received additional loans from Halo in the aggregate principal amount of $1,192,953. These loans are unsecured and bears the same interest rate of 7% per annum and have no specific terms of repayment.
During the year ended December 31, 2024, the Company received additional loans from Halo in the aggregate principal amount of $44,954. These loans are unsecured and bears the same interest rate of 7% per annum and have no specific terms of repayment. The Company recorded interest expense of $39,170 from these loans and also made a full repayment during the year ended December 31, 2024. |
| e. | On April 24, 2024, Mr. Harvinder Singh resigned as an independent director of the Board of Directors of the Company. A Resignation and Mutual Release Agreement dated April 24, 2024 was entered between the Company and Mr. Singh, pursuant to which the Company agreed to pay Harvinder Singh a separation and release amount of $50,000. The Company has paid the amount in full on April 25, 2024. During the year ended December 31, 2024, the Company recognized a gain on debt settlement of $48,592 in the consolidated statements of loss and comprehensive loss. |
As of December 31, 2025, the Company has balances receivable from related parties of $nil (2024 — $368,172) as below:
| a. | Advances - Halo |
| During the year ended December 31, 2024, the Company paid and accrued an amount of $15,969 (CAD21,875) of fees for services rendered by certain legal firms to Halo, a company controlled by the interim CEO of the Company. The transactions were accounted by the Company as advances or loans to Halo. The loans are non-interest bearing, unsecured and has no specific terms of repayment. |
| During the year ended December 31, 2025, the Company paid an additional amount of $220,030 (CAD307,437) of fees for services rendered by certain legal firms to Halo. These amounts, accounted as loans, are non-interest bearing, unsecured and have no specific terms of repayment. During the year ended December 31, 2025, the Company determined that the full loan receivable balance are no longer collectible from Halo and recognized a write-off of $235,686. |
| b. | The Company has the following loan receivable from First Towers & Fiber Corp. (“First Towers”), a company controlled by Christopher Cooper, a director of Akanda: |
| On November 21, 2024, the Company entered into a Bridge Loan Agreement with First Towers, pursuant to which the Company agreed to loan to First Towers $350,000. Interest of the prime rate (as defined in the Loan Agreement) plus 2% will accrue and be calculated daily on the principal amount of the loan on the basis of the actual number of days the loan is outstanding in a year of 365 or 366 days, as applicable, and will be compounded and payable monthly in arrears on the first business day of each month. |
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| Pursuant to the Bridge Loan Agreement, the Company shall also advance to First Towers a $1,000,000 loan on the same terms as the existing Loan Agreement. As of December 31, 2025, the Company lent out a total of $423,000. As at December 31, 2025, the loan receivable balance including interest was terminated in consolidation as of the closing of the First Towers Transaction on August 19, 2025. |
The Company’s related party transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.
Outstanding Claims
On January 29, 2024, Shailesh Bhushan, the former Chief Financial Officer of the Company, filed a complaint with the Employment Standards Branch of British Columbia against Akanda, Halo Collective Inc., and ANM, Inc. Mr. Bhushan alleges that Akanda failed to pay salary and invoices in the aggregate amount of CAD $271,990 from the period December 2022 through November 2023. He also claims unpaid salary and invoices in the amount of CAD $251,193 from Halo and CAD $56,700 from ANM. and alleges that Akanda, Halo, and ANM are related employers who may be jointly and severally liable for payment. The Employment Standards Branch has not yet requested a response to the complaint from Akanda. The Company intends to dispute the claim, including the allegations that the three companies are related employers.
On February 23, 2024, Mr. Bhushan filed a Notice of Civil Claim in the Supreme Court of British Columbia against Akanda alleging constructive dismissal and claiming severance pay, general damages, aggravated and punitive damages, and allegedly unpaid salary and bonus. He also seeks special costs. Mr. Bhushan has named Akanda directors Jatinder Dhaliwal, Katharyn Field, David Jenkins, and Harvinder Singh as defendants, whom he alleges are personally liable for unpaid wages.
In the same claim, Mr. Bhushan alleges constructive dismissal against Halo Collective Inc., and claims severance pay, general damages, aggravated and punitive damages, allegedly unpaid salary and bonus, allegedly unpaid moving expenses, and alleges that the Halo stock he received as compensation lost value due to a share dilution. He has named certain current and former Halo directors as defendants and alleges they are personally liable for unpaid wages. He also seeks special costs against Halo. Mr. Bhushan alleges that Akanda and Halo are a common employer and may be jointly and severally liable for payment of damages.
The Company and the other defendants filed their Response to Civil Claim on May 2, 2024. The Company denies all liability and takes the position that Mr. Bhushan was terminated for just cause. The Company also disputes the amounts claimed, and denies that Akanda and Halo are a common employer. The proceeding is at the discovery stage.
Dentons UK and Middle East LLP (“Dentons”) filed a debt claim against Canmart for legal services and advice invoiced between July 2022 and November 2022. Dentons sought £204,391.98 plus interest in the amount of £30,730.49 and other costs. Although Canmart admits retaining Dentons’s services, Canmart denies any outstanding invoices and has asserted a counterclaim for costs incurred in defending a prior claim, any damages awarded to the claimant in the prior claim, any applicable interest, and costs. Dentons has replied to the counterclaim and this claim remains open.
See Notes 27 of our Audited Financial Statements for the year ended December 31, 2025 for a description of other claims by and against the Company.
| C. | Interests of Experts and Counsel |
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
| A. | Consolidated Statements and Other Financial Information |
See Item 18. — “Financial Statements.”
| B. | Significant Changes |
No significant changes occurred since the date of the annual financial statements.
ITEM 9. THE OFFER AND LISTING
| A. | Offer and Listing Details |
Our Common Shares have traded on The Nasdaq Capital Market under the symbol “AKAN” from our initial public offering on March 15, 2022.
On May 20, 2026, we received a notification of non-compliance from the Listing Qualifications Department of Nasdaq, notifying us that we are not in compliance with the periodic filing requirements for continued listing set forth in Nasdaq Listing Rule 5250(c)(1) as a result of our failure to file our Annual Report on Form 20-F for the fiscal year ended December 31, 2025 with the SEC by the required due date. We expect that we will again be in compliance with Nasdaq upon the filing of this Annual Report on Form 20-F.
| B. | Plan of Distribution |
Not applicable.
| C. | Markets |
Our ordinary shares are listed and traded on The Nasdaq Capital Market.
| D. | Selling Shareholders |
Not applicable.
| E. | Dilution |
Not applicable.
| F. | Expenses of the Issue |
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
| A. | Share Capital |
Not applicable.
| B. | Memorandum and Articles of Association |
General
The Company’s Articles of Incorporation, as amended by Articles of Amendment dated as of August 30, 2021, and as further amended by Articles of Amendment dated as of March 8, 2023, as of May 23, 2024, as of August 25, 2025, as of January 12, 2026, and as of April 13, 2026 (the “Articles”), provide that our authorized capital consists of an unlimited number of Common Shares, an unlimited number of Class A Special Shares, an unlimited number of Class B Special Shares, and an unlimited number of preferred shares (the “Preferred Shares”), issuable in series.
As of June 8, 2026, the Company has approximately 540,841 Common Shares issued and outstanding and 244,814 Class B Special Shares issued and outstanding, and no Preferred Shares issued and outstanding.
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Rights, Preferences and Restrictions Attaching to Our Common Shares
The Articles provide the following rights, privileges, restrictions and conditions attaching to our Common Shares:
| ● | to vote at any meetings of shareholders, except meetings at which only holders of a specified class of shares other than the Common Shares are entitled to vote; |
| ● | subject to the prior rights of the holders of the Preferred Shares, to share equally in the remaining assets of our Company on liquidation, dissolution or winding-up of our Company; and |
| ● | subject to the prior rights of the holders of the Preferred Shares, the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors. |
The holders of Common Shares are entitled to receive notice of and to attend all annual and special meetings of our shareholders and to one vote in respect of each Common Share held at the record date for each such meeting, except a meeting of holders of a particular class of shares other than Common Shares who are entitled to vote separately as a class at such meeting. Subject to the prior rights of the holders of the Preferred Shares, the holders of Common Shares are entitled, at the discretion of our Board of Directors, to receive out of any or all of our profits or surplus properly available for the payment of dividends, any dividend declared by our Board of Directors and payable by the Company on the Common Shares. The holders of the Common Shares will participate in any distribution of the assets of the Company upon liquidation, dissolution or winding-up or other distribution of the assets of the Company, subject to the prior rights of the holder of the Preferred Shares.
Pre-emptive Rights
Our Common Shares do not contain any pre-emptive purchase rights to any of our securities.
Class A Special Shares
On August 29, 2025, shareholders of the Company approved an amendment to the Company’s Articles to create a new class of special common shares without nominal or par value, designated as Class A Special Shares.
The holders of the Class A Special Shares shall be entitled to one vote for each Class A Special Shares held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series, provided that the holders of Class A Special Shares may not cast a vote in respect of a resolution intended to allow the Corporation to issue Class B Special Shares pursuant to the transactions contemplated in the SEA in accordance with applicable Nasdaq Listing Rules.
Subject to the prior rights of any other class ranking senior to the Class B Special Shares and equal in rank to the Common Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Common Shares and Class B Special Shares, the holders of the Class A Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
As of June 8, 2026, all of the Class A Special Shares have converted into Common Shares.
The Class B Special Shares
On August 29, 2025, shareholders of the Company approved an amendment of the Articles to create a new class of special common shares without nominal or par value, designated as Class B Special Shares; provided that no Class B Special Shares may be issued until Akanda’s shareholders (other than the holders of the Class A Special Shares) and the Nasdaq Stock Market have approved the transactions contemplated pursuant to the SEA.
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The holders of the Class B Special Shares shall be entitled to one vote for each Class B Special Share held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series.
Subject to the prior rights of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Common Shares, the holders of the Class B Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
Shareholder Meetings
The Business Corporations Act (Ontario) provides that: (i) a general meeting of shareholders shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at the place where the registered office of our Company is located; (ii) directors must call an annual meeting of shareholders not later than 18 months after the date of incorporation and no later than 15 months after the last preceding annual meeting; (iii) for the purpose of determining shareholders entitled to receive notice of a meeting of or vote at meetings of shareholders, the directors may fix in advance a date as the record date for that determination, provided that such date shall not precede by more than 60 days or by less than 30 days, the date on which the meeting is to be held; (iv) the holders of not less than 5% of the issued shares entitled to vote at a meeting may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition; and (v) if for any reasons it impracticable to call a meeting of shareholders in the matter in which it may be called or to conduct the meeting in the matter prescribed by the by-laws, the Articles or the Business Corporations Act (Ontario), or for any other reason the court thinks fit, the court, upon the application of a director or shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in a manner that the court directs. The Company’s by-laws provide that a quorum is met when at least two persons are present in person and holding or representing by proxy not less than 10% of the votes attached to all shares entitled to be voted at the meeting.
The holders of our Common Shares are entitled to attend and vote at all meetings of the shareholders of the Company, except a meeting of holders of a particular class of shares other than the Common Shares who are entitled to vote separately as a class at such meeting.
Fully Paid and Non-assessable
All outstanding Common Shares are duly authorized, validly issued, fully paid and non-assessable.
Resale Restrictions
Our Articles do not impose restrictions on the transfer of Common Shares by a shareholder.
Preferred Shares
The Preferred Shares may at any time and from time to time be issued in one or more series. The Board of Directors will, by resolution, from time to time, before the issue thereof, fix the designation, rights, privileges, restrictions and conditions attaching to the Preferred Shares of each series.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Shares is Vstock Transfer, LLC.
Listing
Our Common Shares are listed on The Nasdaq Capital Market under the symbol “AKAN”.
On May 20, 2026, we received a notification of non-compliance from the Listing Qualifications Department of Nasdaq, notifying us that we are not in compliance with the periodic filing requirements for continued listing set forth in Nasdaq Listing Rule 5250(c)(1) as a result of our failure to file our Annual Report on Form 20-F for the fiscal year ended December 31, 2025 with the SEC by the required due date. We expect that we will again be in compliance with Nasdaq upon the filing of this Annual Report on Form 20-F.
There is no established trading market for the Company’s Class B Special Shares expected to be issued by the Company, all of which (subject to certain limited exceptions) vote with, or will vote with upon issuance, the Common Shares. We do not intend to list the Class B Special Shares on Nasdaq or any other national securities exchange or any other nationally recognized trading system.
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| C. | Material Contracts |
See Item 6.B – Compensation and Item 7.B. – Related Party Transactions.
| D. | Exchange Controls |
We are not aware of any governmental laws, decrees, regulations or other legislation in Canada that restrict the export or import of capital, including the availability of cash and cash equivalents for use by our affiliated companies, or that affect the remittance of dividends, interest or other payments to non-resident holders of our securities. Any remittances of dividends to residents of the United States and to other non-resident holders are, however, subject to withholding tax. See Item 10.E. – “Taxation”.
| E. | Taxation |
Material Canadian Federal Income Tax Considerations
In the opinion of Gowling WLG (Canada) LLP, Canadian counsel to the Company, the following summary describes the principal Canadian federal income tax considerations pursuant to the Income Tax Act (Canada) and the regulations thereunder (the “Tax Act”) generally applicable to the acquisition, holding and disposition of the Common Shares by a holder who acquires, as beneficial owner, our Common Shares and who, for purposes of the Tax Act and at all relevant times, holds the Common Shares as capital property, deals at arm’s length with the Company and is not affiliated with the Company (a “Holder”). Generally, the Common Shares will be considered to be capital property to a Holder provided the Holder does not acquire or hold the Common Shares in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.
This summary does not apply to a Holder (i) that is a “financial institution” for the purposes of the mark-to-market rules contained in the Tax Act; (ii) that is a “specified financial institution” as defined in the Tax Act; (iii), an interest in which would be, or for whom a Common Share would be, a “tax shelter investment” as defined in the Tax Act; (iv) that has made a functional currency reporting election under the Tax Act to report in a currency other than the Canadian currency; (v) that has or will enter into a “derivative forward agreement”, a “synthetic disposition arrangement” or a “dividend rental arrangement”, each as defined under the Tax Act, with respect to the Common Shares. (vi) that carries on, or is deemed to carry on, an insurance business in Canada or elsewhere. Such Holders should consult their own tax advisors with respect to an investment in the Common Shares.
Additional considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada, and that is or becomes, or does not deal at arm’s length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction or event or series of transactions or events that includes the acquisition of the Common Shares, controlled by a non-resident person or group of non-resident persons not dealing with each other at arm’s length for purposes of the “foreign affiliate dumping” rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors with respect to the possible application of these rules.
In addition, this summary does not address the deductibility of interest by a Holder who has borrowed money or otherwise incurred debt in connection with the acquisition of the Common Shares.
This summary is based upon the provisions of the Tax Act in force as of the date hereof, all specific proposals to amend the Tax Act that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and counsel’s understanding of the current administrative policies and assessing practices of the Canada Revenue Agency (“CRA”) made publicly available prior to the date hereof. This summary assumes the Proposed Amendments will be enacted in the form proposed, however, no assurance can be given that the Proposed Amendments will be enacted in the form proposed, if at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except for the Proposed Amendments, does not take into account or anticipate any changes in law or the administrative policies or assessing practices of the CRA, whether by legislative, governmental or judicial action or decision, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein.
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Subject to certain exceptions that are not discussed in this summary, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Common Shares, including dividends, must be determined in Canadian dollars using the relevant exchange rate determined in accordance with the Tax Act.
This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder or prospective holder of the Common Shares, and no representations with respect to the income tax consequences to any holder or prospective holder are made. Consequently, holders and prospective holders of the Common Shares should consult their own tax advisors for advice with respect to the tax consequences to them of acquiring the Common Shares, having regard to their particular circumstances.
Holders Resident in Canada
This portion of the summary applies to a Holder who, at all relevant times, for purposes of the Tax Act and any applicable income tax treaty or convention, is or is deemed to be resident in Canada (a “Resident Holder”).
Certain Resident Holders who might not otherwise be considered to hold their Common Shares as capital property may, in certain circumstances, be entitled to have the Common Shares, and all other “Canadian securities” (as defined in the Tax Act) owned by such Resident Holders in the taxation year of the election and any subsequent taxation year, treated as capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. Resident Holders should consult their own tax advisors regarding the availability or advisability of this election.
Dividends on the Common Shares
Dividends received or deemed to be received on the Common Shares by a Resident Holder who is an individual (other than certain trusts) will generally be included in the individual’s income and will be subject to the gross-up and dividend tax credit rules applicable to taxable dividends received from taxable Canadian corporations, including the enhanced dividend tax credit rules applicable to any dividends designated by the Company as “eligible dividends” in accordance with the Tax Act. There may be limitations on the ability of the Company to designate dividends as “eligible dividends.”
In the case of a Resident Holder that is a corporation, the amount of any such taxable dividend that is included in its income for a taxation year will generally also be deductible in computing its taxable income for that taxation year. In certain circumstances, a dividend received or deemed to be received by a Resident Holder that is a corporation may be deemed to be proceeds of disposition or a capital gain pursuant to subsection 55(2) of the Tax Act. Resident Holders that are corporations should consult their own tax advisors having regard to their own particular circumstances.
A Resident Holder that is a “private corporation” or a “subject corporation”, each as defined in the Tax Act will generally be liable to pay a refundable tax under Part IV of the Tax Act on dividends received or deemed to be received on the Common Shares to the extent such dividends are deductible in computing its taxable income for the taxation year. Such additional tax may be refundable in certain circumstances.
Dispositions of Common Shares
Upon a disposition (or a deemed disposition) of a Common Share, a Resident Holder generally will realize a capital gain (or a capital loss) equal to the amount, if any, by which the proceeds of disposition of such Common Share, net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base of such Common Share to the Resident Holder.
The adjusted cost base to a Resident Holder of Common Shares acquired hereunder will be determined by averaging the cost of such Common Shares to the Resident Holder with the adjusted cost base of all other Common Shares, if any, held by the Resident Holder as capital property immediately before the acquisition.
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Taxation of Capital Gains and Capital Losses
Generally, two-thirds of any capital gain (a “taxable capital gain”) realized by a Resident Holder in a taxation year must be included in the Resident Holder’s income for the year and two-thirds of any capital loss (an “allowable capital loss”) realized by a Resident Holder in a taxation year must be deducted from taxable capital gains realized by the Resident Holder in that year. Allowable capital losses in excess of taxable capital gains realized in a taxation year generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances described in the Tax Act.
The amount of any capital loss realized by a Resident Holder that is a corporation on the disposition of a Common Share may be reduced by the amount of dividends received or deemed to be received by it on such Common Share, to the extent and under the circumstances described in the Tax Act. Similar rules may apply where a Common Share is owned by a partnership or trust of which a corporation, trust or partnership is a member or beneficiary. Resident Holders to whom these rules may be relevant should consult their own tax advisors.
Aggregate Investment Income
A Resident Holder that is, throughout the relevant taxation year, a “Canadian-controlled private corporation”, as defined in the Tax Act, may be liable to pay a refundable tax on its “aggregate investment income”, which is defined in the Tax Act to include an amount in respect of taxable capital gains and dividends or deemed dividends that are not deductible in computing such corporation’s income. Pursuant to Proposed Amendments released on April 7, 2022 in a Notice of Ways and Means Motion (the “Notice”) released with the federal budget, it is proposed that the refundable tax on investment income will also apply to corporations that are “substantive CCPCs” as defined in the Notice.
Alternative Minimum Tax
Capital gains realized and dividends received or deemed to be received by an individual (including certain trusts) may give rise to liability for alternative minimum tax as calculated under the detailed rules set out in the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.
Holders Not Resident in Canada
This portion of the summary applies to a Holder who, at all relevant times, for purposes of the Tax Act and any applicable income tax treaty or convention (i) is neither resident nor deemed to be resident in Canada, and (ii) does not, and is not deemed to, use or hold the Common Shares in a business carried on in Canada (a “Non-Resident Holder”). In addition, this portion of the summary does not apply to an insurer who carries on an insurance business in Canada and elsewhere or an “authorized foreign bank” (as defined in the Tax Act) and such Non-Resident Holders should consult their own tax advisors.
Dividends on the Common Shares
Any dividends paid or credited, or deemed to be paid or credited, on the Common Shares, as the case may be, to a Non-Resident Holder will generally be subject to Canadian withholding tax at the rate of 25% of the gross amount of the dividend, subject to any reduction in the rate of withholding to which that Non-Resident Holder may be entitled under an applicable income tax treaty or convention. For instance, where the Non-Resident Holder is a resident of the United States that is entitled to applicable benefits under the Canada-United States Income Tax Convention (1980), as amended, and is the beneficial owner of the dividends, the rate of Canadian withholding tax applicable to dividends is generally reduced to 15%. The rate of withholding tax is generally further reduced to 5% if the beneficial owner of such dividend is a company that owns, directly or indirectly, at least 10% of the voting stock of the Company. Non-Resident Holders should consult their own tax advisors to determine their entitlement to relief under an applicable income tax treaty or convention.
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Disposition of the Common Shares
A Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder on a disposition of a Common Share unless such share constitutes “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of disposition and the Non-Resident Holder is not entitled to relief under an applicable income tax treaty or convention.
Generally, the Common Shares will not constitute “taxable Canadian property” of a Non-Resident Holder at any particular time provided that the Common Shares are then listed on a “designated stock exchange” for the purposes of the Tax Act (which currently includes the Nasdaq), unless at any time during the 60-month period immediately preceding such time: (i) at least 25% or more of the issued shares of any class or series of the capital stock of the Company were owned by or belonged to any combination of (x) the Non-Resident Holder, (y) persons with whom the Non-Resident Holder did not deal at arm’s length (for the purposes of the Tax Act), and (z) partnerships in which the Non-Resident Holder or a person described in (y) holds a membership interest directly or indirectly through one or more partnerships; and (ii) more than 50% of the fair market value of such shares was derived directly or indirectly from one, or any combination of, real or immovable property situated in Canada, Canadian resource property (as defined in the Tax Act), timber resource property (as defined in the Tax Act) or options in respect of, interests in or for civil law rights in, any such property (whether or not such property exists). Notwithstanding the foregoing, the Common Shares may also be deemed to be “taxable Canadian property” in certain circumstances.
In cases where a Non-Resident Holder disposes (or is deemed to have disposed) of a Common Share that is “taxable Canadian property” to that Non-Resident Holder, and the Non-Resident Holder is not entitled to an exemption under an applicable income tax treaty or convention, the consequences described above under the headings “Holders Resident in Canada — Dispositions of Common Shares” and “Taxation of Capital Gains and Capital Losses” will generally be applicable to such disposition. Non-Resident Holders for whom a Common Share is, or may be, “taxable Canadian property” should consult their own tax advisors.
Material U.S. Federal Income Tax Considerations
The following discussion is a general summary of certain material U.S. federal income tax considerations with respect to the ownership and disposition of shares of our Common Shares. This summary is based on current U.S. federal income tax laws (including provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations promulgated thereunder and administrative rulings and court decisions, all in effect as of the date hereof), all of which are subject to change at any time, possibly with retroactive effect.
For purposes of this discussion, the term “U.S. Holder” means a beneficial owner of one or more of our Common Shares that is for U.S. federal income tax purposes one of the following:
| ● | an individual citizen or resident of the United States, including individuals treated as residents of the United States solely for tax purposes; |
| ● | a corporation created or organized in or under the laws of the United States or any political subdivision thereof; |
| ● | an estate the income of which is subject to U.S. federal income taxation regardless of its source, or; |
| ● | a trust if (1) a court within the United States can exercise primary supervision over it, and one or more United States persons have the authority to control all substantial decisions of the trust, or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. |
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This discussion applies only to a U.S. Holder that holds Common Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). Unless otherwise provided, this summary does not discuss reporting requirements. In addition, this discussion does not address any tax consequences other than U.S. federal income tax consequences, such as U.S. state and local tax consequences, U.S. estate and gift tax consequences, and non-U.S. tax consequences, and does not describe all of the U.S. federal income tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, the net investment income tax, and tax consequences to holders that are subject to special provisions under the Code, including, but not limited to, holders that:
| ● | are tax exempt organizations, qualified retirement plans, individual retirement accounts, or other tax deferred accounts; |
| ● | are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; |
| ● | are brokers or dealers in securities or currencies or holders that are traders in securities that elect to apply a mark-to-market accounting method; |
| ● | have a “functional currency” for U.S. federal income tax purposes that is not the U.S. dollar; |
| ● | own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; |
| ● | acquire Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; |
| ● | are partnerships or other pass-through entities for U.S. federal income tax purposes (or investors in such partnerships and entities); |
| ● | are required to accelerate the recognition of any item of gross income with respect to the Common Shares as a result of such income being recognized on an applicable financial statement; |
| ● | own or will own (directly, indirectly, or constructively) 10% or more of our total combined voting power or value; |
| ● | are controlled foreign corporations; |
| ● | are passive foreign investment companies; |
| ● | hold the Common Shares in connection with trade or business conducted outside of the United States or in connection with a permanent establishment or other fixed place of business outside of the United States; or |
| ● | are former U.S. citizens or former long-term residents of the United States. |
If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our securities, the tax treatment of a person treated as a partner for U.S. federal income tax purposes generally will depend on the status of the partner and the activities of the partnership. Persons that for U.S. federal income tax purposes are treated as a partner in a partnership holding shares of our securities should consult their tax advisors.
We have not sought, and do not expect to seek, a ruling from the United States Internal Revenue Service (the “IRS”), as to any United States federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely affect the accuracy of the statements in this discussion.
Except as otherwise noted, this summary assumes that the Company (nor any of its subsidiaries) is not a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes. A non-U.S. entity’s possible status as a PFIC must be determined annually and therefore may be subject to change. If the Company (or any of its subsidiaries) were to be a PFIC in any year, materially adverse consequences could result for U.S. Holders for that year and subsequent years.
All prospective investors should consult with their own tax advisors regarding the U.S. federal, state, local, non-U.S. income and other tax considerations of acquiring, holding and disposing of the Common Shares.
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WE RECOMMEND THAT PROSPECTIVE HOLDERS OF OUR COMMON SHARES CONSULT WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY FEDERAL, STATE, LOCAL, NON-U.S. INCOME AND OTHER TAX LAWS) OF THE OWNERSHIP AND DISPOSITION OF OUR COMMON SHARES.
U.S. Holders
Taxation of Distributions to U.S. Holders
Subject to the PFIC rules discussed below, a U.S. Holder generally will be required to include in gross income, in accordance with such U.S. Holder’s method of accounting for United States federal income tax purposes, as dividends the amount of any distribution of cash or other property (other than certain distributions of the Company’s shares or rights to acquire the Company’s shares) paid on the Company’s Common Shares to the extent the distribution is paid out of the Company’s current or accumulated earnings and profits (as determined under United States federal income tax principles). Distributions in excess of such earnings and profits generally will be applied against and reduce the U.S. Holder’s tax basis in its Common Shares (but not below zero) and, to the extent in excess of such basis, will be treated as gain from the sale or exchange of such Common Shares (the treatment of which is described under “— Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Shares to U.S. Holders” below). Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, we expect that distributions, if issued, will generally be reported to U.S. Holders as dividends.
Dividends paid by us will be taxable to a corporate U.S. Holder at regular rates and will not be eligible for the dividends-received deduction generally allowed to domestic corporations in respect of dividends received from other domestic corporations. With respect to individuals and other non-corporate U.S. Holders, dividends generally will be taxed at the lower applicable long-term capital gains rate (see “— Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Shares to U.S. Holders” below) applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (1) our Common Shares on which the dividends are paid are readily tradable on an established securities market in the United States or the Company is eligible for the benefits of the U.S.-Canada income tax treaty (the “Treaty”), (2) we are not a PFIC (nor treated as such with respect to a U.S. Holder) at the time the dividend was paid or in the previous year, and (3) certain other requirements are met. U.S. Holders should consult their tax advisors regarding the availability of such lower rate for any dividends paid with respect to our Common Shares.
For U.S. foreign tax credit purposes, dividends paid on our Common Shares generally will be treated as foreign source income and generally will constitute passive category income. The amount of a dividend will include any amounts withheld by us in respect of Canadian income taxes. Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s particular circumstances, Canadian income taxes withheld from dividends on the Common Shares, at a rate not exceeding any reduced rate pursuant to the Treaty, will be creditable against the U.S. Holder’s U.S. federal income tax liability. In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including any Canadian income taxes, in computing their taxable income, subject to generally applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisers regarding the creditability or deductibility of foreign taxes in their particular circumstances.
The amount of any dividend paid in Canadian dollars will equal the U.S. dollar value of the Canadian dollars received, calculated by reference to the exchange rate in effect on the date the dividend is received by you, in the case of Common Shares, regardless of whether the Canadian dollars are converted into U.S. dollars. If the Canadian dollars received as a dividend are converted into U.S. dollars on the date of receipt, a U.S. Holder generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the Canadian dollars received as a dividend are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Canadian dollar will be treated as U.S. source ordinary income or loss.
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Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Shares to U.S. Holders
Subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital gain or loss on the sale or other taxable disposition of our Common Shares. The amount of gain or loss recognized by a U.S. Holder on a sale or other taxable disposition generally will be equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted tax basis in its Common Shares so disposed of. A U.S. Holder’s adjusted tax basis in its Common Shares generally will equal the U.S. Holder’s acquisition cost reduced by any prior distributions treated as a return of capital.
Any capital gain or loss recognized generally will be long-term capital gain or loss if the U.S. Holder’s holding period for such Common Shares exceeds one year. Long-term capital gain realized by a non-corporate U.S. Holder may be taxed at rates of taxation lower than the rates applicable to ordinary income and short-term capital gains, while short-term capital gains are subject to U.S. federal income tax at the rates applicable to ordinary income. The deductibility of capital losses is subject to various limitations.
Any gain or loss recognized by a U.S. Holder will generally be U.S. source gain or loss for foreign tax credit purposes. Consequently, a U.S. Holder may not be able to use the foreign tax credit arising from any non-U.S. tax imposed on the disposition of the Common Shares unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from non-U.S. sources.
Passive Foreign Investment Company Rules
A non-U.S. corporation will be classified as a PFIC for United States federal income tax purposes if either (i) at least 75% of its gross income in a taxable year, including its pro rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive income (ii) at least 50% of its assets in a taxable year (ordinarily determined based on fair market value and averaged quarterly over the year), including its pro rata share of the assets of any corporation in which it is considered to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally includes, among other things, dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of assets giving rise to passive income.
Although our PFIC status is determined annually, an initial determination that our Company is a PFIC generally will apply for subsequent years to a U.S. Holder who held Company Shares while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our Common Shares and the U.S. Holder did not make either a timely mark-to-market election or a qualified electing fund (“QEF”) election for our first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) Common Shares, as described below, such U.S. Holder generally will be subject to special rules with respect to (i) any gain recognized by the U.S. Holder on the sale or other disposition of its Common Shares (which may include gain realized by reason of transfers of Common Shares that would otherwise qualify as nonrecognition transactions for United States federal income tax purposes) and (ii) any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the Common Shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the Common Shares). Under these special tax rules:
| ● | the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Common Shares; |
| ● | the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income; |
| ● | the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder without regard to the U.S. Holder’s other items of income and loss for such year; and |
| ● | an additional amount equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax attributable to each such other taxable year of the U.S. Holder. |
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In general, if we are determined to be a PFIC, a U.S. Holder may be able to avoid application of the PFIC tax consequences described above in respect to our Common Shares by making a timely and valid QEF election (if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder in which or with which our taxable year ends. A U.S. Holder generally may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge. There is no assurance that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided. We, therefore, have not determined whether, if we were to be classified as a PFIC for a taxable year, we will provide information necessary for a U.S. Holder to make a QEF election which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs. Accordingly, U.S. Holders should assume that they will not be able to make a QEF election with respect to the Common Shares.
Alternatively, if a U.S. Holder, at the close of its taxable year, owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect to such shares for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds (or is deemed to hold) Common Shares in the Company and for which we are determined to be a PFIC, such U.S. Holder generally will not be subject to the PFIC rules described above in respect to its Common Shares. Instead, in general, the U.S. Holder will include as ordinary income in each taxable year the excess, if any, of the fair market value of Common Shares at the end of its taxable year over its adjusted basis in its Common Shares. These amounts of ordinary income would not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. The U.S. Holder also generally will recognize an ordinary loss in respect of the excess, if any, of its adjusted basis in its Common Shares over the fair market value of its Common Shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). The U.S. Holder’s basis in its Common Shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of its Common Shares will be treated as ordinary income.
The mark-to-market election is available only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission or on a foreign exchange or market that the IRS determines has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. If made, a mark-to-market election would be effective for the taxable year for which the election was made and for all subsequent taxable years unless the Common Shares ceased to qualify as “marketable stock” for purposes of the PFIC rules or the IRS consented to the revocation of the election. U.S. Holders are urged to consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our Common Shares under their particular circumstances.
If we are or become a PFIC and, at any time, have a non-U.S. subsidiary that is classified as a PFIC, U.S. Holders generally would be deemed to own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge described above if we receive a distribution from, or dispose of all or part of our interest in, the lower-tier PFIC or the U.S. Holders otherwise were deemed to have disposed of an interest in the lower-tier PFIC. There can be no assurance that we will have timely knowledge of the status of any such lower-tier PFIC. In addition, we may not hold a controlling interest in any such lower-tier PFIC and thus there can be no assurance we will be able to cause the lower- tier PFIC to provide such required information. A mark-to-market election generally would not be available with respect to such lower-tier PFIC. U.S. Holders are urged to consult their tax advisors regarding the tax issues raised by lower-tier PFICs.
A U.S. Holder that owns (or is deemed to own) shares in a PFIC during any taxable year of the U.S. Holder, may have to file an IRS Form 8621, or any successor form, (whether or not a QEF or mark-to- market election is made) and such other information as may be required by the U.S. Treasury Department. Failure to do so, if required, will extend the statute of limitations until such required information is furnished to the IRS (potentially including with respect to items that do not relate to a U.S. Holder’s investment in Common Shares).
The rules dealing with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of our Common Shares should consult their own tax advisors concerning the application of the PFIC rules to our Common Shares under their particular circumstances.
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Information Reporting and Backup Withholding
Payments of dividends or sales proceeds that are made within the United States or through certain U.S.- related financial intermediaries may be subject to information reporting and backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient, or (ii) in the case of backup withholding, the U.S. Holder provides a correct U.S. taxpayer identification number and certifies that it is not subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules in their particular circumstances and the availability of and procedures for obtaining an exemption from backup withholding.
Reporting Obligations for Certain Owners of Foreign Financial Assets
Certain U.S. Holders may be required to file an IRS Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation) to report a transfer of property (including cash) to the Company. Substantial penalties may be imposed on a U.S. Holder that fails to comply with this reporting requirement, and the period of limitations on assessment and collection of United States federal income taxes will be extended in the event of a failure to comply. Furthermore, certain U.S. Holders who are individuals and certain entities will be required to report information with respect to such U.S. Holder’s investment in “specified foreign financial assets” on IRS Form 8938 (Statement of Specified Foreign Financial Assets), subject to certain exceptions. Specified foreign financial assets generally include any financial account maintained with a non-U.S. financial institution and should also include the Common Shares if they are not held in an account maintained with a U.S. financial institution. Persons who are required to report specified foreign financial assets and fail to do so may be subject to substantial penalties, and the period of limitations on assessment and collection of United States federal income taxes may be extended in the event of a failure to comply. Potential investors are urged to consult their tax advisors regarding the foreign financial asset and other reporting obligations and their application to an investment in our Common Shares.
The discussion of reporting obligations set forth above is not intended to constitute an exhaustive description of all reporting obligations that may apply to a U.S. Holder. A failure to satisfy certain reporting obligations may result in an extension of the period during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting obligation. Penalties for failure to comply with these reporting obligations are substantial. U.S. Holders should consult with their own tax advisors regarding their reporting obligations under these rules, including the requirement to file an IRS Form 8938.
Non-U.S. Holders
This section applies to you if you are a “Non-U.S. Holder.” As used herein, the term “Non-U.S. Holder” means a beneficial owner of the Company’s Common Shares that is for United States federal income tax purposes not a U.S. Holder, as defined above.
Taxation of Distributions to Non-U.S. Holders
A Non-U.S. Holder of our Common Shares will generally not be subject to U.S. federal income or withholding tax on dividends received on our Common Shares unless such income is effectively connected with the conduct by the holder of a U.S. trade or business.
Any distribution not constituting a dividend will be treated as first reducing the adjusted basis in the Non-U.S. Holder’s shares of our Common Shares and, to the extent it exceeds the adjusted basis in the Non-U.S. Holder’s shares of our Common Shares, as gain from the sale or exchange of such shares. Any such gain will be subject to the treatment described below under “— Gain on Sale or Other Disposition of our Common Shares to Non-U.S. Holders”.
Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Common Shares to Non-U.S. Holders
A Non-U.S. Holder of our Common Shares will not be subject to U.S. federal income or withholding tax on gain realized on the sale or other taxable disposition of our Common Shares of Common Shares, unless: such gain is effectively connected with the conduct by the holder of a U.S. trade or business; or in the case of gain realized by an individual holder, the holder is present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met or the Non-U.S. Holder is deemed to be a U.S. taxpayer by the IRS.
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| F. | Dividends and Paying Agents |
Not applicable.
| G. | Statement by Experts |
Not applicable.
| H. | Documents on Display |
We are subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, as applicable to “foreign private issuers” as defined in Rule 3b-4 under the Exchange Act. As a foreign private issuer, we are exempt from certain provisions of the Exchange Act. Accordingly, our proxy solicitations are not subject to the disclosure and procedural requirements of regulation 14A under the Exchange Act, transactions in our equity securities by our officers and directors are exempt from reporting and the “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, we file with the U.S. Securities and Exchange Commission an Annual Report on Form 20-F containing financial statements that have been examined and reported on, with and opinion expressed by an independent registered public accounting firm, and we submit reports to the U.S. Securities and Exchange Commission on Form 6-K containing (among other things) press releases and unaudited financial information for the first six months of each fiscal year. We post our Annual Report on Form 20-F on our website promptly following the filing of our Annual Report with the U.S. Securities and Exchange Commission. The information on our website is not incorporated by reference into this Annual Report.
This document and the exhibits thereto and any other document we file pursuant to the Exchange Act may be inspected without charge and copied at prescribed rates at the U.S. Securities and Exchange Commission public reference room at 100 F Street, N.E., Room 1580, Washington D.C. 20549. You may obtain information on the operation of the Securities and Exchange Commission’s public reference room in Washington, D.C. by calling the U.S. Securities and Exchange Commission at 1-800-SEC-0330.
The U.S. Securities and Exchange Commission maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that make electronic filings with the U.S. Securities and Exchange Commission using its EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system.
The documents concerning our company which are referred to in this document may also be inspected at our office located at c/o Gowling WLG (Canada) LLP, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada.
| I. | Subsidiary information |
We currently have the following significant subsidiaries:
| ● | Cannahealth Limited |
| ● | Holigen Holdings Limited |
| ● | Bophelo Holdings Limited |
| ● | Bophelo Bio Science and Wellness (Pty) Limited* |
| ● | 1371011 BC Limited |
| ● | 1468243 BC Limited |
| ● | First Towers & Fibers Corporation |
| ● | Canadian Towers & Fiber Optics S.A. de C.V. |
| ● | Canadian Towers S.A. de C.V. |
| * | Bophelo Bio Science and Wellness (Pty) Ltd. is in the process of being liquidated. |
| J. | Annual report to security holders |
Not Applicable.
81
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risks), credit risk and liquidity risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial risks.
Foreign exchange risk
Foreign exchange risk: is the risk that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange rates. The Company has not entered into any foreign exchange hedging contracts. The Company is exposed to currency risk from the British Pound (“GBP”), the European Union Euro (“EUR”), Canadian dollar (“CAD”) and Mexican Dollar (“MXN”) through the following foreign currency denominated financial assets and liabilities:
| As at (expressed in GBP) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | £ | 100 | £ | 16,558 | ||||
| Trade and other receivables | 354 | 293,055 | ||||||
| Loan receivable | — | 469,233 | ||||||
| £ | 454 | £ | 778,846 | |||||
| Financial liabilities | ||||||||
| Trade and other payables | £ | 2,126 | £ | 820,809 | ||||
| £ | 2,126 | £ | 820,809 | |||||
| As at (expressed in EUR) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | € | 11,304 | € | 12,504 | ||||
| Trade and other receivables | 3,076 | 3,076 | ||||||
| € | 14,380 | € | 15,580 | |||||
| Financial liabilities | ||||||||
| Trade and other payables | € | 5,263 | € | 838 | ||||
| Loans and borrowings | 124,890 | 124,890 | ||||||
| € | 130,153 | € | 125,728 | |||||
| As at (expressed in CAD) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash and cash held in trust | $ | 287,503 | $ | 5,473,500 | ||||
| Loans receivable | — | 515,197 | ||||||
| $ | 287,503 | $ | 5,988,697 | |||||
| Financial liabilities | ||||||||
| Trade and other payables | $ | 4,137,013 | $ | 2,809,356 | ||||
| Due to related party | 882,165 | 425,962 | ||||||
| Lease liabilities | 191,706 | — | ||||||
| Loans and borrowings | 1,177,564 | 315,557 | ||||||
| Convertible promissory notes | 1,446,893 | — | ||||||
| Secured promissory notes | 10,465,530 | — | ||||||
| Secured convertible debenture | 5,681,053 | — | ||||||
| $ | 23,981,924 | $ | 3,550,875 | |||||
82
| As at (expressed in MXN) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | $ | 5,028,415 | $ | — | ||||
| Trade and other receivables | 24,199,567 | — | ||||||
| Due from related parties | 68,814 | — | ||||||
| $ | 29,296,796 | $ | — | |||||
| Financial liabilities | ||||||||
| Trade and other payables | $ | 5,425,846 | $ | — | ||||
| Lease liabilities | 4,609,418 | — | ||||||
| $ | 10,035,264 | $ | — | |||||
Based on the above net exposures as at December 31, 2025, assuming that all other variables remain constant, a 5% appreciation or deterioration of the USD against the GBP would result in a corresponding increase or decrease, respectively on the Company’s net income of approximately $nil (2024 — $2,000), EUR — $5,000 (2024 — $5,000), CAD — $864,000 (2024 — $85,000) and MXN — $54,000 (2024 — $nil).
Credit risk
Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligation and arises principally from the Company’s cash and accounts receivable. The carrying amounts of the financial assets represents the maximum credit exposure. The Company limits its exposure to credit risk on cash by placing these financial instruments with high-credit quality financial institutions.
At December 31, 2025, the Company was subject to a concentration of credit risk related to its accounts receivable as 100% (2024 — 74% from two customers) of the balance of amounts owing is from three customers. The Company did not record any bad debt expense during the years ended December 31, 2025 and 2024. As at December 31, 2025, the expected credit lifetime credit losses for accounts receivable aged as current were nominal amounts. The Company considers a financial asset in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities and to ensure that it will have sufficient liquidity to meet its liabilities and commitments when due and to fund future operations. The Company’s trade and other payables are due within the current operating year.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
| A. | Debt Securities |
Not applicable.
| B. | Warrants and Rights |
Not applicable.
| C. | Other Securities |
Not applicable.
| D. | American Depositary Shares |
Not applicable.
83
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Financial Officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2025, as required by Rule 13a-15(b) under the Exchange Act. Based on that evaluation, our management has concluded that, as of December 31, 2025, our disclosure controls and procedures were not effective, because of a material weakness in our internal control over financial reporting, as discussed below, as well as an inability to timely conclude our audit for the 2025 fiscal year.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013). Based on our evaluation under the criteria set forth in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to the material weakness described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Based on our assessment, management concluded that as of December 31, 2025, our company’s internal control over financial reporting was not effective based on present company activity. In the course of making our assessment, we identified a material weakness in our internal control over financial reporting. The material weakness consisted of inadequate staffing and supervision within the bookkeeping and accounting operations of our company. The relatively small number of staff who have bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness which could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and are committed to taking further action and implementing additional improvements as necessary.
This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report.
Inherent Limitations on Effectiveness of Controls
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
84
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) for the fiscal year ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16. RESERVED
Not applicable.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Jatinder Dhaliwal, David Jenkins and Usama Chaudhry are each members of our board of directors and serve on our audit committee. Our board of directors has determined that each of them meet the independent director standard under Nasdaq listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
ITEM 16B. CODE OF ETHICS
We have adopted a code of conduct that applies to our directors, chief executive officer and all senior financial officers of our company, including the chief financial officer, chief accounting officer or controller, or persons performing similar functions. The code of conduct is publicly available on our website at www.akandacorp.com/investors.
Written copies are available upon request. If we make any substantive amendment to the code of conduct or grant any waivers, including any implicit waiver, from a provision of the code of conduct, we will disclose the nature of such amendment or waiver on our website.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
We engaged GreenGrowth CPAs as our independent registered public accounting firm. Set forth below is a summary of the fees paid to GreenGrowth CPAs for services provided in fiscal year 2025 and 2024.
Accountant Fees and Services
| Period | 2025 | 2024 | ||||||
| Audit Fees | $ | 143,500 | $ | 88,875 | ||||
| Audit Related Fees | 8,500 | 37,450 | ||||||
| Tax Fees | — | — | ||||||
| All Other Fees | — | — | ||||||
| $ | 152,000 | $ | 126,325 | |||||
Audit Fees. Audit fees consists of services rendered by an independent registered public accounting firm for the audit of our consolidated financial statements and our internal control over financial reporting, review of the interim financial statements.
Audit-Related Fees. Audit-related fees relate to assurance and associated services that traditionally are performed by the independent auditor including SEC filings, comfort letter, consents and comment letters in connection with regulatory filings.
Tax Fees. Tax fees consist of services rendered by an external auditor for tax compliance, tax consulting and tax planning.
All Other Fees. All other fees are for any other permissible work that is not an Audit, Audit-Related or Tax Fee.
85
Pre-Approval Policies and Procedures
Our Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm. Pre-approval of an audit or non-audit service may be given as a general pre-approval, as part of the audit committee’s approval of the scope of the engagement of our independent registered public accounting firm, or on an individual basis. Any proposed services exceeding general pre-approved levels also requires specific pre-approval by our audit committee. The policy prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in Section 201 of the Sarbanes-Oxley Act or the rules of the Securities and Exchange Commission, and also requires the audit committee to consider whether proposed services are compatible with the independence of the registered public accounting firm.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
Under NASDAQ Stock Market Rule 5615(a)(3), foreign private issuers, such as our company, are permitted to follow certain home country corporate governance practices instead of certain provisions of the NASDAQ Stock Market Rules. A foreign private issuer that elects to follow a home country practice instead of any such NASDAQ rules must submit to NASDAQ, in advance, a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws. We submitted such a written statement to NASDAQ. See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Corporate Governance” for a summary of such differences.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We have an
86
ITEM 16K. CYBERSECURITY
We use SaaS based information technology (IT) systems/services which are provided by reputable vendors, our IT environment is audited by third party IT auditors for IT risk management regularly. The Company takes care of access management and related threats. Logs, threats, and alerts are monitored and dealt with by the Company on a regular basis. All system/services being used (Microsoft (email/SharePoint/teams) are all cloud-based provided by reputable cloud vendors and their IT environments are audited by third party auditors for IT risk management. Information is analyzed on potential threats to the organization, identifying what threats each of our IT assets may face and from where those may originate. All server level threats are taken care of by systems providers under SaaS model. There were no cyber-attacks, virus infection or security breach during the prior fiscal year. The Company is not aware of or been informed of instances of noncompliance with any regulatory requirements associated with IT. The information system has not experienced a significant loss of data that could not be restored from backup systems.
The Company has
87
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to furnish financial statements and related information specified in Item 18.
ITEM 18. FINANCIAL STATEMENTS
The following financial statements are filed as part of this annual report on Form 20-F.
88
Index to Financial Statements
Akanda Corp.
F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Akanda Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Akanda Corp. (the “Company”), as of December 31, 2025 and 2024, the related consolidated statements of comprehensive loss, changes in shareholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board.
Consideration of the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s significant operating losses and cash outflows raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2023
June 9, 2026
PCAOB ID Number
F-2
Akanda Corp.
Consolidated Statements of Financial Position
(Expressed in United States Dollars)
| As at | December 31, | December 31, | ||||||||
| Note | 2025 | 2024 | ||||||||
| ASSETS | ||||||||||
| Current | ||||||||||
| Cash | $ | $ | ||||||||
| Cash held in trust | ||||||||||
| Trade and other receivables | 7 | |||||||||
| Prepayments | 8 | |||||||||
| Loans receivable | 13,18 | |||||||||
| Total Current Assets | ||||||||||
| Non-Current | ||||||||||
| Property, plant and equipment | 10 | |||||||||
| Intangible assets and goodwill | 12 | |||||||||
| Loan receivable | 13 | |||||||||
| Right-of-use assets | 11 | |||||||||
| Total Non-Current Assets | ||||||||||
| Total Assets | $ | $ | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||
| Current | ||||||||||
| Trade and other payables | $ | $ | ||||||||
| Lease liability | 14 | |||||||||
| Loans and borrowings | 4,15,16 | |||||||||
| Convertible promissory notes | 16 | |||||||||
| Due to related parties | 18 | |||||||||
| Total Current Liabilities | ||||||||||
| Non-Current | ||||||||||
| Lease liability | 14 | |||||||||
| Secured promissory notes | 4 | |||||||||
| Secured convertible debenture | 4 | |||||||||
| Total Non-Current Liabilities | ||||||||||
| Total Liabilities | ||||||||||
| Shareholders’ Equity (Deficit) | ||||||||||
| Common shares | 17 | |||||||||
| Class A special shares | 4,17 | |||||||||
| Class B special shares | 4,17 | |||||||||
| Other reserves | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||||
| Non-controlling interest | 20 | ( | ) | |||||||
| Total Shareholders’ Equity (Deficit) | ( | ) | ||||||||
| Total Liabilities and Shareholders’ Equity (Deficit) | $ | $ | ||||||||
Subsequent Events (Note 29)
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Akanda Corp.
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in United States Dollars)
| Years ended | ||||||||||
| December 31, | ||||||||||
| Note | 2025 | 2024 | ||||||||
| Sales | 25 | $ | $ | |||||||
| Cost of sales | ||||||||||
| Gross Profit (Loss) | ( | ) | ||||||||
| Operating expenses | ||||||||||
| Depreciation and amortization | 10,11 | |||||||||
| Consulting and professional fees | 18 | |||||||||
| Personnel expenses | 18 | |||||||||
| General and administrative expenses | 26 | |||||||||
| Total operating expenses | ||||||||||
| Operating loss | ( | ) | ( | ) | ||||||
| Other income (expenses): | ||||||||||
| Finance income | ||||||||||
| Finance expense | 4,14,15,18 | ( | ) | ( | ) | |||||
| Foreign exchange gain (loss), net | ( | ) | ||||||||
| Transaction costs | 16 | ( |
) | |||||||
| Change in fair value of financial liabilities measured at FVTPL | 4,16 | |||||||||
| Gain (loss) on debt settlement | 4,17 | ( | ) | |||||||
| Other income | ||||||||||
| Gain on sale of subsidiary | 5 | |||||||||
| Write-off of AP, net | ||||||||||
| Write-off of holdback payable | 4 | |||||||||
| Write-off of loan receivable | 13 | ( | ) | |||||||
| Impairment loss | 10, 11, 12 | ( | ) | |||||||
| ( | ) | |||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||||
| Gain (loss) from discontinued operation | 5,6 | ( | ) | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||||
| Translation adjustment | ( | ) | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||||
| Net loss attributable to: | $ | |||||||||
| Shareholders of the Company | ( | ) | $ | ( | ) | |||||
| Non-controlling interest | ( | ) | ||||||||
| $ | ( | ) | $ | ( | ) | |||||
| Net comprehensive loss attributable to: | ||||||||||
| Shareholders of the Company | $ | ( | ) | $ | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||||
| $ | ( | ) | $ | ( | ) | |||||
| Loss per share from continuing operations – basic and diluted | 17 | $ | ( | ) | $ | ( | ) | |||
| Loss per share – basic and diluted | 17 | $ | ( | ) | $ | ( | ) | |||
| Weighted average common shares outstanding | 17 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Akanda Corp.
Consolidated Statements of Shareholders’ Equity
(Expressed in United States Dollars)
| Note | Common Shares | Class
A Special Shares | Class
B Special Shares | Other Reserves | Secured
Convertible Debt - Equity Component | Accumulated Deficit | Accumulated Other Comprehensive Loss | Non- controlling interest | Total | |||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||
| Issuance of shares from private placement | 17 | |||||||||||||||||||||||||||||||||||||
| Issuance of shares upon exercise of prefunded warrants | 17 | ( | ) | |||||||||||||||||||||||||||||||||||
| Cancelled shares | 17 | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Share issuance costs | 17 | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Fair value of RSUs redeemed at $ | 17 | |||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of shares from private placement | 17 | |||||||||||||||||||||||||||||||||||||
| Issuance of special shares pursuant to the acquisition of First Towers | 4,17 | |||||||||||||||||||||||||||||||||||||
| Issuance of special shares pursuant to a debt settlement | 4,17 | |||||||||||||||||||||||||||||||||||||
| Issuance of shares upon conversion of promissory note | 16,17 | |||||||||||||||||||||||||||||||||||||
| Fair value adjustment on the converted promissory note | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Share issuance costs | 17 | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||
| Impact of loss of control of Canmart | 6 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Translation adjustment | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Akanda Corp.
Consolidated Statements of Cash Flows
(Expressed in United States Dollars)
Years ended December 31, | ||||||||||
| Note | 2025 | 2024 | ||||||||
| Cash flows from operating activities: | ||||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||||
| Net gain (loss) from discontinued operations | 6 | ( | ) | |||||||
| Net loss for the year | ( | ) | ( | ) | ||||||
| Adjustments for non-cash items: | ||||||||||
| Gain on loss of control of Canmart, net of cash surrendered and foreign currency translation adjustment | 6 | ( | ) | |||||||
| Depreciation and amortization | 10,11 | |||||||||
| Depreciation and amortization from discontinued operations | 10 | |||||||||
| Interest expenses and accretion | ||||||||||
| Interest expenses from discontinued operations | 15 | |||||||||
| Interest income from Bridge loans | 13 | ( | ) | |||||||
| Fair value of RSUs granted and exercised | 17 | |||||||||
| Gain on settlement on debt | 4,17 | ( | ) | ( | ) | |||||
| Gain on sale of subsidiary | 5 | ( | ) | |||||||
| Write-off of AP, net | ( | ) | ||||||||
| Write-off of holdback payable | 4 | ( | ) | |||||||
| Write-off of loan receivable | 13 | |||||||||
| Foreign exchange gain, net | ( | ) | ||||||||
| Impairment loss | 10,11,12 | |||||||||
| Change in fair value of financial liabilities at FVTPL | 4,16 | ( |
) | |||||||
| Working capital adjustments (net of amounts acquired/disposed): | ||||||||||
| Trade and other receivables | ( | ) | ||||||||
| Prepayments | ( | ) | ( | ) | ||||||
| Inventory | ||||||||||
| Trade and other payables | ( | ) | ( | ) | ||||||
| Due to related parties | ( | ) | ||||||||
| Cash flows used in operating activities | ( | ) | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||||
| Additions to property, plant and equipment | 10 | ( | ) | ( | ) | |||||
| Cash surrendered on sale of RPK | 5 | ( | ) | |||||||
| Net cash proceeds from sale of subsidiary | 5 | |||||||||
| Loan repayment (receivable) | 13 | ( | ) | |||||||
| Cash lent for Bridge loan | 13 | ( | ) | |||||||
| Cash surrendered on loss of control of Canmart | 6 | ( | ) | |||||||
| Acquisition of First Towers, net of cash acquired and unpaid note consideration | 4 | ( | ) | |||||||
| Cash flows used in investing activities | ( | ) | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from private placement, net of costs | 17 | |||||||||
| Proceeds from issuance of convertible promissory notes | 16 | |||||||||
| Advances from (to) related parties | 18 | ( | ) | |||||||
| Repayment of advances from related parties | ( | ) | ( | ) | ||||||
| Loans received | ||||||||||
| Loans repaid | ( | ) | ( | ) | ||||||
| Lease payments | 14 | ( | ) | ( | ) | |||||
| Cash flows provided by financing activities | ||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the year | ||||||||||
| Cash and cash equivalents at the end of the year | $ | $ | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 1. | Nature of Operations and Going Concern |
Akanda Corp. (the “Company”) is domiciled in Canada and was incorporated on July 16, 2021. The Company’s registered office is 77 King Street West, Suite 400, Toronto-Dominion Centre, Toronto Canada, Ontario, M5K 0A1. The Company, through its subsidiaries. operates as a cannabis cultivation, manufacturing, and distribution company. The Company is also in the business of leasing fiber optic networks and telecommunication towers, through its subsidiary First Towers which is based in Mexico.
The Company was incorporated for the designed purpose of becoming the ultimate parent company of Cannahealth Ltd. (“Cannahealth”), through a reorganization of entities with common control. The share purchase agreement became unconditional on or about November 3, 2021 and the Company acquired the shares in the aforementioned entities from Halo Collective Inc. (“Halo”).
On April 29, 2022, the Company, through
its wholly owned subsidiary, Cannahealth, acquired
On February 28, 2024, the Company incorporated a new subsidiary – 1468243 B.C. Ltd.
On March 24, 2024, the Company completed
the transaction with Somai Pharmaceuticals Ltd. (“Somai”) for the sale of RPK (note 5). The Company accounted for the operating
results of RPK which was a net loss of $
Prior to the liquidation event on
May 30, 2025 described below, the Company, through its subsidiary Canmart Ltd. (“Canmart”), is also in the business of sales
and distribution of cannabis-based products for medical use, which is based in the United Kingdom (“UK”). During the first
quarter of 2025, the Company evaluated the current state of Canmart and has determined to discontinue and cease it UK operation. The
Company filed for creditor’s voluntary liquidation and had the winding up commenced on May 30, 2025 (note 6). At December 31, 2025,
the Company no longer controlled Canmart and derecognized all assets and liabilities at their book values on May 30, 2025 and wrote down
all balances to $. The Company accounted for the operating results of Canmart which was a net loss of $
On August 19, 2025, the Company acquired
The Company’s consolidated financial statements have been prepared
on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal
course of business for the foreseeable future. The Company incurred a net cash outflow of $
F-7
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 1. | Nature of Operations and Going Concern (continued) |
The Company is an early-stage company and is primarily dependent on externally provided financing and revenue generated by its subsidiary to continue as a going concern. Additional funds will be required to enable the Company to pursue such an initiative and the Company may be unable to obtain such financing on satisfactory terms. Furthermore, there is no assurance that the Company will be profitable. Management intends to finance operating costs over the next twelve months with its cash on hand, equity and debt financing, and/or additional cash that will be generated from operations. The Company does not at this stage have any firm plans or commitments regarding further financing.
These uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities which might be necessary should the Company be unable to continue in existence.
| 2. | Basis of Preparation |
| (a) | Statement of compliance |
These consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).
| (b) | Basis of preparation |
These consolidated financial statements have been prepared on an accrual basis, except for cash flow information, and are based on the historical cost, modified where applicable and related to the valuation of certain financial assets and financial liabilities to fair value.
| (c) | Functional and presentation currency |
The Company and its subsidiaries are measured using the currency of the primary economic environment in which each subsidiary operates - the functional currency. The Euro is the functional currency of the Company’s former RPK business, Holigen and Cannahealth, Great British Pounds is the functional currency of the Company’s former Canmart business, Mexican Peso is the functional currency of CTFO Mexico and CT Mexico and Canadian Dollars is the functional currency of First Towers, 1371011 and Akanda while the United States Dollars is its reporting currency.
These consolidated financial statements are prepared and presented in United States Dollars (“USD” or “$”), which is the Company’s reporting currency. All financial information has been rounded to the nearest dollar except where indicated otherwise.
F-8
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 2. | Basis of Preparation (continued) |
| (d) | Use of estimates and judgments |
The preparation of consolidated financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses during the year. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Areas in which management has made critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements include the determination of the Company’s and its subsidiaries’ functional currencies. Information about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are included in the following notes to consolidated financial statements for the year ended December 31, 2025:
| ● | Note 3(d): Estimates of the fair value of the Company’s compound financial instruments |
| ● | Note 3(e): Estimates of variable consideration receivable from revenue from contracts with customers |
| ● | Note 3(g): Estimates of the net realizable value of the Company’s inventories |
| ● | Note 3(h): Estimates of the fair value of the Company’s biological assets |
| ● | Note 3(i): Measurement and useful lives of the Company’s property, plant and equipment |
| ● | Note 3(j): Measurement and useful lives of the Company’s intangible assets |
| ● | Note 3(l): Estimates and assessment of the income tax assets/liabilities |
| ● | Note 3(m): Estimates of the Company’s incremental borrowing rate used in the valuation of its leases |
| ● | Note 3(o): Estimates of the Company’s acquisition |
| 3. | Material Accounting Policies |
| (a) | Basis of consolidation |
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities that are controlled by the Company. Control exists when the Company has power over the investee and the Company is exposed or has the rights to variable returns from the investee. Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent account policies. All intercompany transactions and balances and unrealized gains and losses from intercompany transactions have been eliminated.
F-9
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (a) | Basis of consolidation (continued) |
The subsidiaries of the Company are as follows:
| Country of Incorporation | Holding | Functional Currency | ||||||
| Cannahealth Ltd. (“Cannahealth”) | ||||||||
| Bophelo Holdings Ltd. (“Bophelo H”) | ||||||||
| Bophelo Bio Science and Wellness (Pty) Ltd. (“Bophelo”) | ||||||||
| Canmart Ltd. (“Canmart”)** | ||||||||
| Holigen Holdings Limited (“Holigen”) | ||||||||
| RPK Biopharma Unipessoal Lda. (“RPK”)* | ||||||||
| 1371011 BC Ltd. (“1371011”) | ||||||||
| 1468243 BC Ltd. (“1468243”) | ||||||||
| First Towers & Fibers Corp. (“First Towers”) | ||||||||
| Canadian Towers & Fiber Optics S.A. de C.V. (“CTFO Mexico”) | ||||||||
| Canadian Towers S.A. de C.V. (“CT Mexico”) | ||||||||
| * | |
| ** |
Non-controlling interests
Non-controlling interests are classified as a separate component of equity. On initial recognition, non-controlling interests are measured at their proportionate share of the acquisition date fair value of identifiable net assets of the related subsidiary acquired by the Company. Subsequent to the acquisition date, adjustments are made to the carrying amount of non-controlling interests for the non-controlling interests’ share of changes to the subsidiary’s equity. Adjustments to recognize the non-controlling interests’ share of changes to the subsidiary’s equity are made even if this results in the non-controlling interests having a deficit balance.
| [1] | Pursuant to the acquisition of First Towers, the Company consolidated CT Mexico over which it holds no direct or indirect ownership interest as at acquisition date, as originally accounted under First Towers. As the Company acquired First Towers, the Company had determined that it exercises control over CT Mexico in accordance with IFRS 10 – Consolidated Financial Statements, as it: |
| – | has the power to direct the relevant activities of CT Mexico through contractual arrangements and operational control; |
| – | is exposed to variable returns through its funding, management, and operational activities with the entity; and |
| – | has the ability to use its power over CT Mexico to affect those returns. |
Accordingly, CT Mexico has been fully consolidated in these financial statements. The Company has determined that CT Mexico qualifies as a structured entity under IFRS 12 due to the nature of its design and purpose. CT Mexico is structured in such a way that voting or similar rights are not the dominant factor in determining control.
The Company does not provide financial support to CT Mexico beyond existing contractual obligations, and there are no explicit arrangements that would require the Company to do so in the future.
F-10
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (b) | Foreign currency |
Items included in the financial statements of each of the Company’s consolidated subsidiaries are measured using the currency of the primary economic environment in which each subsidiary operates (the functional currency). The consolidated financial statements are presented in USD. All assets and liabilities in each statement of financial position are translated at the closing rate at the date of that statement of financial position. All income and expenses are translated at exchange rates at the dates of the transactions.
Foreign currency transactions are translated into the respective functional currencies of the Company and its subsidiaries using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit and loss. Non-monetary items that are not carried at fair value are translated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.
The results and financial position of the Company’s foreign subsidiaries that have a different functional currency from the Company’s functional and presentation currency are translated into USD as follows:
| (i) | Assets and liabilities of the foreign subsidiary are translated at the closing exchange rate on the date of the consolidated statement of financial position; |
| (ii) | Revenue and expenses of the foreign subsidiary are translated at the average closing exchange rate for the period reported in the consolidated statement of profit or loss. When the average exchange rate does not provide a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, the Company utilizes the closing exchange rate on the date of the transaction; and |
| (iii) | The exchange rate differences for foreign subsidiaries are recognized in other comprehensive income in the cumulative translation account. |
| (c) | Financial instruments |
| (i) | Financial assets |
The Company initially recognizes a financial asset on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
Upon recognition of a financial asset, classification is made based on the business model for managing the asset and the asset’s contractual cash flow characteristics. The financial asset is initially recognized at its fair value and subsequently classified and measured as (i) amortized cost; (ii) fair value through other comprehensive income (“FVOCI”); or (iii) FVTPL. Financial assets are classified as FVTPL if they have not been classified as measured at amortized cost or FVOCI.
The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Financial assets and liabilities are offset and the net amount presented in the consolidated statements of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Company has classified all of its financial assets as financial assets measured at amortized cost or FVTPL. The Company has not classified any financial assets as FVTPL or FVOCI.
F-11
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (c) | Financial instruments (continued) |
| (i) | Financial assets (continued) |
Financial assets measured at amortized cost
A non-derivative financial asset is measured at amortized cost when both of the following conditions are met: (i) the asset is held within a business model whose objective is to hold assets in order to collect the contractual cash flows; and (ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Such assets are recognized initially at fair value plus any directly attributable transaction costs and measured at amortized cost using the effective interest method subsequent to initial recognition, loans and receivables are measured at amortized cost. Financial assets measured at amortized cost are comprised of cash, trade and other receivables, loans receivable and due from related party.
Impairment of financial assets at amortized cost
The Company recognized a loss allowance for expected credit losses (“ECL”) on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime ECL if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset’s credit risk has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the 12-month ECL.
| (ii) | Financial liabilities |
The Company recognizes a financial liability on the trade date in which it becomes a party to the contractual provisions of the instrument at fair value plus any directly attributable costs. Financial liabilities are subsequently measured at amortized cost or FVTPL and are not subsequently reclassified. The Company’s financial liabilities are trade and other payables and loans and borrowings which are recognized on an amortized cost basis.
Financial liabilities measured at amortized cost
All financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. All financial liabilities are measured at amortized cost, except for financial liabilities measured at FVTPL. A financial liability may no longer be reclassified subsequent to initial recognition. Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method.
The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or when they expire. The Company has the following non-derivative financial liabilities which are classified as financial liabilities measured at amortized cost: trade and other payables, due to related parties, and loans and borrowings.
| (d) | Compound financial instruments |
The Company may issue financial instruments that contain both liability and equity components. When the initial proceeds from such instruments are received, the liability component is recognized at the fair value of a similar liability that does not have an equity conversion option. The residual amount is allocated to the equity component and recorded in equity as a conversion feature reserve. Transaction costs are allocated proportionately to the liability and equity components. The liability is subsequently measured at amortized cost using the effective interest method.
F-12
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (d) | Compound financial instruments (continued) |
The allocation between liability and equity components is based on estimated fair values using discounted cash flows or option pricing models. Changes in assumptions may significantly affect the relative allocation and subsequent accounting treatment.
| (e) | Revenue from contracts with customers |
Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it transfers control over a good or service to a customer. The Company records revenue upon transfer of promised goods or services to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services based on the following five step approach:
| Step 1: | Identify the contracts with customers; |
| Step 2: | Identify the performance obligations in the contract; |
| Step 3: | Determine the transaction price; |
| Step 4: | Allocate the transaction price to the performance obligations in the contract; and |
| Step 5: | Recognize revenue as performance obligations are satisfied. |
The Company typically satisfies its performance obligations at a point in time, upon completion of sale. The Company primarily acts as principal in contracts with its customers. The Company does not have material obligations for returns, refunds and other similar obligations, nor warranties and related obligations.
Revenue is recognized at the amount of the transaction price that is allocated to the performance obligation. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
The Company has the following revenue streams:
| 1) | Sale of cannabis-based products for medicinal use |
| This revenue stream is assessed as one performance obligation. Revenue from cannabis based medicinal product sales is recognized once the performance obligation has been satisfied, which would be upon the customer taking the delivery of the product. The transaction price for each product and service will be determined based on the respective invoice. |
| Pursuant to the cessation of Canmart in May 2025, no revenues have been recognized from this stream. As of December 31, 2025, the Company has not yet cultivated any product on its farm land property. The Company is currently operating under its hemp cultivation license and continuously working on its full cultivation license for cannabis cultivation. |
| 2) | Lease and construction of telecommunications infrastructure, including towers and fiber networks |
Leasing Revenue Revenue from the lease of tower and fiber assets is recognized on a straight-line basis over the lease term, in accordance with IFRS 16. Lease agreements are classified as operating leases, typically ranging from five to thirteen years, and generally include fixed payments without significant variable components. |
F-13
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (e) | Revenue from contracts with customers (continued) |
Construction and Services Revenue Revenue from infrastructure construction and related services is recognized over time as performance obligations are satisfied, based on input methods such as costs incurred relative to total expected costs. These are typically fixed-price contracts governed by IFRS 15. |
The Company exercises judgments in determining the amount of the costs incurred to obtain or fulfil a contract with a customer, which includes, but is not limited to (a) the likelihood of obtaining the contract, (b) the estimate of the profitability of the contract, and (c) the credit risk of the customer. An impairment loss will be recognized in profit or loss to the extent that the carrying amount of the asset exceeds (a) the remaining amount of consideration that the entity expects to receive in exchange for the goods or services to which the asset relates, less (b) the costs that relate directly to providing those goods or services and that have not been recognized as expenses.
Some of the Company’s revenue
is derived from fixed price service contracts that may extend beyond
| (f) | Cash and cash equivalents |
The Company considers all liquid investments purchased with a maturity of three months or less at acquisition to be cash and cash equivalents, which are carried and classified at amortized cost. The Company did hold any cash equivalents as of December 31, 2025 and 2024.
| (g) | Inventories |
Inventories consist of raw materials and are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out principle, and includes expenditures incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. Inventories are written down to net realizable value when the cost of inventories is estimated to be unrecoverable due to obsolescence, damage, or declining selling prices. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. When the circumstances that previously caused inventories to be written down below cost no longer exist, or when there is clear evidence of an increase in selling prices, the amount of the write-down previously recorded is reversed.
| (h) | Biological assets |
Biological assets are measured at their fair value less costs to sell in the consolidated statement of financial position. The Company’s method of accounting for biological assets attributes value accretion on a straight-line basis throughout the life of the biological asset from initial cloning to the point of harvest. All direct and indirect costs of biological assets are capitalized as they are incurred.
Biological assets and produce held by the Company is planned to be used in four possible ways:
| ● | Sale to the export market; |
| ● | Sale to the local market; |
| ● | Repurposed for use in research and development; and |
| ● | Written off for being obsolete. |
F-14
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (i) | Property, plant and equipment |
| (i) | Recognition and measurement |
Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When parts of an item of property and equipment have different estimated useful lives, they are accounted for as separate items within property and equipment. The costs of the ongoing regular servicing of property and equipment are recognized in tin the period in which they are incurred.
| (ii) | Depreciation |
Depreciation is recognized in profit
or loss over the estimated useful lives of each part of an item of property and equipment in a manner that most closely reflects management’s
estimated future consumption of the future economic benefits embodied in the asset.
| Plant and equipment | ||
| Leasehold improvements | ||
| Motor Vehicles | ||
| Computers | ||
| Furniture and fixtures |
The Company has a majority of its property, plant and equipment in Mexico, held by its subsidiary First Towers, of which the depreciation is calculated using the straight-line method at the following annual rates:
| ● | Fiber Optic Network |
| ● | Telecom Towers |
| ● | Machinery and Equipment |
| ● | Other equipment |
Construction in progress represents capitalized costs related to the construction of telecommunications towers and fiber optic infrastructure that are not yet available for use. These amounts are transferred to the appropriate asset category when construction is complete and the asset is ready for its intended use, at which point depreciation commences. Construction in progress is not depreciated.
| (j) | Intangible assets |
Intangible assets are recorded at cost
less amortization and impairment losses, if any. The Company had a cannabis operator’s license in Lesotho, held by its subsidiary
Bophelo, which was valid for
F-15
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (j) | Intangible assets (continued) |
The Company had cannabis distribution licenses in the United Kingdom held by its subsidiary, Canmart which have been assessed as having an indefinite useful life. As such, these licenses were not amortized but their recoverable amounts are tested annually for impairment. Pursuant to the cessation of Canmart in May 2025, the license was derecognized and recorded as a loss on the consolidated statement of loss and comprehensive loss. The indefinite intangible assets are recorded at cost less impairment losses, if any. The Company capitalizes the initial license application cost as the cost of intangible assets while the annual license renewal fees are expensed in the year during which they occur.
| (k) | Impairment of non-financial assets |
The Company assesses at each reporting period whether there is an indication that a non-financial asset may be impaired. An impairment loss is recognized when the carrying amount of an asset, or its cash generating unit (“CGU”), exceeds its recoverable amount. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount is the greater of the assets or CGU’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less cost to sell, an appropriate valuation model is used. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the CGU to which the asset belongs.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of amortization, if no impairment loss had been recognized.
| (l) | Income taxes |
Income tax expense comprises current and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive loss.
Current taxes are the expected tax receivable or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax receivable or payable in respect of previous years. Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred taxes are not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred taxes are not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously.
F-16
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (l) | Income taxes (continued) |
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
| (m) | Leases |
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the right to obtain substantially all of the economic benefits from use of the asset during the term of the arrangement exists, and if the Company has the right to direct the use of the asset. At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative standalone prices.
As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.
The right-of-use asset is subsequently depreciated from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, the incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:
| a) | fixed payments, including in-substance fixed payments, less any lease incentives receivable; |
| b) | variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; |
| c) | amounts expected to be payable under a residual value guarantee; |
| d) | exercise prices of purchase options if the Company is reasonably certain to exercise that option; and |
| e) | payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. |
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in the estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option.
Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit or loss.
F-17
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (n) | Loss per share |
The Company presents basic loss per share (“LPS”) data for its ordinary shares. Basic LPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for the Company’s own shares held. Diluted LPS is computed similar to basic LPS except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of any exercisable instruments, if dilutive. The number of additional shares is calculated by assuming that outstanding exercisable instruments were exercised and that the proceeds from such exercise were used to acquire common shares at the average market price during the reporting periods.
| (o) | Share capital |
Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued. The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a private placement to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.
| (p) | Business combinations |
Acquisitions of a business are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value. This is calculated as the sum of the acquisition date fair values of the assets transferred by the Company and liabilities incurred by the Company to the former owners of the acquiree in exchange for control of the acquiree. Acquisition related costs are recognized in profit and loss as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized in profit or loss as a bargain purchase gain.
Judgment is required to determine if the Company’s acquisitions represent a business combination or an asset acquisition. For acquisitions accounted as business combination, goodwill was recognized on the transactions and acquisition costs were expensed. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets acquired and liabilities incurred or assumed. For acquisitions representing asset acquisition, no goodwill was recognized on the transactions and acquisition costs were capitalized to the assets purchased. An allocation of the purchase price to the individual identifiable assets acquired, including intangible assets, and liabilities assumed based on their fair values at the date of purchase was required. The fair values of the net assets acquired was calculated using significant estimates and judgments. If estimates or judgments differed, this could result in a materially different allocation of net assets on the consolidated statement of financial position.
F-18
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 3. | Material Accounting Policies (continued) |
| (q) | Accounting standards issued and adopted |
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting policies
The amendments require that an entity discloses its material accounting policy information, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The adoption of this amendment did not have a significant impact to the Company’s consolidated financial statements.
In January 2020, the IAS issued an amendment to IAS 1 Presentation of Financial Statements that clarifies the criterion for classifying a liability as non-current relating to the right to defer settlement of a liability for at least 12 months after the reporting period.
| 1. | Liabilities are classified as non-current if the entity has a substantive right to defer settlement for at least 12 months at the end of the reporting period. The amendment no longer refers to unconditional rights. The assessment determines whether a right exists, but it does not consider whether the entity will exercise the right. |
| 2. | ’Settlement’ is defined as the extinguishment of a liability with cash, other economic resources or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. |
In October 2022, the IASB issued amendments to IAS 1 that specified how an entity assesses whether it has the right to defer settlement of a liability when that right is subject to compliance with covenants within twelve months after the reporting period. The amendment applies to annual reporting periods beginning on or after January 1, 2024 and is applied retrospectively upon adoption. The adoption of this amendment did not have a significant impact to the Company’s consolidated financial statements.
| (o) | Recent accounting pronouncements |
Certain new IFRS standards and interpretations have been issued but are not shown as they are not expected to have a material impact on the Company’s consolidated financial statements.
F-19
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 4. | Business Combination |
Acquisition of RPK
On April 29, 2022, the Company, through
its wholly owned subsidiary, Cannahealth, acquired
The purchase of Holigen has been accounted
for by the acquisition method, with the results of Holigen included in the Company’s results of operation from the date of acquisition.
The purchase of Holigen was determined as being a business combination in accordance with the requirements of IFRS 3 - Business Combinations,
due to the fact that the Company acquired control over Holigen on the acquisition date through the purchase of
On February 28, 2024, the Company
signed a definitive Share Purchase Agreement and Escrow Agreement with Somai Pharmaceuticals Ltd. (“Somai”), pursuant to
which Somai will acquire RPK for a total consideration of $
Status of Holigen’s seller
In October 2022, Flowr commenced Court-supervised restructuring proceedings under the Companies’ Creditors Arrangement Act (“CCAA”) in order to receive a stay of proceedings that will allow Flowr to conduct a Sale and Investment Solicitation Process (“SISP”). The Court granted an Initial Order in these CCAA proceedings and appointed Ernst & Young Inc. as ‘the Monitor’.
During the year ended December 31,
2023, Flowr completed the sale of all of the shares of its subsidiaries, The Flowr Group (Okanagan) Inc. and certain other assets, comprising
substantially all of the assets of Flowr. As a result, and pursuant to an Order dated July 21, 2023, the Monitor completed cash and share
distributions to Flowr’s debenture holders. There is no recovery available for Flowr’s unsecured creditors and shareholders. For
this reason, the Company recognized a write-off of holdback payable of $
Acquisition of First Towers
On August 22, 2025, the Company consummated the Business Combination pursuant to the Share Exchange Agreement ( “SEA”), as amended on August 19, 2025, with First Towers & Fibers Corp. (“First Towers”), a corporation existing under the laws of the Province of British Columbia. Pursuant to SEA, all of the common shares of First Towers have been acquired by the Company and in exchange, the Company will issue Class A Special Shares and Class B Special Shares and cash payable over time and evidenced by a promissory note. As a result of the closing, which was effective on August 21, 2025 but dated as of August 19, 2025, First Towers became a wholly owned subsidiary of the Company together with its subsidiaries, CT Mexico and CTFO Mexico.
Consideration Shares
The Company did not issue any of its
common shares as of the closing, as originally contemplated by the SEA. On August 29, 2025, the Company held a Special Meeting of Shareholders
and approved the creation of new classes of securities, including Class A Special Shares convertible into Company common shares on a
one for one basis and Class B Special Shares convertible into Company common shares on a one for one basis. After the Special Meeting
and the approval of the new classes of securities, the Company issued post-consolidated
F-20
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 4. | Business Combination (continued) |
Acquisition of First Towers (continued)
Consideration Note
In connection with the closing, the
Company entered into a promissory note with a First Towers Shareholder (the “Consideration Note”), in lieu of the Company
issuing Class A Special Shares and Class B Special Shares as consideration to such shareholder. The Consideration Note is in the principal
amount of $
During the year ended December 31,
2025, the Company made a partial repayment of $
First Towers owns and operates 700+kms
5G dark fiber network in central Mexico, where some of the strongest industrial and fastest growing state economies in Mexico are located,
with multinational telecommunications giant Telefonica as anchor under a
The purchase of First Towers has been
accounted for by the acquisition method, with the results of First Towers included in the Company’s results of operation from the
date of acquisition. For accounting purposes, the acquisition of First Towers was determined as being a business combination in accordance
with IFRS 3, with the Company identified as the accounting acquirer and First Towers as the acquiree.
| Class A Special Shares ( | $ | |||
| Class B Special Shares ( | ||||
| Cash (via Promissory Note) | ||||
| Total Consideration Paid | $ | |||
| Cash | $ | |||
| Trade and other receivables (note 7) | ||||
| Prepayments | ||||
| Property, plant and equipment, net (note 10) | ||||
| Right-of-use assets (note 11) | ||||
| Goodwill (note 12) | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Due to related parties | ( | ) | ||
| Lease liabilities (note 14) | ( | ) | ||
| Loans and borrowings (note 15) | ( | ) | ||
| Due to/from Akanda | ( | ) | ||
| Net Assets Acquired | $ |
| * |
F-21
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 4. | Business Combination (continued) |
Acquisition of First Towers (continued)
During the year ended December 31,
2025, the Company recorded a goodwill of $
From the date of acquisition, the
operations of First Towers contributed a net loss of $
During the year ended December 31,
2025, the acquired business contributed $
The Company performed its annual test
for goodwill as at December 31, 2025. The Company did so by comparing the sum of the carrying value of the CGU of First Towers and the
carrying value of goodwill against the fair value of First Towers’ business. Based on the impairment test, the carrying value for
both goodwill and CGU far exceeded the fair value of First Towers’ business. As a result, goodwill was fully impaired as at December
31, 2025 and an impairment loss of $
Assumption of First Towers Indebtedness
In connection with the First Towers Transaction and the Closing, the Company entered into a Debt Settlement Agreement (the “PGC DSA”) and a Convertible Promissory Note (the “PGC Note”) with PGC Finco Inc. (“PGC”), and a Debt Settlement Agreement (the “Dunstan DSA”) and a Convertible Promissory Note (the “Dunstan Note”) with Dunstan Holdings Ltd. (“Dunstan”).
In satisfaction of all indebtedness
of First Towers to PGC, the Company assumed indebtedness of First Towers in the aggregate principal amount of $
In satisfaction of all indebtedness
of First Towers to Dunstan, the Company assumed indebtedness of First Towers in the aggregate principal amount of $
Each of the PGC Note and the Dunstan
Note (collectively, the “Notes”) has a maturity date of August 19, 2031, has an interest rate of 8-1/2% per annum payable
semiannually in arrears, and are secured by all of the assets of the Company. Each Note may be converted from time to time by either
the Company or the holder of the Note, into common shares of the Company. As a result of the shareholders’ approval on November
28, 2025, the Company may issue up to
F-22
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 4. | Business Combination (continued) |
Acquisition of First Towers (continued)
Assumption of First Towers Indebtedness (continued)
The convertible debenture was determined
to be a hybrid financial instrument with a liability and an embedded derivative liability. The Company has elected the option in IFRS
9 to recognize the convertible debenture as one financial instrument at FVTPL. At the time of issuance, the Company determined the principal
amount of $
During the year ended December 31,
2025, the Company paid $
| 5. | Sale of RPK |
During the year ended December 31, 2024, the Company commenced plans to sell its subsidiary - RPK, and on March 24, 2024, pursuant to the signed definitive Share Purchase Agreement and Escrow Agreement with Somai in February 2024, the Company completed the transaction with Somai for the sale of its RPK.
Under the terms of the Share Purchase
Agreement, Somai acquired RPK for a total cash consideration of Two Million United States Dollars ($
In connection with the closing, the
Company paid a cash finder’s fee for an aggregate of $
The Company recognized a gain on sale
of subsidiary of $
| Cash received | $ | |||
| Finder’s fee – transaction cost | ( | ) | ||
| Consideration received, net | $ | |||
| Cash | $ | |||
| Accounts receivable (note 7) | ||||
| Inventory (note 9) | ||||
| Prepayments | ||||
| Property, plant and equipment, net (note 10) | ||||
| Intangible licenses (note 12) | ||||
| Accounts payable | ( | ) | ||
| Bank loans (note 15) | ( | ) | ||
| Net assets sold | $ | |||
| Gain on sale of subsidiary | $ |
The Company accounted for the operating
results of RPK which was a net loss of $
F-23
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 6. | Loss of Control of Canmart Ltd. |
During the first quarter of 2025, the Company evaluated the current state of Canmart and has determined to discontinue and cease it UK operation. The Company came to this decision after receiving notification from Canmart’s directors that they intend to resign and thought out the difficulty in finding qualified replacements, among other things. The Company then filed for creditor’s voluntary liquidation and had the winding up commenced on May 30, 2025.
As at December 31, 2025, the Company
no longer controlled Canmart and derecognized all assets and liabilities at their book values on May 30, 2025 and wrote down all balances
to $. During the year ended December 31, 2025, the Company recorded a gain on loss of control of Canmart of $
| Years ended December 31, | 2025 | 2024 | ||||||
| Net Revenue | $ | $ | ||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Other income (expenses) | ||||||||
| ( | ) | |||||||
| Gain on loss of control of subsidiary | ||||||||
| Gain on discontinued operations | $ | $ | ||||||
| Exchange differences on translation of discontinued operations | $ | ( | ) | $ | ||||
| Other comprehensive income from discontinued operations | $ | ( | ) | $ | ||||
| Cash flows provided by (used in) operating activities | $ | ( | ) | $ | ||||
| Cash flows provided by (used in) investing activities | ( | ) | ||||||
| Cash flows provided by (used in) financing activities | ( | ) | ||||||
| Effects of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash provided by (used in) by the subsidiary | $ | ( | ) | $ | ( | ) | ||
| Carrying amount of net liabilities immediately prior to loss of control of subsidiary | $ | ( | ) | |||||
| Reclassification of foreign currency translation reserve | ( | ) | ||||||
| Gain on loss of control of subsidiary | $ | ( | ) | |||||
As at May 30, 2025, the carrying amounts of assets and liabilities of Canmart were as follows:
| Cash | $ | |||
| Accounts receivable (note 7) | ||||
| Prepayments | ||||
| Loan receivables (note 13) | ||||
| Property, plant and equipment, net (note 10) | ||||
| Intangible licenses (note 12) | ||||
| Total assets | $ | |||
| Trade and other payables | $ | |||
| Total liabilities | $ | |||
| Net liabilities | $ | ( | ) |
F-24
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 7. |
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Sales taxes and other taxes recoverable | ||||||||
| Other receivables | ||||||||
| $ | $ | |||||||
Trade receivables represent amounts
due from customers under normal credit terms, generally 30 to 90 days. As at December 31, 2025, there were three customers
(2024 — two customers) with an amount greater than 10% of the Company’s trade accounts receivable which represented
Sales taxes and other taxes recoverable
consists mainly of Mexican value-added tax and other taxes recoverable which represented
During the year ended December 31,
2024, the Company derecognized accounts receivable with a net book value of $
| 8. | Prepayments |
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Advertising and promotion | $ | $ | ||||||
| Consulting fees | ||||||||
| Management fees | ||||||||
| Other prepayments and deposits | ||||||||
| $ | $ | |||||||
Other prepayments and deposits consists of advances to suppliers for tower and fiber network construction, advance payments for insurance premiums, deposits, and or other services expected to be utilized within the next twelve months.
| 9. | Inventory |
The Company’s inventory prior
to the sale of RPK included consumer packaging inventory and dried cannabis flower finished product at RPK in Portugal. During the year
ended December 31, 2024, concurrent to the sale of RPK (note 5), the Company derecognized inventory with a net book value of $
Biological assets
As at December 31, 2024, the Company no longer owns any cannabis plants.
F-25
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 10. | Property, Plant and Equipment |
| Cost | Land | Plant
and equipment | Leasehold Improvements | Motor Vehicles | Computers | Furniture and fixtures | Fibre
Optics Projects | Telecom Towers | Machinery
& Sat. Equip | Construction -in-progress | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Foreign exchange movements | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Acquisition (note 4) | ||||||||||||||||||||||||||||||||||||||||||||
| Additions | ||||||||||||||||||||||||||||||||||||||||||||
| Impact of loss of control of Canmart | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign exchange movements | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Accumulated depreciation | Land | Plant
and equipment | Leasehold
Improvements | Motor
Vehicles | Computers | Furniture
and fixtures | Fibre
Optics Projects | Telecom
Towers | Machinery
& Sat. Equip | Construction -in-progress | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation – from discontinued operation | ||||||||||||||||||||||||||||||||||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Foreign exchange movements | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | ||||||||||||||||||||||||||||||||||||||||||||
| Depreciation – from discontinued operation | ||||||||||||||||||||||||||||||||||||||||||||
| Impact of loss of control of Canmart | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Foreign exchange movements | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Impairment | Land | Plant
and equipment | Leasehold Improvements | Motor Vehicles | Computers | Furniture
and fixtures | Fibre
Optics Projects | Telecom
Towers | Machinery
& Sat. Equip | Construction- in-progress | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| Addition | — | |||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Net book value | Land | Plant
and equipment | Leasehold Improvements | Motor
Vehicles | Computers | Furniture and fixtures | Fibre
Optics Projects | Telecom Towers | Machinery
& Sat. Equip | Construction -in-progress | Total | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
As at December 31, 2024, the Company
derecognized property, plant and equipment with a net book value of $
During the year ended December 31,
2025, the Company recognized depreciation of its property, plant and equipment of $
In connection with the annual test
performed for goodwill (note 12), the Company assessed that the sum of the carrying value of the CGU of First Towers (mainly PPE) and
the carrying value of goodwill greatly exceeds the fair value of First Towers’ business. As a result, the excess of calculated impairment
loss, after reducing goodwill, was pro-rated to PPE and ROU assets as at December 31, 2025. An impairment loss of $
The Company also performed an annual test for its land property as
at December 31, 2025. The Company assessed that a significant portion of the net book value of land was impaired. An impairment loss of
$
F-26
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 10. | Property, Plant and Equipment (continued) |
1900 Ferne Road, Gabriola Island, British Columbia
On September 19, 2023, and as amended on September 22, 2023 and September 24, 2025, the Company entered into an option agreement with 1107385 B.C. Ltd (“1107385”) to purchase farming land property and related operations and licenses from 1107385. To acquire the property, the Company must pay the following:
| A. | The Company will issue a non-refundable payment equal to $ |
| ● | the First Option Payment, upon signing (issued |
| ● | the Second Option Payment, 15 days after signing (paid $ |
| ● | the Third Option Payment, 30 days after signing (paid $ |
| Pursuant to the amendment on September 24, 2025, the term contained in the option agreement has been extended to September 25, 2027. The Company plans during this additional two year period to develop Tetrahydrocannabinol (THC) and cannabidiol (CBD) facilities at this site. In exchange for such extension, the Company shall pay to 1107385 a total of $ |
| a. | $ |
| b. | $ |
| B. | Additional payments will be made based upon milestones achieved from the development. Further payment milestones include: |
| ● | Upon approval or a license for THC cultivation on the property from the applicable regulatory authority, $ | |
| ● | Upon sale of THC product cultivated from the property, $ | |
| ● | Upon Hemp cultivation approval from the application regulatory authority, $ | |
| ● | Upon CBD cultivation approval from the application regulatory authority, $ |
On September 5, 2024, Health Canada
approved a hemp license for the Company. As a result, the Company was paid an additional $
The Company has been working on obtaining its full cultivation license for a variety of potential products containing THC. As of December 31, 2025, the Company has not yet cultivated any product from this land.
F-27
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 11. | Right-of-use Assets |
On January 1, 2025, the Company entered
into a lease agreement for an office space with a monthly lease payment of $
Pursuant to the acquisition of First Towers (note 4), part of the net assets assumed by the Company consist primarily of ground leases for tower and fiber infrastructure sites in Mexico. As of this period, First Towers owns and deployed 24 towers and an additional 6 are under construction. These assets are depreciated on a straight-line basis over the lease term.
During the year ended December 31,
2025, subsequent to the acquisition, First Towers completed the construction of 6 lease towers, and with this First Towers now have 30
cellular towers deployed. Of the six towers, three were leased and have the following monthly lease payment and terms: MX$
The details of the right-of-use assets recognized as at December 31, 2025 are as follows:
| Office lease | Tower and Fiber Infrastructure | Total | ||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Amortization | ( | ) | ( | ) | ||||||||
| Movement in exchange rates | ( | ) | ( | ) | ||||||||
| Balance, December 31, 2024 | ||||||||||||
| Additions | ||||||||||||
| Acquisition (note 4) | ||||||||||||
| Amortization | ( | ) | ( | ) | ( | ) | ||||||
| Impairment loss | ( | ) | ( | ) | ||||||||
| Movement in exchange rates | ( | ) | ||||||||||
| Balance, December 31, 2025 | $ | $ | $ | |||||||||
During the year ended December 31,
2025, the Company recorded amortization on its right-of-use assets of $
In connection with the annual test
performed for goodwill (note 12), the Company assessed that the sum of the carrying value of the CGU of First Towers and goodwill greatly
exceeds the fair value of First Towers’ business. As a result, the excess of calculated impairment loss, after reducing goodwill,
was pro-rated to PPE and ROU assets as at December 31, 2025. An impairment loss of $
| 12. | Intangible Assets and Goodwill |
| Cost: | Software | Licences | Goodwill | Total | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ||||||||||
| Movement in exchange rates | ( | ) | ( | ) | ( | ) | ||||||||||
| Balance, December 31, 2024 | ||||||||||||||||
| Acquisition (note 4) | ||||||||||||||||
| Impact on loss of control of Canmart | ( | ) | ( | ) | ||||||||||||
| Movement in exchange rates | ||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ||||||||||||
F-28
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 12. | Intangible Assets and Goodwill (continued) |
| Accumulated amortization: | Software | Licences | Goodwill | Total | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Amortization | ||||||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ||||||||||
| Movement in exchange rates | ( | ) | ( | ) | ||||||||||||
| Balance, December 31, 2024 and 2025 | $ | $ | $ | $ | ||||||||||||
| Impairment: | Software | Licences | Goodwill | Total | ||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ||||||||||||
| Impact of sale of RPK | ( | ) | ( | ) | ( | ) | ||||||||||
| Balance, December 31, 2024 | ||||||||||||||||
| Addition | ||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ||||||||||||
| Net book value: | Software | Licences | Goodwill | Total | ||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ||||||||||||
| Balance, December 31, 2025 | $ | — | $ | — | $ | — | $ | — | ||||||||
During the year ended December 31,
2024, concurrent to the sale of RPK, the Company derecognized RPK’s cannabis API manufacturing and GMP license with a net book
value of $
During the year ended December 31,
2025, concurrent to the loss of control of Canmart, the Company derecognized Canmart’s cannabis distribution license with a net
book value of $
The Company performed its impairment
test on goodwill and assessed that the sum of carrying value of CGU of First Towers and the carrying value of goodwill greatly exceeds
the fair value of First Towers’ business. The calculated impairment loss was allocated to goodwill and other long-lived assets of
First Towers — PPE (note 10) and ROU assets (note 11). Goodwill was fully impaired as at December 31, 2025 and an impairment loss
of $
As of December 31, 2025, the Company has intangible assets and goodwill.
| 13. | Loan Receivable |
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Loan to Cellen Life Sciences Limited (a) | $ | $ | ||||||
| Loan to an arm’s length party (b) | ||||||||
| Loan to First Towers & Fiber Corp. (c) | ||||||||
| Advances to Halo (d) | ||||||||
| $ | $ | |||||||
| (a) |
F-29
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 13. | Loan Receivable (continued) |
| (b) |
| (c) | On November 21, 2024, the Company entered into a Bridge Loan Agreement with First Towers & Fiber Corp., a corporation incorporated under the laws of the Province of British Columbia (“First Towers”) and a company controlled by a director of the Company (note 18), pursuant to which the Company loaned out $
The obligations under the Loan will rank as the third ranking and most senior secured debt of First Towers. The Loan, together with all accrued interest, fees and other amount payable pursuant to the Loan Agreement, will be due and payable by First Towers in full on demand by the Company. In addition, First Towers has the right at any time to repay the Loan or any part of the Loan without premium, penalty or bonus. As general and continuing collateral security for the obligations under the Loan Agreement, First Towers agreed to execute and deliver to and in favor of the Company, a general security agreement creating a third-ranking security interest over all of First Towers’ property, an investment property pledge agreement creating a third-ranking security interest in all present and after acquired shares owned in First Towers (the “Pledged Shares”), a control agreement for the Pledged Shares, and an insurance transfer and consent, assigning certain insurance of First Towers to the Company as mortgagee, third loss payee and additional named insured as required by the Loan Agreement.
Pursuant to the Bridge Loan Agreement, the Company shall also advance to First Towers a $ |
| i. | On January 24, 2025, the Company lent an amount of $ |
| ii. | On February 14, 2025, the Company lent an amount of $ |
| iii. | On April 2, 2025, the Company lent a total amount of $ |
| iv. | On May 1, 2025, the Company lent a total amount of $ |
| As at December 31, 2025, the loan receivable balance including interest was terminated in consolidation as of the closing of the First Towers Transaction on August 19, 2025. |
F-30
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 13. | Loan Receivable (continued) |
| (d) | During the year ended December 31, 2024, the Company paid and accrued an amount of $
During the year ended December 31, 2025, the Company paid an additional amount of $ |
The details of the loans receivable recognized as at December 31, 2025 are as follows:
| Balance, December 31, 2023 | $ | |||
| Addition | ||||
| Interest Receivable | ||||
| Movement in exchange rates | ( | ) | ||
| Balance, December 31, 2024 | ||||
| Addition | ||||
| Interest Receivable | ||||
| Cash payment | ( | ) | ||
| Impact on loss of control of Canmart | ( | ) | ||
| Termination of loans to First Towers’ including interest, pursuant to the acquisition | ( | ) | ||
| Write-off of loans to Halo | ( | ) | ||
| Movement in exchange rates | ||||
| Balance, December 31, 2025 | $ | |||
| Maturity | December 31, 2025 | December 31, 2024 | ||||||||||
| Current | $ | $ | ||||||||||
| Non-current | ||||||||||||
| $ | $ | |||||||||||
| 14. | Lease Liability |
On January 1, 2025, the Company entered
into a lease agreement for an office space with a monthly lease payment of $
Pursuant to the acquisition of First Towers (note 4), part of the net liabilities assumed by the Company consist primarily of ground leases for tower and fiber infrastructure sites in Mexico. As of the acquisition date, First Towers owns and deployed 24 towers and an additional 6 are under construction.
F-31
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 14. | Lease Liability (continued) |
During the year ended December 31,
2025, subsequent to the acquisition, First Towers completed the construction of 6 lease towers, and with this First Towers now have 30
cellular towers deployed. Of the six towers, three were leased and have the following monthly lease payment and terms: MX$
The details of the lease liability recognized as at December 31, 2025 are as follows:
| Office Lease | Tower Leases | Total | ||||||||||
| Balance, December 31, 2023 | $ | $ | $ | |||||||||
| Accrued interest | ||||||||||||
| Lease payables transferred back from AP for cash settlement | ||||||||||||
| Cash payments | ( | ) | ( | ) | ||||||||
| Movement in exchange rates | ||||||||||||
| Balance, December 31, 2024 | ||||||||||||
| Additions | ||||||||||||
| Acquisition (note 4) | ||||||||||||
| Accrued interest | ||||||||||||
| Cash payments | ( | ) | ( | ) | ( | ) | ||||||
| Reclass to Accounts payable | ( | ) | ( | ) | ||||||||
| Movement in exchange rates | ||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | |||||||||
| Maturity | Incremental borrowing rate |
December 31, 2025 |
December 31, 2024 |
|||||||||||
| Current | 2025 | % | $ | $ | ||||||||||
| Non-current | 2035 | % | ||||||||||||
| $ | $ | |||||||||||||
The Company has committed to the following undiscounted minimum lease payments remaining as at December 31, 2025:
| Years ended December 31: | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| $ | ||||
F-32
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 15. | Loans and Borrowings |
| (a) | Bank loans: |
The loans below have been granted to Holigen Ltd. and its subsidiary in order to fund their capital and operational needs on site.
| (i) | Short term loans |
As at December 31, 2023, the balance
of the loans from Caixa was $
| (ii) | Long term loans |
As at December 31, 2023, the balance
of the loans from Caixa was $
During the year ended December 31, 2024,
the Company recognized interest expense of $
| (b) | Other loans: |
| (i) | In connection with the acquisition of Holigen, the Company assumed a total loan of € |
| (ii) | During the year ended December 31, 2022, the Company received a loan of £ |
On January 17, 2023, the Company received
an additional loan of €
During the year ended December 31, 2024,
the Company recorded interest expense of $
| (iii) | During the year ended December 31, 2023, the Company received loans of CAD$ |
F-33
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 15. | Loans and Borrowings (continued) |
| (iv) | During the year ended December 31, 2023, the Company received loans of CAD$ |
During the year ended December 31, 2024,
the Company received additional loans of CAD$
The Company recorded interest expense
of $
| (v) | In connection with the acquisition of First Towers (note 4), the Company assumed a total loans of CAD$ |
| 16. | Convertible Promissory Notes |
On September 12, 2025, the Company
closed the Securities Purchase Agreement entered on September 11, 2025 with certain institutional investors (the “September Investors”),
to issue and sell to each of the September Investors a convertible promissory note (each, individually, a “September Note”
and collectively, the “September Notes”), for aggregate gross proceeds to the Company of $
The Company intends to use the net
proceeds (i) for marketing purposes of up to $
As compensation for such placement
agent services, the Company paid the Placement Agent $
The maturity date of each September
Note is the 12-month anniversary of the issuance date of such September Note, and is the date upon which the principal amount, as well
as any other fees, shall be due and payable. The Notes bear interest at a rate of
The September Note was determined to
be a hybrid financial instrument with a liability and an embedded derivative liability. The Company has elected the option in IFRS 9 to
recognize the September Note as one financial instrument at FVTPL. Under this approach, the transaction costs of $
During the year ended December 31,
2025, the Company issued
During the year ended December 31, 2025, the Company assessed that
the fair value of the converted September Notes was $
F-34
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital |
| (a) | Authorized |
The Company has authorized share capital of an unlimited number of common shares, an unlimited number of Class A Special Shares, an unlimited number of Class B Special Shares, and an unlimited number of preferred shares, issuable in series, with par value.
On May 21, 2024, the Company implemented
a
On November 14, 2024, the Company implemented
a
On August 26, 2025, the Company implemented
a
Subsequent to the year ended December 31, 2025, the Company implemented a 1-for-5 Reverse Stock Split and a 1-for-4.5 Reverse Stock Split on its common shares, respectively. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole number. All share and per share data in these consolidated financial statements have been retroactively restated to reflect the effect of the reverse stock split (note 29).
| (b) |
| Number of shares | Capital | |||||||
| Balance, December 31, 2023 | $ | |||||||
| Issuance of shares from private placement | ||||||||
| Issuance of shares upon exercise of prefunded warrants | ||||||||
| Cancelled shares | ( | ) | ( | ) | ||||
| Share issuance costs | ( | ) | ||||||
| Fair value of RSUs redeemed at $ | ||||||||
| Balance, December 31, 2024 | ||||||||
| Issuance of shares from private placement | ||||||||
| Issuance of shares upon conversion of promissory note | ||||||||
| Fair value adjustment on the converted promissory note | ( | ) | ||||||
| Share issuance costs | ( | ) | ||||||
| Impact on loss of control of Canmart | ( | ) | ||||||
| Balance, December 31, 2025 | $ | |||||||
During the year ended December 31, 2025, the Company had the following share capital transactions:
| (i) | On March 26, 2025, pursuant to a series of subscription agreement entered with investors on March 21 and 24, 2025, the Company completed its private offering with the issuance of |
| (ii) | On October 2, 2025, pursuant to the conversion of promissory note (note 16), the Company issued |
| (iii) | On October 6, 2025, pursuant to the conversion of promissory note (note 16), the Company issued |
F-35
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital (continued) |
| (b) | Shares issued and outstanding (continued) |
During the year ended December 31, 2025, the Company had the following share capital transactions (continued):
| (iv) | On October 9, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (v) | On October 16, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (vi) | On October 21, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (vii) | On October 24, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (viii) | On November 14, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (ix) | On November 17, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (x) | On November 24, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xi) | On November 26, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xii) | On December 3, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xiii) | On December 8, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xiv) | On December 15, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xv) | On December 16, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xvi) | On December 18, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
F-36
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital (continued) |
| (b) | Shares issued and outstanding (continued) |
During the year ended December 31, 2025, the Company had the following share capital transactions (continued):
| (xvii) | On December 19, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xviii) | On December 23, 2025, pursuant to the conversion of September Note (note 16), the Company issued |
| (xix) | In connection with the private placement completed during the year,
the Company incurred a total share issuance costs of $ |
During the year ended December 31, 2024, the Company had the following share capital transactions:
| (i) | On February 2, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on February 1, 2024, the Company announced closing of registered direct offering with the issuance of |
| (ii) | On March 4, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on March 1, 2024, the Company announced closing of registered direct offering with the issuance of |
| (iii) | On March 5, 2024, pursuant to the securities purchase agreement entered with Corbo Capital Inc. on March 4, 2024, the Company announced closing of registered direct offering with the issuance of |
F-37
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital (continued) |
| (b) | Shares issued and outstanding (continued) |
During the year ended December 31, 2024, the Company had the following share capital transactions (continued):
| (iv) | On March 27, 2024, pursuant to an underwriting agreement entered with Univest Securities, LLC (“Univest”) as the underwriter on March 25, 2024, the Company announced closing of underwritten public offering with the issuance of |
| (v) | On April 26, 2024, the Company cancelled |
| (vi) | On May 17, 2024, pursuant to the securities purchase agreement entered with DRNK Beverage Corp. on the same day, the Company announced the 1st closing of registered direct offering with the issuance of |
| (vii) | On May 20, 2024, pursuant to the securities purchase agreement entered with DRNK Beverage Corp. on May 17, 2024, the Company announced the 2nd closing of registered direct offering with the issuance of |
| (viii) | On May 24, 2024, the Company issued |
| (ix) | On October 3, 2024, pursuant to an underwriting agreement entered with Univest as the underwriter on October 2, 2024, the Company announced closing of underwritten public offering with the issuance of |
| (x) | In connection with the closed direct offerings and underwriting public offerings completed during the year ended December 31, 2024, the Company incurred a total share issuance cost of $ |
F-38
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital (continued) |
| (c) | Special Shares |
Class A Special Shares
On August 29, 2025, the Company approved an amendment of the Articles to create a new class of special common shares without nominal or par value (the “Class A Special Shares). The Class A Special Shares is convertible into Company common shares on a one for one basis. The holders of the Class A Special Shares shall be entitled to one vote for each Class A Special Shares held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Common Shares and Class B Special Shares, the holders of the Class A Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
Class B Special Shares
On August 29, 2025, the Company approved an amendment of the Articles to create a new class of special common shares without nominal or par value (the “Class B Special Shares”). The Class B Special Shares is convertible into Company common shares on a one for one basis. The holders of the Class B Special Shares shall be entitled to one vote for each Class B Special Share held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Common Shares, the holders of the Class B Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
Issued and Outstanding
On August 29, 2025, the Company issued
On November 28, 2025, the Company issued
A summary of the Company’s outstanding Special Shares as at December 31, 2025 are as follows:
| Number of Class A Special Shares | Number of Class B Special Shares | Capital | ||||||||||
| Balance, December 31, 2024 | $ | |||||||||||
| Issuance of special shares pursuant to the acquisition of First Towers | ||||||||||||
| Issuance of special shares pursuant to a debt settlement | ||||||||||||
| Balance, December 31, 2025 | $ | |||||||||||
F-39
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 17. | Share Capital (continued) |
| (d) | Loss per share |
The weighted average number of common
shares outstanding for basic and diluted loss per share for the year ended December 31, 2025 was
| (e) | Restricted stock units |
In order to incentivize senior executive
management and key staff, the Company makes use of equity incentives awarded pursuant to the Employee Share Ownership Plan (“ESOP”).
In terms of the ESOP, as amended in March 2024, the Company may award up to
On May 24, 2024, the Company granted
A summary of the Company’s outstanding RSUs as at December 31, 2025 are as follows:
| Number of RSUs | ||||
| Balance, December 31, 2023 | ||||
| Granted | ||||
| Exercised | ( | ) | ||
| Balance, December 31, 2024 and 2025 | ||||
During the year ended December 31,
2024, the Company recorded $
| 18. | Related Party Transactions |
Transactions with Key Management Personnel
The Company has identified its Board of Directors, Executive Chairman, Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”) as its key management personnel who have the authority and responsibility for planning, directing and controlling the Company’s main activities.
| For the years ended December 31, | 2025 | 2024 | ||||||
| Key Management Remuneration | $ | $ | ||||||
| Former Management Fees | ||||||||
| Stock-based compensation | ||||||||
| $ | $ | |||||||
The Key Management remuneration is included in Consulting and Professional Fees and Personnel Expenses in the Statement of Operations.
F-40
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 18. | Related Party Transactions (continued) |
As of December 31, 2025,
the Company has balances payable to related parties of $
| a. | Included within accounts payable and accrued liabilities at December 31, 2025 is remuneration payable to key management totaling $ |
| ● | current directors and officers: |
| i. | $ |
| ii. | $ |
| iii. | $ |
| iv. | $ |
| v. | $ |
| vi. | $ |
| vii. | $ |
| viii. | $ |
| ix. | $ |
| b. | The former director and officer of RPK, Kiranjit Sidhu is also the owner of Catalyst Capital LLC (“Catalyst”). |
| i. | On November 14, 2022, the Company received a loan of £ |
| ii. | On January 17, 2023, the Company received an additional loan of € |
| iii. | On February 5, 2023, the Company entered into another independent contractor agreement with Mr. Sidhu, pursuant to which, he agreed to provide services regarding the business operations, business development, legal and strategic matters to the Company for $ |
| iv. | On April 4, 2024, the Company entered into debt settlement agreement with Mr. Sidhu to settle up all amounts owing of $ |
F-41
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 18. | Related Party Transactions (continued) |
| c. | The Company has the following loans outstanding to 1248787 B.C. Ltd. (“1248787”), a company controlled by Jatinder Dhaliwal, a director of the Akanda: |
| i. | On August 18, 2023, the Company received a loan of C$ |
| ii. | On September 27, 2023, the Company received a loan of C$ |
| iii. | On October 13, 2023, the Company received a loan of C$ |
| d. | The Company has the following loans transactions with Halo, a company controlled by Katharyn Field, the executive director and interim CEO of Akanda: |
Unsecured debenture
During the year ended December 31, 2024, the Company received additional
loans from Halo in the aggregate principal amount of $ |
| e. | On April 24, 2024, Mr. Harvinder Singh resigned as an independent director of the Board of Directors of the Company. A Resignation and Mutual Release Agreement dated April 24, 2024 was entered between the Company and Mr. Singh, pursuant to which the Company agreed to pay Harvinder Singh a separation and release amount of $ |
F-42
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 18. | Related Party Transactions (continued) |
As of December 31, 2025,
the Company has balances receivable from related parties of $ (2024 — $
| a. | Advances — Halo |
| During the year ended December 31, 2024, the Company paid and accrued an amount of $ |
| During the year ended December 31, 2025, the Company paid an additional amount of $ |
| b. | The Company has the following loan receivable from First Towers & Fiber Corp. (“First Towers”), a company controlled by Christopher Cooper, a director of Akanda: |
| On November 21, 2024, the Company entered into a Bridge Loan Agreement with First Towers & Fiber Corp., a corporation incorporated under the laws of the Province of British Columbia (“First Towers”), pursuant to which the Company agreed to loan to First Towers $ |
| Pursuant to the Bridge Loan Agreement, the Company shall also advance to First Towers a $ |
The Company’s related party transactions are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.
F-43
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 19. | Income Taxes |
The components of income tax expense (benefit) are as follows:
| Years ended December 31, | 2025 | 2024 | ||||||
| Current: | $ | $ | ||||||
| Kingdom of Lesotho | ||||||||
| Republic of Malta | ||||||||
| United Kingdom | ||||||||
| Mexico | ||||||||
| $ | $ |
A reconciliation of the expected income tax recovery to the actual income tax recovery is as follows:
Deferred tax assets and liabilities have not been recognized for the following:
| Years ended December 31, | 2025 | 2024 | ||||||
| Net loss before income taxes: | $ | ( | ) | $ | ( | ) | ||
| Statutory income tax rate | % | % | ||||||
| Income tax benefit | ( | ) | ( | ) | ||||
| Non-deductible items | ||||||||
| Non-taxable items | ( | ) | ( | ) | ||||
| Foreign rate differential | ( | ) | ||||||
| Unrecognized loss carryforwards | ||||||||
| $ | $ | |||||||
The Company has reconciled to the
average statutory tax rate of the Republic of Malta (
Deferred tax assets
| At December 31, | 2025 | 2024 | ||||||
| Net operating loss before carryforwards | $ | $ | ||||||
| Unrecognized loss carryforwards | $ | $ |
Deferred tax assets have not been recognized in respect of unutilized tax losses carried forward because it is not probable that future taxable profit will be available against which the Company can use the benefits therefrom.
| 20. | Non-controlling Interest |
As at December 31, 2025, the carrying
value of non-controlling interest (“NCI”) was $
| CTFO Mexico | CT Mexico | Total | ||||||||||
| Balance, December 31, 2024 | $ | $ | $ | |||||||||
| Net loss allocated to NCI | ||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | |||||||||
F-44
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 21. | Financial Instruments |
Determination of Fair Values
IFRS 13, Fair Value Measurement, establishes a fair value hierarchy that reflects the significance of the inputs used in measuring fair value. The fair value hierarchy has the following levels:
Level 1 — Quoted prices in active markets for identical assets or liabilities;
Level 2 — Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;
Level 3 — Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions market participants would use in pricing.
A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following models. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
The following is a comparison by class of the carrying amounts and fair value of the Company’s financial instruments as at December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||
| Financial assets | Level | Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||||
| Financial assets measured at amortised cost: | ||||||||||||||||||
| Cash and cash held in trust | 1 | $ | $ | $ | $ | |||||||||||||
| Trade and other receivables | 2 | |||||||||||||||||
| Loan receivable | 2 | |||||||||||||||||
| Financial liabilities | ||||||||||||||||||
| Financial liabilities measure at amortised cost: | ||||||||||||||||||
| Trade and other payables | 2 | |||||||||||||||||
| Loans and borrowings | 2 | |||||||||||||||||
| Secured promissory notes | 2 | |||||||||||||||||
| Lease liabilities | 2 | |||||||||||||||||
| Due to related parties | 2 | |||||||||||||||||
| Financial liabilities measure at FVTPL: | ||||||||||||||||||
| Convertible promissory notes | 2 | |||||||||||||||||
| Secured convertible debenture | 2 | |||||||||||||||||
| 22. | Risks Arising from Financial Instruments and Risk Management |
The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate risks), credit risk and liquidity risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial risks.
F-45
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 22. | Risks Arising from Financial Instruments and Risk Management (continued) |
| (a) | Market risk |
Foreign exchange risk: is the risk
that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange rates. The Company
has not entered into any foreign exchange hedging contracts.
| As at (expressed in GBP) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | £ | £ | ||||||
| Trade and other receivables | ||||||||
| Loan receivable | ||||||||
| £ | £ | |||||||
| Financial liabilities | ||||||||
| Trade and other payables | £ | £ | ||||||
| £ | £ | |||||||
| As at (expressed in EUR) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | € | € | ||||||
| Trade and other receivables | ||||||||
| € | € | |||||||
| Financial liabilities | ||||||||
| Trade and other payables | € | € | ||||||
| Loans and borrowings | ||||||||
| € | € | |||||||
| As at (expressed in CAD) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash and cash held in trust | $ | $ | ||||||
| Loans receivable | ||||||||
| $ | $ | |||||||
| Financial liabilities | ||||||||
| Trade and other payables | $ | $ | ||||||
| Due to related party | ||||||||
| Lease liabilities | ||||||||
| Loans and borrowings | ||||||||
| Convertible promissory notes | ||||||||
| Secured promissory notes | ||||||||
| Secured convertible debenture | ||||||||
| $ | $ | |||||||
F-46
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 22. | Risks Arising from Financial Instruments and Risk Management (continued) |
| (a) | Market risk (continued) |
| As at (expressed in MXN) | December 31, 2025 | December 31, 2024 | ||||||
| Financial assets | ||||||||
| Cash | $ | $ | ||||||
| Trade and other receivables | ||||||||
| Due from related parties | ||||||||
| $ | $ | |||||||
| Financial liabilities | ||||||||
| Trade and other payables | $ | $ | ||||||
| Lease liabilities | ||||||||
| $ | $ | |||||||
Based on the above net exposures as
at December 31, 2025, assuming that all other variables remain constant, a
| (b) | Credit risk |
Credit risk is the risk of financial loss to the Company if a partner or counterparty to a financial instrument fails to meet its contractual obligation and arises principally from the Company’s cash and accounts receivable. The carrying amounts of the financial assets represents the maximum credit exposure. The Company limits its exposure to credit risk on cash by placing these financial instruments with high-credit quality financial institutions.
At December 31, 2025, the Company was
subject to a concentration of credit risk related to its accounts receivable as
| (c) | Liquidity risk |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continuously monitoring forecasted and actual cash flows, as well as anticipated investing and financing activities and to ensure that it will have sufficient liquidity to meet its liabilities and commitments when due and to fund future operations. The Company’s trade and other payables are due within the current operating year.
| 23. | Capital Management |
The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to continue the business of the Company. The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share and warrant issuances, granting of stock options, the issuance of debt or by undertaking other activities as deemed appropriate under the specific circumstance. The Board of Directors does not establish a quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern and to provide capital to pursue the development and commercialization of its products. In the management of capital, the Company includes cash, short-term debt and capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or new debt.
At the current stage of the Company’s development, in order to maximize its current business activities, the Company does not pay out dividends. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.
The Company’s overall strategy with respect to capital risk management remains unchanged for the years ended December 31, 2025 and 2024.
F-47
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 24. | Segmented Information |
The Company has
Set out below is information about the assets and liabilities as at December 31, 2025 and 2024 and profit or loss from each segment for the years ended December 31, 2025 and 2024:
| As at December 31, 2025 | ||||||||||||||||||||
| Financial statement line item: | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Reportable segment assets | $ | $ | $ | $ | $ | |||||||||||||||
| Reportable segment liabilities | ||||||||||||||||||||
| As at December 31, 2024 | ||||||||||||||||||||
| Financial statement line item: | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Reportable segment assets | $ | $ | $ | $ | $ | |||||||||||||||
| Reportable segment liabilities | ||||||||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Financial statement line item: | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Other income (expense) | ( | ) | ( | ) | ( | |||||||||||||||
| Finance income | ( | ) | ||||||||||||||||||
| Finance expense | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Depreciation & amortization | ||||||||||||||||||||
| Discontinued operations | ( | ) | ||||||||||||||||||
| Reportable segment loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
F-48
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 24. | Segmented Information (continued) |
| For the year ended December 31, 2024 | ||||||||||||||||||||
| Financial statement line item: | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | $ | |||||||||||||||
| Intersegment revenues | ||||||||||||||||||||
| Other income (expense) | ( | ) | ||||||||||||||||||
| Finance income | ||||||||||||||||||||
| Finance expense | ( | ) | ( | ) | ||||||||||||||||
| Depreciation & amortization | ||||||||||||||||||||
| Discontinued operations | ( | ) | ( | ) | ||||||||||||||||
| Reportable segment income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Set out below are reconciliations of each reportable segment’s revenues, profit or loss for the years ended December 31, 2025 and 2024, and assets and liabilities as at December 31, 2025 and 2024:
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Revenues | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment revenue | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | |||||||||||||||
| For the year ended December 31, 2024 | ||||||||||||||||||||
| Revenues | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment revenue | ||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | $ | |||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||||||||
| Loss | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total loss for reportable segments | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||
| Total loss on discontinued operations | ( | ) | ||||||||||||||||||
| Elimination of inter segment profit or loss | ||||||||||||||||||||
| Loss before income tax expense | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||
| For the year ended December 31, 2024 | ||||||||||||||||||||
| Loss | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total loss for reportable segments | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||
| Total loss on discontinued operations | ( | ) | ( | ) | ||||||||||||||||
| Elimination of inter segment profit or loss | ||||||||||||||||||||
| Loss before income tax expense | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||
F-49
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 24. | Segmented Information (continued) |
| As at December 31, 2025 | ||||||||||||||||||||
| Assets | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total assets for reportable segments | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment assets | ( | ) | ( | ) | ||||||||||||||||
| Segments’ assets | $ | $ | $ | $ | $ | |||||||||||||||
| As at December 31, 2024 | ||||||||||||||||||||
| Assets | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total assets for reportable segments | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment assets | ( | ) | ( | ) | ||||||||||||||||
| Segments’ assets | $ | $ | $ | $ | $ | |||||||||||||||
| As at December 31, 2025 | ||||||||||||||||||||
| Liabilities | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total liabilities for reportable segments | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Entity’s liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| As at December 31, 2024 | ||||||||||||||||||||
| Liabilities | Infrastructure | Cultivation | Distribution | Corporate | Total | |||||||||||||||
| Total liabilities for reportable segments | $ | $ | $ | $ | $ | |||||||||||||||
| Elimination of inter segment liabilities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Entity’s liabilities | $ | $ | $ | $ | $ | |||||||||||||||
| 25. | Revenue and Geographic Information |
The Company, through its subsidiary – First Towers, generates revenue from the leasing of telecommunications infrastructure, including tower sites and dark fiber routes. As of December 31, 2025, the Company’s revenue is earned entirely in Mexico, where all of its telecommunications infrastructure assets are located.
| 26. | General and Administrative Expenses |
The following provides a breakdown of general and administrative expenses by nature for the years ended December 31, 2025 and 2024:
| 2025 | 2024 | |||||||
| Advertising and promotion | $ | $ | ||||||
| Insurance | ||||||||
| Office and administrative | ||||||||
| Rent | ||||||||
| Transfer agent and filing fees | ||||||||
| Travel expenses | ||||||||
| Total general and administrative expenses | $ | $ | ||||||
F-50
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 27. | Insolvency Proceedings |
In July 2022, the Company announced that the High Court of Lesotho (the “Lesotho Court”) has placed in liquidation the Company’s, wholly-owned subsidiary, Bophelo Bio Science and Wellness (Pty) Ltd. (“Bophelo”). The action to place Bophelo in liquidation was taken by the Lesotho Court pursuant to an application and request (the “Liquidation Application”) that was filed by Louisa Mojela, the former Executive Chairman of the Company, who was terminated as Executive Chairman of Akanda, and the Mophuti Matsoso Development Trust (“MMD Trust”). Akanda had intended to convene a special committee to investigate Ms. Mojela’s actions and conduct, including actions and conduct taken by her prior to her filing of the Liquidation Application, and further intended to pursue all of its available legal rights and remedies against Ms. Mojela and the MMD Trust for taking this unauthorized action. The Company also intended to contest and seek to reverse the determination by the Lesotho Court to place Bophelo in liquidation and seek to recover significant loans that it has made to Bophelo to fund the execution of Bophelo’s business plan; however, due to lack of funds and resources, the Company is not at this time actively contesting the matter and cannot give no assurance that it will do so in the future. Finally, Ms. Mojela has been summarily terminated as Chairman of Bophelo for Cause, as a “bad leaver”, as a result of her action to seek to place Bophelo in liquidation. Ms. Mojela has instituted legal proceedings against the Company as a result of the termination of her employment. In an action taken without the Company’s knowledge, the Lesotho Court has ordered an insolvent liquidation of Bophelo, and has appointed Mr. Chavonnes Cooper of Cape Town, South Africa, as liquidator of Bophelo for purposes of maintaining the value of the assets owned or managed by Bophelo. The order was signed by the Honorable Mr. Justice Mokhesi on July 15, 2022.
At the date of these consolidated financial statements, the liquidation of Bophelo Bio Science and Wellness (Pty) Ltd. is still ongoing.
| 28. | Contingencies |
On October 20, 2022, Louisa Mojela
filed a claim against Canmart and the Company for wrongful termination of her Service Agreement. The claimant sought £
On December 2, 2024, the Company entered
into a settlement agreement to settle this dispute for a sum of £
On April 29, 2023, Trevor Scott, former
CFO of the Company, issued a claim against the Company for amounts owing under his employment agreement totaling £
On May 12, 2023, Tejinder Virk, former
CEO of the Company, issued a claim for Detriment and dismissal for alleged protected disclosures totaling £
F-51
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 28. | Contingencies (continued) |
On May 15, 2023, Vidya Iyer, the Company’s
former SVP of Finance issued a claim for amounts owing under her employment agreement totaling £
On January 29, 2024, the Company
was informed that Mr. Shailesh Bhushan, the former Chief Financial Officer of the Company, filed a complaint with the Employment
Standards Branch of British Columbia claiming unpaid salary and invoices in the aggregate amount of CAD $
On February 23, 2024, Mr. Bhushan filed a Notice of Civil Claim in the Supreme Court of British Columbia against Akanda alleging constructive dismissal and claiming severance pay, general damages, aggravated and punitive damages, and allegedly unpaid salary and bonus. He also seeks special costs. Mr. Bhushan has named Akanda directors Jatinder Dhaliwal, Katharyn Field, David Jenkins, and Harvinder Singh as defendants, whom he alleges are personally liable for unpaid wages. The Company and the other defendants filed their Response to Civil Claim on May 2, 2024. The Company denies all liability and takes the position that Mr. Bhushan was terminated for just cause. The Company also disputes the amounts claimed, and denies that Akanda and Halo are a common employer. The proceeding is at the discovery stage and no trial date has been set. As of May 15, 2026, to the Company’s knowledge Mr. Bhushan has not yet attempted to amend his Notice of Civil Claim to include the claims he seeks to withdraw from the Employment Standards Branch complaint. The Company intends to object to any attempt to so amend on the basis, among other things, of abuse of process.
On September 10, 2024, Dallas Dunkley
filed a claim against the Company for wrongful dismissal. The Company served its Statement of Defense on November 20, 2024. The total
amount claimed in the Statement of Claim is $
In January 2024 and January 2025, the Company received subpoenas from the SEC, Division of Enforcement. As of December 31, 2025, no provision has been recorded because the Company does not believe that a present obligation exists for which an outflow of resources is probable and can be reliably estimated; however, the ultimate outcome of the matter cannot be predicted at this time.
| 29. | Subsequent Events |
Subsequent to the year ended December 31, 2025, the Company:
| i. | Implemented a Reverse Stock Split: |
| On January 12, 2026, the Company implemented a |
| On April 13, 2026, the Company implemented a |
F-52
Akanda Corp.
Notes to the Consolidated Financial Statements
(Expressed in United States Dollars)
| 29. | Subsequent Events (continued) |
| ii. | Issued the following shares: |
| a. | On January 14, 2026, pursuant to the conversion of September Note (note 16), the Company issued |
| b. | On January 16, 2026, pursuant to the conversion of September Note (note 16), the Company issued |
| c. | On January 23, 2026, pursuant to the final conversion of September Note (note 16), the Company issued |
| iii. | Closed a $ |
On January 21, 2026, the Company
entered into a Securities Purchase Agreement dated January 20, 2026 (the “January Purchase Agreement”) with certain institutional
investors (the “January Investors”) to issue and sell to each of the January Investors a convertible promissory note (each,
individually, a “January Note” and collectively, the “January Notes”), for aggregate gross proceeds to the Company
of $
The Company intends to use the net
proceeds from the sale of the January Notes for (i) marketing purposes of up to $
Univest Securities, LLC (the “Placement Agent”) acted as placement agent for the January Offering.
The maturity date of each January
Note is the 12-month anniversary of the issuance date of such January Note, and is the date upon which the principal amount, as well
as any other fees, shall be due and payable. The January Notes bear interest at a rate of
Each January Investor has the right,
at any time, to convert all or any portion of the then outstanding and unpaid principal amount and interest if any (including any costs,
fees, and charges) into the Company’s Common Shares, at a conversion price (the “Conversion Price”) equal to the lower
of (i) $
In addition, the Company entered
into an engagement letter, as amended (the Engagement Letter”) with the Placement Agent, pursuant to which the Placement Agent
agreed to serve as the placement agent for the issuance and sale of securities of the Company. As compensation for such placement agent
services, the Company has agreed to pay the Placement Agent an aggregate cash fee equal to
F-53
ITEM 19. EXHIBITS
The following exhibits are filed as part of this Annual Report on Form 20-F:
EXHIBIT INDEX
89
| + | Indicates management contract or compensatory plan. |
| # | Filed herewith. |
In accordance with SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, and the instruction to Form 20-F, the certifications furnished in Exhibit 13.1 and Exhibit 13.2 hereto are deemed to accompany this Annual Report on Form 20-F and will not be deemed “filed” for purpose of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the U.S. Securities Act of 1933, as amended, or the U.S. Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate them by reference.
90
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Akanda Corp. | ||
| /s/ Katie Field | ||
| By: | Katie Field | |
| Title: | Interim Chief Executive Officer and Executive Director | |
Date: June 9, 2026
91
Exhibit 1.1
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 1/8 EX-3.1 4 tm2129724d4_ex3-1.htm EXHIBIT 3.1 Exhibit 3.1 Request ID: 026453832 Province of Ontario Date Report Produced: 2021/07/16 Demande n°: Province de l'Ontario Document produit le: Transaction ID: 079982715 Ministry of Government Services Time Report Produced: 15:43:52 Transaction n°: Ministère des Services gouvernementaux Imprimé à: Category ID: CT Catégorie: Certificate of Incorporation Certificat de constitution This is to certify that Ceci certifie que AKANDA CORP . Ontario Corporation No. Numéro matricule de la personne morale en Ontario 002854618 is a corporation incorporated, est une société constituée aux termes under the laws of the Province of Ontario. des lois de la province de l'Ontario. These articles of incorporation Les présents statuts constitutifs are effective on entrent en vigueur le JULY 16 JUILLET, 2021 Director/Directeur Business Corporations Act/Loi sur les sociétés par actions
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 2/8 Page: 1 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 FORM 1 FORMULE NUMÉRO 1 BUSINESS CORPORATIONS ACT / LOI SUR LES SOCIÉTÉS PAR ACTIONS ARTICLES OF INCORPORATION STATUTS CONSTITUTIFS 1. The name of the corporation is: Dénomination sociale de la compagnie: AKANDA CORP. 2. The address of the registered office is: Adresse du siège social: 77 KING STREET WEST Suite 400 TORONTO-DOMINION CENTRE (Street & Number, or R.R. Number & if Multi-Office Building give Room No.) (Rue et numéro, ou numéro de la R.R. et, s'il s'agit édifice à bureau, numéro du bureau) TORONTO ONTARIO CANADA M5K 0A1 (Name of Municipality or Post Office) (Postal Code/ Code postal) (Nom de la municipalité ou du bureau de poste) 3. Number (or minimum and maximum number) of directors is: Nombre (ou nombres minimal et maximal) Minimum 1 d'administrateurs: Maxium 10 4. The first director(s) is/are: Premier(s) administrateur(s): First name, initials and surname Resident CanadianState Yes or No Prénom, initiales et nom de famille Résident Canadien Oui/Non Address for service, giving Street & No. Domicile élu, y compris la rue et le or R.R. No., Municipality and Postal Code numéro, le numéro de la R.R., ou le nom de la municipalité et le code postal * PHILIP NO VAN DEN BERG 77 KING STREET WEST Suite 400 TORONTO-DOMINION CENTRE TORONTO ONTARIO CANADA M5K 0A1
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 3/8 Page: 2 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 5. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. Limites, s'il y a lieu, imposées aux activités commerciales ou aux pouvoirs de la compagnie. None. 6. The classes and any maximum number of shares that the corporation is authorized to issue: Catégories et nombre maximal, s'il y a lieu, d'actions que la compagnie est autorisée à émettre: The Corporation is authorized to issue an unlimited number of preferred shares, issuable in series and an unlimited number of Common shares.
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 4/8 Page: 3 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 7. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series: Droits, privilèges, restrictions et conditions, s'il y a lieu, rattachés à chaque catégorie d'actions et pouvoirs des administrateurs relatifs à chaque catégorie d'actions que peut être émise en série: A. PREFERRED SHARES The rights, privileges, restrictions and conditions attaching to the preferred shares, issuable in series, as a class, are as follows: 1. The preferred shares may at any time and from time to time be issued in one or more series, each series to consist of such number of shares as may, before the issue thereof, be determined by resolution of the board of directors of the Corporation. 2. The board of directors of the Corporation shall, subject as hereinafter provided, by resolution duly passed before the issue of the preferred shares of each series, fix the designation, rights, privileges, restrictions and conditions to be attached to the preferred shares of such series. 3. With respect to payment of dividends and priority in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the preferred shares of each series shall be entitled to preference over the Common shares of the Corporation and over any other shares ranking junior to the preferred shares; and the preferred shares of each series may also be given such other preferences over the Common shares and any other shares ranking junior to the preferred shares as may be determined as to the respective series authorized to be issued. 4. The preferred shares of each series shall rank on a parity with the preferred shares of every other series with respect to priority in payment of dividends and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs. B. COMMON SHARES The rights, privileges, restrictions and conditions attaching to the Common shares, as a class, are as follows: 1. Dividends Subject to the prior rights of the holders of the preferred shares of the Corporation, the board of directors of the Corporation may declare and cause to be paid dividends to the holders of the Common shares from any assets at the time properly applicable to the payment of dividends.
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 5/8 Page: 4 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 7. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series: Droits, privilèges, restrictions et conditions, s'il y a lieu, rattaches à chaque catégorie d'actions et pouvoirs des administrateurs relatifs à chaque catégorie d'actions que peut être émise en série: 2. Liquidation, Dissolution or Winding-Up In the event of the liquidation, dissolution or winding-up of the Corporation or other distribution of assets of the Corporation among shareholders for the purpose of winding-up its affairs, subject to the prior rights of the holders of the preferred shares of the Corporation, the holders of the Common shares shall be entitled to receive the remaining assets of the Corporation. 3. Voting Rights The holders of the Common shares shall be entitled to receive notice of and to attend any meeting of the shareholders of the Corporation, and shall be entitled to one vote in respect of each Common share held at such meetings, except a meeting of holders of a particular class of shares other than the Common shares who are entitled to vote separately as a class at such meeting.
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 6/8 Page: 5 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 8. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows: L'émission, le transfert ou la propriété d'actions est/n'est pas restreinte. Les restrictions, s'il y a lieu, sont les suivantes: Shares of the Corporation may not be transferred unless the restrictions on the transfer of securities of the Corporation contained in section 9 of the articles of the Corporation entitled "Other provisions, if any" are complied with.
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 7/8 Page: 6 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 9. Other provisions, (if any, are): Autres dispositions, s'il y a lieu: Securities of the Corporation, other than non-convertible debt securities, shall not be transferred without either: (a) the approval of the directors of the Corporation, expressed by a resolution passed at a meeting of the directors or by an instrument or instruments in writing signed by a majority of the directors; or (b) the approval of the holders of at least a majority of the shares of the Corporation entitling the holders thereof to vote in all circumstances (other than a separate class vote of the holders of another class of shares of the Corporation) outstanding at the time, expressed by a resolution passed at a meeting of the holders of those shares or by an instrument or instruments in writing signed by the holders of a majority of those shares.
2/23/23, 4:42 PM https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm https://www.sec.gov/Archives/edgar/data/1888014/000110465922009804/tm2129724d4_ex3-1.htm 8/8 Page: 7 Ontario Corporation Number Request ID / Demande n° Numéro de la compagnie en Ontario 26453832 2854618 10. The names and addresses of the incorporators are Nom et adresse des fondateurs First name, initials and last name Prénom, initiale et nom de or corporate name famille ou dénomination sociale Full address for service or address of registered office or of principal place of business giving street & No. or R.R. No., municipality and postal code Domicile élu, adresse du siège social au adresse de l'établissement principal, y compris la rue et le numéro, le numéro de la R.R., le nom de la municipalité et le code postal * PHILIP VAN DEN BERG 77 KING STREET WEST Suite 400 TORONTO-DOMINION CENTRE TORONTO ONTARIO CANADA M5K 0A1
EX-3.2 5 tm2129724d4 ex3-2.htm EXHIBIT 3.2 Form 3 Business Corporations Act Formule 3 Loi surles societes par actions • For Ministry Use Only A l'usage exclusif du minislere f'\;-. Ministry of Government tJr? 3ndConsumerServ1ces Ontario CERTIFICA"f'I:: This is to cert.ify •hat 1.llese articles are effective on Ministere <:1es Services gouvernementaux P.t des Services aux consommateurs CERT!l!=ICAT CP.c, certifie que 1es presents statuts entrent en v1gueur le AUGUSl 3 O AOOt 2021 ,., • Jtf'~~J/?J ® !)irector I D1rectnce . i3usiness coroorations Act 1 1_01 sur 1es f.ociAtes oar actmns ARTICLES OF AMENDMENT STATUTS DE MODIFICATION 1. The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS) Ontario Corporation Number Numero de la societe en Ontario 2854618 Denomination socia\e actuelle de la societe (ecrire en LETTRES MAJUSCULES SEULEMENT): A K A N D A C 0 R p 2. The name of the corporation is changed to (if applicable ): (Set out in BLOCK CAPITAL LETTERS) Nouvelle denomination socia\e de la societe (s'il ya lieu) (ecrire en LETTRES MAJUSCULES SEULEMENT) : 3. Date of Incorporation/amalgamation: Date de la constitution ou de la fusion : 2021/07/16 (Year, Monll1, Day) (annee, mois, jour) Exhibit3.2 I I 4. Complete only If there is a change In the number of directors or the minimum/ maximum number of directors. 07119 (2011105) 5. II taut rempllr cette parlie seulement sl le nombre d'admlnistrateurs ou sl le nombre minimal ou maximal d'admlnlstrateurs a change. Number of directors is/are: Nombre d'administrateurs : Number Nombre or OU minimum and maximum number of directors is/are: nombres minimum et maximum d'administrateurs : minimum and maximum minimum et maximum The articles of the corporation are amended as follows: Les statuts de la societe sont modifies de la fa9on suivante : See page 1A attached. © Queen's Printer for Ontario, 2011 / © lmprimeur de la Reine pour l'Onlarlo, 2011 Page 1 of/de 2
SCHEDULE "A" TO ARTICLES OF AMENDMEN"r Tile Articles of Iha Corporation are amended as follows: 1. to remove the reslrictlori on the transfer of shares set out in paragraph 8 of the arllcles of the Corporatron by delellng U,e rollowing provision In its en\frety: "Shares of the Corporation may not be transferred unless the restrict1ons on the transfef of securities of the Corporation contained in section 9 of the articles of the Corporation entitled "OU1er provisions if any" are complied with." and to substitute therefore the following words: "No Restrict1ons." 2. to remove from paragraph 9 of the articles of t he Corporation the following provisions in their entirety: "Securities of the Corporation, other than non-convertible debt securities, shall not be transferred without either: (a) (b) the approval of the directors of the Corporation, expressed by a resolution passed at a meeting of the directors or by an ln-strument or instruments in writing signed by a majority of the directors; or l.he approval of the holders of at least a majority of tt,e shares or the Corporation entitling the holders thereor to vote in all circumstances (other than a separate class vote of the holders of another class of shares or the Corporation) outstanding al the time, expressed by a resolution passed at a meeting of the holders or those sllares or by an instrument or instruments in writing signed by the holders of a majority of those shares." and to substitute therefore th.e following words: "None." NATDOCS'<(l738'1938\V-1 1.A I
07119 (2.011/05) 6. The amendment !'las been duly authorlUlo' as required by sections 168 and 170 (as eppllcmble) of the B11sl11ess Corporations Act. La modl1icatloo a elli dQment autorisce conforroomeni aux anides 168 et 170 (sRI011 le cas) de la l.o/ s11rres soci&l<ls par actions. 7, Tl e rasoltJlion a ulhorlzlng the amendment was approved by the sharil-hold ars/dlreCIOl'$ (as applicable) of the corp<,rE1llon on lits actionnalrfr!i ou les admlnMraleurS (Selan le cils) de la socieM on! approuve la resdlllion aulorlsant la rnodl~cation le 2021/08/30 (Year, Month. Day) (llnMo, mois, Joor) These articles are signed In duplicate, Les pMsonis slatuls so11t sign<is en doubl(l exernplalre, AKANDA CORP. (Print riM1e ol corpo.-ouon from Ar1Ide 1 on page 1) {Veurflez 6crir lo nom de la aacle1~ <)<1 l'arttcle un ~ \.a pogr, uno), By/ Par: 0 1},Qcus,aneci hv: . it,,.,(kr Vtt1t. ~FMD1FllE!749F ., (SkJn~11;1re) (Slonaiure) Director tO<l110rlpUon o/ omoo) (fC111c6on) I
Ministry of Public and Business Service Delivery Ministère des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur les sociétés par actions AKANDA CORP. Corporation Name / Dénomination sociale 2854618 Ontario Corporation Number / Numéro de société de l'Ontario This is to certify that these articles are effective on La présente vise à attester que ces statuts entreront en vigueur le March 08, 2023 / 08 mars 2023 Director / Directeur Business Corporations Act / Loi sur les sociétés par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiée conforme du dossier du ministère des Services au public et aux entreprises. Directeur ou registrateur Ontarioi,J
Ministry of Public and Business Service Delivery Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKANDA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": Not amended B. The classes and any maximum number of shares that the corporation is authorized to issue: To consolidate the issued and outstanding common shares of the Corporation on the basis of one (1) post-consolidation common share for ever ten (10) existing pre-consolidation common shares, provided that no fractional common shares of the Corporation shall be issued in connection with the consolidation and the number of common shares to be received by any one shareholder shall be rounded down to the nearest whole number of common shares. C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": Not amended BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - March 08, 2023 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 1 of 2 Ontario ti,
D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": Not amended E. Other provisions: Not amended 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on: November 22, 2022 The articles have been properly executed by the required person(s). BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - March 08, 2023 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 2 of 2
Ministry of Public and Business Service Delivery Ministère des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur les sociétés par actions AKANDA CORP. Corporation Name / Dénomination sociale 2854618 Ontario Corporation Number / Numéro de société de l'Ontario This is to certify that these articles are effective on La présente vise à attester que ces statuts entreront en vigueur le May 23, 2024 / 23 mai 2024 Director / Directeur Business Corporations Act / Loi sur les sociétés par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiée conforme du dossier du ministère des Services au public et aux entreprises. Directeur ou registrateur Ontarioi,J
Ministry of Public and Business Service Delivery Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKANDA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": Not amended B. The classes and any maximum number of shares that the corporation is authorized to issue: To consolidate the issued and outstanding common shares of the Corporation on the basis of one (1) post-consolidation common share for every forty (40) existing pre-consolidation common shares, provided that no fractional common shares of the Corporation shall be issued in connection with the consolidation and the number of common shares to be received by any one shareholder shall be rounded down to the nearest whole number of common shares. BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - May 23, 2024 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 1 of 2 Ontario ti,
C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": Not amended D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": Not amended E. Other provisions: Not amended 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on: May 06, 2024 The articles have been properly executed by the required person(s). BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - May 23, 2024 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 2 of 2
Ministry of Public and Business Service Delivery Ministère des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur les sociétés par actions AKANDA CORP. Corporation Name / Dénomination sociale 2854618 Ontario Corporation Number / Numéro de société de l'Ontario This is to certify that these articles are effective on La présente vise à attester que ces statuts entreront en vigueur le November 13, 2024 / 13 novembre 2024 Director / Directeur Business Corporations Act / Loi sur les sociétés par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiée conforme du dossier du ministère des Services au public et aux entreprises. Directeur ou registrateur Ontarioi,J
Ministry of Public and Business Service Delivery Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKANDA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": Not amended B. The classes and any maximum number of shares that the corporation is authorized to issue: The articles are amended as follows: To consolidate the issued and outstanding common shares of the Corporation on the basis of one (1) post-consolidation common share for every two (2) existing pre-consolidation common shares, provided that no fractional common shares of the Corporation shall be issued in connection with the consolidation and the number of common shares to be received by any one shareholder shall be rounded down to the nearest whole number of common shares. BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - November 13, 2024 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 1 of 2 Ontario ti,
C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": Not amended D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": Not amended E. Other provisions: Not amended 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on: March 22, 2024 The articles have been properly executed by the required person(s). BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - November 13, 2024 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 2 of 2
Ministry of Public and Business Service Delivery Ministère des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur les sociétés par actions AKANDA CORP. Corporation Name / Dénomination sociale 2854618 Ontario Corporation Number / Numéro de société de l'Ontario This is to certify that these articles are effective on La présente vise à attester que ces statuts entreront en vigueur le August 27, 2025 / 27 août 2025 Director / Directeur Business Corporations Act / Loi sur les sociétés par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiée conforme du dossier du ministère des Services au public et aux entreprises. Directeur ou registrateur Ontarioi,J
Ministry of Public and Business Service Delivery Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKANDA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": Not amended B. The classes and any maximum number of shares that the corporation is authorized to issue: To consolidate the issued and outstanding common shares of the Corporation on the basis of one (1) post-consolidation common share for every 3.125 existing pre-consolidation common shares, provided that no fractional common shares of the Corporation shall be issued in connection with the consolidation and the number of common shares to be received by any one shareholder shall be rounded down to the nearest whole number of common shares. BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - August 27, 2025 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 1 of 2 Ontario ti,
C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": Not amended D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": Not amended E. Other provisions: Not amended 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on: August 15, 2025 The articles have been properly executed by the required person(s). BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - August 27, 2025 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 2 of 2
Ontario& Ministry of Public and Business Service Delivery Ministere des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur Les societes par actions AKAN DA CORP. Corporation Name I Denomination sociale 2854618 Ontario Corporation Number/ Numero de societe de !'Ontario This is to certify that these articles are effective on La presente vise a attester que ces statuts entreront en vigueur le December 22, 2025 / 22 decembre 2025 Director I Directeur Business Corporations Act I Loi sur les societes par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. V. ~u»A,t~ W . Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiee conforme du dossier du ministere des Services au public et aux entreprises. V. ~u»A,t~W- Directeur ou registrateur
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 Ontario& Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKAN DA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended Ministry of Public and Business Service Delivery 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": N/a B. The classes and any maximum number of shares that the corporation is authorized to issue: (a) Delete the unissued preferred shares, issuable in series, as a class. The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 1 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 (b) Increase the authorized capital of the Corporation by providing that the Corporation is authorized to issue an unlimited number of Class A Special Shares and an unlimited number of Class B Special Shares. (c) Provide that the classes and any maximum number of shares that the Corporation is authorized to issue are as follows: The Corporation is authorized to issue an unlimited number of Common Shares, an unlimited number of Class A Special Shares, and an unlimited number of Class B Special Shares C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": (a) Restate the rights, privileges, restrictions and conditions attaching to the Common Shares, Class A Special Shares, and Class B Special Shares, as set out below. 1.1 Definitions: PART1 DEFINITIONS (a) "Affiliate" means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person, whether through one or more intermediaries or otherwise. The term "control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. (b) "Automatic Conversion" means the automatic conversion into Common Shares of the Class A Special Shares and Class B Special Shares, as applicable, each in accordance with the terms and conditions set forth in PART 6 of these Articles. (c) "Automatic Conversion Date" has the meaning set forth in Section 6.3. (d) "Class A Special Shares" means the Class A Special Shares in the capital of the Corporation. (e) "Class B Special Shares" means the Class B Special Shares in the capital of the Corporation. (f) "Common Shares" means the common shares in the capital of the Corporation. (g) "Conversion Rate" has the meaning set forth in Section 5.2. (h) "Corporation" means the corporation to which these articles are in respect of. (i) "holder" of any share referred to herein means the holder of such share as registered on the central securities The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 2 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 register of the Corporation and, in respect of shares held by joint holders, means all such joint holders. 0) "Liquidation Distribution" means a distribution of assets of the Corporation among its shareholders arising on the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs. (k) "Original Issue Date" means the date on which the first Special Share is issued. (I) "Permitted Transfer" means, in respect of a proposed Transfer by a holder of Special Shares: (i) in the case of an individual, by gift to a member of one of the individual's immediate family, to a trust, the beneficiaries of which are members of the individual's immediate family or an Affiliate of such individual, in each case for estate planning purposes; (ii) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (iii) in the case of an individual, pursuant to a qualified domestic relations order; (iv) by virtue of the holder's organizational documents upon liquidation or dissolution of the holder; or (v) subject to the provisions of Section 5.1, a Transfer to the officers or directors of such holder, the members or partners of such holder, any Affiliates of such holder or any employee of such Affiliate. (m) "Permitted Transferee" means any transferee arising from a Permitted Transfer. (n) "Person" means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture or other similar entity, whether or not a legal entity. (o) "Share Exchange Agreement" means share exchange agreement dated as of March 5, 2025, amended as of March 31, 2025 as further amended, among the Corporation, First Towers & Fiber Corp., a corporation existing under the laws of the Province of British Columbia, and certain common shareholders of the Corporation listed in Schedule "A" of the agreement. (p) "Special Shares" means, collectively, the Class A Special Shares and Class B Special Shares. (q) "Transfer" means any, direct or indirect, sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or encumbrance in or disposition of an interest (whether with or without consideration, whether voluntarily or involuntarily or by operation of law or otherwise, provided that a Permitted Transfer as contemplated in Section 1.1 (l)(i) and Section 1.1 (l)(v) shall be without consideration or for nominal consideration). PART2 COMMON SHARES 2.1 Common Shares. The Corporation is authorized to issue an unlimited number of Common Shares without nominal or par value. 2.2 Voting. The holders of the Common Shares shall be entitled to one vote for each Common Share held at all meetings of shareholders of the Corporation, and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series. The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 3 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 2.3 Dividends. Subject to the prior rights of any other class ranking senior to the Class A Special Shares and equal in rank to the Class A Special Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare. 2.4 Liquidation Distribution. In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Class B Special Shares, the holders of the Common Shares shall be entitled to receive all remaining property and assets of the Corporation. PART3 CLASS A SPECIAL SHARES 3.1 Class A Special Shares. The Corporation is authorized to issue an unlimited number of Class A Special Shares without nominal or par value. 3.2 Voting. The holders of the Class A Special Shares shall be entitled to one vote for each Class A Special Shares held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series, provided that the holders of Class A Special Shares may not cast a vote in respect of a resolution intended to allow the Corporation to issue Class B Special Shares pursuant to the transactions contemplated in the Share Exchange Agreement in accordance with applicable Nasdaq Listing Rules. 3.3 Dividends. Subject to the prior rights of any other class ranking senior to the Class B Special Shares and equal in rank to the Common Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare. 3.4 Liquidation Distribution. In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Common Shares and Class B Special Shares, the holders of the Class A Special Shares shall be entitled to receive all remaining property and assets of the Corporation. PART4 CLASS B SPECIAL SHARES 4.1 Class B Special Shares. The Corporation is authorized to issue an unlimited number of Class B Special Shares without nominal or par value, provided that no Class B Special Shares may be issued until the shareholders of the Corporation and the Nasdaq Stock Market have approved the transactions contemplated pursuant to the Share Exchange Agreement. 4.2 Voting. The holders of the Class B Special Shares shall be entitled to one vote for each Class B Special Shares held at all meetings of shareholders of the Corporation, and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series. 4.3 Dividends. Subject to the prior rights of any other class ranking senior to the Common Shares and equal in rank The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 4 of 8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 to the Class A Special Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare. 4.4 Liquidation Distribution. In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Common Shares, the holders of the Class B Special Shares shall be entitled to receive all remaining property and assets of the Corporation. PARTS TRANSFERS 5.1 Limits on Transferability. None of the Special Shares may be Transferred without the prior approval of the board of directors, which shall only be given if: (a) the board of directors is satisfied that the Transfer is a Permitted Transfer; and (b) the transferring holder and the Permitted Transferee enter into a written agreement in form and substance reasonably satisfactory to the Corporation providing such assurances as the Corporation may require relating to, among other things: (c) the eligibility of the Transfer as a Permitted Transfer; (d) the Permitted Transferee's acknowledgement of the transfer restrictions in respect of the Special Shares being transferred; and (e) the Permitted Transferee's agreement to be bound by all of the covenants, agreements and obligations of the transferring holder to the Corporation in respect of (x) matters relating to the Special Shares and (y) the transferring holder's ownership of the Special Shares. The Corporation shall not register, and no holder shall have any right to request, any Transfer of the registered ownership of any Special Shares without such approval. For greater certainty, no holder shall be entitled to pledge, mortgage, exchange, hypothecate or grant a security interest or encumbrance in any Special Shares. Notwithstanding the foregoing, any holder or proposed holder of Special Shares may, at such Person's option, at any time (whether before or after the issuance of any Special Shares to such Person) provide an irrevocable direction and agreement (the "Direction") in favour of the Corporation, that a proposed Transfer contemplated in Section 1.1 (l)(v) shall be deemed not be a Permitted Transfer in respect of any Special Shares held or proposed to be held by such Person (and, for greater certainty, such Direction may (but need not) also provide that any other proposed Transfer contemplated in Section 1.1 (l)(v) shall be conditional upon the proposed transferee executing an identical Direction), whereupon the Corporation shall thereafter disregard any request by such Person for a Transfer to be made pursuant to Section 1.1 (l)(v) unless such request complies with such Direction. 5.2 Conversion Provisions. Unless and until adjusted as provided for in this Section 5.2, for all conversions of Special Shares, each Special Share shall be converted into Common Shares on a 1 :1 basis (the "Conversion Rate"). (a) No fractional Common Shares shall be issued upon conversion of the Special Shares. All Common Shares (including fractions thereof) issuable upon conversion of more than one Special Share by a holder thereof shall be aggregated for the purpose of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional Common Share, The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 5 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 the holder shall be entitled to the number of Common Shares determined by rounding the entitlement down to the nearest whole number. (b) If the Corporation shall at any time or from time to time after the Original Issue Date effect a subdivision of the outstanding Common Shares, the Special Shares shall be similarly subdivided at the same time (failing which the Conversion Rate shall be adjusted accordingly). If the Corporation shall at any time or from time to time after the Original Issue Date effect a consolidation of the outstanding Common Shares, the Special Shares shall be similarly consolidated at the same time (failing which the Conversion Rate shall be adjusted accordingly). (c) If the Common Shares of the Corporation shall be changed into the same or a different number of shares of any class, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares, or a reorganization, merger, amalgamation, arrangement, consolidation, business combination or sale of assets provided for below), then in the event that any Special Shares are thereafter converted into Common Shares, the holders of the Special Shares shall be entitled to receive the kind and amount of shares or other securities or property receivable, upon such reorganization, reclassification or other change, that would have otherwise been receivable by the holders of the number of Common Shares into which such Special Shares would have been converted immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein. (d) In case of any merger, amalgamation, consolidation, arrangement, reorganization or other business combination involving the Corporation and any other corporation or other entity or Person, then in the event that any Special Shares are thereafter converted into Common Shares, such Special Shares shall thereafter be convertible (or shall be converted into a security which shall be convertible) into the kind and amount of shares or other securities or property to which a holder of the number of Common Shares of the Corporation that would have otherwise been deliverable upon conversion of such Special Shares would have been entitled upon such event; and, in such case, appropriate adjustment (as determined in good faith by the board of directors of the Corporation) shall be made in the application of the provisions in this Section 5.2(d) set forth with respect to the rights and interest thereafter of the holders of the Special Shares, to the end that the provisions set forth in this Section 5.2(d) (including provisions with respect to changes in and other adjustments of the Conversion Rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares or other securities or property thereafter deliverable upon the conversion of the Special Shares. (e) Upon any Special Shares being converted as herein provided, all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall immediately cease and terminate on the Automatic Conversion Date, other than the right of the holders thereof to receive Common Shares in exchange therefor. PART6 AUTOMATIC CONVERSIONS OF SPECIAL SHARES 6.1 Class A Special Shares. Class A Special Shares shall be converted automatically into Common Shares immediately upon the Corporation's shareholders passing a resolution approving the issuance of Class B Special Shares in accordance with Nasdaq Listing Rule 5635(d). 6.2 Class B Special Shares. Class B Special Shares shall be converted automatically into Common Shares on the following schedule, provided that none of the Class B Special Shares shall convert to Common Shares prior to the approval of the conversion of the Class B Special Shares into Common Shares in accordance with the listing rules of the Nasdaq Stock Market, as set forth in the Share Exchange Agreement: 19.9% of the Class B Special Shares will convert to Common Shares on February 2, 2026; 2.25% of the Class B Special Shares will convert to Common Shares on August 3, 2026; The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 6 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 3.25% of the Class B Special Shares will convert to Common Shares on February 3, 2027; All remaining Class B Special Shares will convert to Common Shares on August 3, 2026, the calculation of such number of shares made on a pro-rata per holder basis. 6.3 Automatic Conversion. Upon the occurrence of an automatic conversion under the foregoing Sections, all the then issued and outstanding Special Shares of the applicable class shall be converted automatically without any further action by the holders thereof and whether or not the certificates (if any) representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that in each case all holders of Special Shares being converted shall be given written notice of the occurrence of an Automatic Conversion, including the date such event occurred (the "Automatic Conversion Date"), and the Corporation shall not be obligated to issue certificates evidencing the Common Shares issuable upon such conversion unless certificates evidencing such Special Shares being converted, if any, are either delivered to the Corporation, or its transfer agent, or the holder notifies the Corporation, or its transfer agent, that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation (and its transfer agent, if applicable) from any loss incurred by it in connection therewith. 6.4 Effect of Automatic Conversion. On the Automatic Conversion Date, all rights with respect to the Special Shares so converted shall terminate, except for any of the rights of the holder thereof, upon surrender of the holder's certificate or certificates therefor, to receive certificates for the number of Common Shares into which such Special Shares have been converted. Upon the automatic conversion of the applicable Special Shares, the holders of such Special Shares shall surrender the certificates representing such shares at the registered office of the Corporation or of its transfer agent. Upon surrender of such certificates, the Corporation shall promptly issue and deliver to such holder, in such holder's name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of Common Shares into which the Special Shares surrendered were converted on the Automatic Conversion Date. Such conversion shall be deemed to have been made upon the occurrence of the Automatic Conversion and the Person or Persons entitled to receive the Common Shares issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Shares at such time. D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": N/a E. Other provisions: N/a 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 7 of8
BCA - Articles of Amendment - AKAN DA CORP. - OCN:2854618 - December 22, 2025 on: August 29, 2025 The articles have been properly executed by the required person(s). The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar. Ministry of Public and Business Service Delivery Page 8 of8
Ministry of Public and Business Service Delivery Ministère des Services au public et aux entreprises Certificate of Amendment Certificat de modification Business Corporations Act Loi sur les sociétés par actions AKANDA CORP. Corporation Name / Dénomination sociale 2854618 Ontario Corporation Number / Numéro de société de l'Ontario This is to certify that these articles are effective on La présente vise à attester que ces statuts entreront en vigueur le January 12, 2026 / 12 janvier 2026 Director / Directeur Business Corporations Act / Loi sur les sociétés par actions The Certificate of Amendment is not complete without the Articles of Amendment Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar Ce certificat de modification n'est pas complet s'il ne contient pas les statuts de modification Copie certifiée conforme du dossier du ministère des Services au public et aux entreprises. Directeur ou registrateur Ontarioi,J
Ministry of Public and Business Service Delivery Articles of Amendment Business Corporations Act Corporation Name (Date of Incorporation/Amalgamation) AKANDA CORP. (July 16, 2021) 1. The name of the corporation is changed to: Not amended 2. The number of directors or the minimum/maximum number of directors are amended as follows: Not amended 3. The articles are amended as follows: A. Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise. If none, enter "None": Not amended B. The classes and any maximum number of shares that the corporation is authorized to issue: To consolidate the issued and outstanding common shares of the Corporation on the basis of one (1) post-consolidation common share for every 5 existing pre-consolidation common shares, provided that no fractional common shares of the Corporation shall be issued in connection with the consolidation and the number of common shares to be received by any one shareholder shall be rounded down to the nearest whole number of common shares. BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - January 12, 2026 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 1 of 2 Ontario ti,
C. Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors' authority with respect to any class of shares which may be issued in series. If there is only one class of shares, enter "Not Applicable": Not amended D. The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows. If none, enter "None": Not amended E. Other provisions: Not amended 4. The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act. 5. The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on: November 28, 2025 The articles have been properly executed by the required person(s). BCA - Articles of Amendment - AKANDA CORP. - OCN:2854618 - January 12, 2026 The endorsed Articles of Amendment are not complete without the Certificate of Amendment. Certified a true copy of the record of the Ministry of Public and Business Service Delivery. Director/Registrar, Ministry of Public and Business Service Delivery Page 2 of 2
Exhibit 2.1
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT
TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
General
Akanda Corp’s (the “Company, “we,” “us” and “our”) Articles of Incorporation, as amended by Articles of Amendment dated as of August 30, 2021, and as further amended by Articles of Amendment dated as of March 8, 2023, as of May 23, 2024, as of August 25, 2025, as of December 22, 2025 and as of January 12, 2026 (the “Articles”), provide that the Company’s authorized capital consists of an unlimited number of Common Shares, an unlimited number of Class A Special Shares, an unlimited number of Class B Special Shares, and an unlimited number of preferred shares (the “Preferred Shares”), issuable in series.
Other than our Common Shares, no other securities of the Company are traded on The Nasdaq Capital Market.
Common Shares
Rights, Preferences and Restrictions Attaching to the Common Shares
The Articles provide the following rights, privileges, restrictions and conditions attaching to our Common Shares:
| ● | to vote at any meetings of shareholders, except meetings at which only holders of a specified class of shares other than the Common Shares are entitled to vote; |
| ● | subject to the prior rights of the holders of the Preferred Shares, to share equally in the remaining assets of our Company on liquidation, dissolution or winding-up of our Company; and |
| ● | subject to the prior rights of the holders of the Preferred Shares, the Common Shares are entitled to receive dividends if, as, and when declared by the Board of Directors. |
The holders of Common Shares are entitled to receive notice of and to attend all annual and special meetings of our shareholders and to one vote in respect of each Common Share held at the record date for each such meeting, except a meeting of holders of a particular class of shares other than Common Shares who are entitled to vote separately as a class at such meeting. Subject to the prior rights of the holders of the Preferred Shares, the holders of Common Shares are entitled, at the discretion of our Board of Directors, to receive out of any or all of our profits or surplus properly available for the payment of dividends, any dividend declared by our Board of Directors and payable by the Company on the Common Shares. The holders of the Common Shares will participate in any distribution of the assets of the Company upon liquidation, dissolution or winding-up or other distribution of the assets of the Company, subject to the prior rights of the holder of the Preferred Shares.
Fully Paid and Non-assessable
All outstanding Common Shares are duly authorized, validly issued, fully paid and non-assessable.
Resale Restrictions
Our Articles do not impose restrictions on the transfer of Common Shares by a shareholder.
Pre-Emptive Rights
Our Common Shares do not contain any pre-emptive purchase rights to any of our securities.
Class A Special Shares
On August 29, 2025, shareholders of the Company approved an amendment to the Company’s Articles to create a new class of special common shares without nominal or par value (the “Class A Special Shares”).
The holders of the Class A Special Shares shall be entitled to one vote for each Class A Special Shares held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series, provided that the holders of Class A Special Shares may not cast a vote in respect of a resolution intended to allow the Corporation to issue Class B Special Shares pursuant to the transactions contemplated in the SEA in accordance with applicable Nasdaq Listing Rules.
Subject to the prior rights of any other class ranking senior to the Class B Special Shares and equal in rank to the Common Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Common Shares and Class B Special Shares, the holders of the Class A Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
As of April 30, 2026, all of the Class A Special Shares converted into Ordinary Shares.
2
The Class B Special Shares
On August 29, 2025, shareholders of the Company approved an amendment of the Articles to create a new class of special common shares without nominal or par value (the “Class B Special Shares”). Subsequently, the Company held a Special Meeting of Shareholders on November 28, 2025, at which, among other things, (a) approved a special resolution to approve the issuance of 4,775,972 Common Shares for purposes of complying with applicable NASDAQ listing rules, of the issuance of 20% or more of the Company’s issued and outstanding Common Shares as of August 21, 2025, issuable on exchange of Class B Special Shares to the former First Towers & Fiber Corp. (“FT”) shareholders (the “FT Shareholders”), pursuant to that certain share exchange agreement between the Company, FT and the FT Shareholders, entered into as of March 5, 2025, as amended; and (b) passed a special resolution to approve the issuance of (i) an aggregate of 732,384 Common Shares underlying Class B Special Shares issuable pursuant to the terms of certain Debt Settlement Agreements the Company entered into as of August 19, 2025 upon and as a result of the closing of the FT Transaction (the “Debt Settlement Agreements”) and (ii) up to 27,300,000 Common Shares upon the conversion of all of the principal and interest under certain 6-year convertible promissory notes in the aggregate principal amount of US$4,909,995.28, issued pursuant to the terms of the Debt Settlement Agreements and the FT Transaction, in both cases for purposes of complying with applicable NASDAQ listing rules, of the issuance of 20% or more of the Company’s issued and outstanding Common Shares as of August 21, 2025.
As a result of such approvals, the Company (a) issued an aggregate of 4,775,972 Class B Special Shares in accordance with the terms of the FT Transaction, which convert in accordance with their terms into a like number of Common Shares; (b) (i) issued an aggregate of 732,384 Class B Special Shares issuable pursuant to the terms of the Debt Settlement Agreements, which convert in accordance with their terms into a like number of Common Shares, and (ii) may issue up to 27,300,000 Common Shares, from time to time in accordance with its terms, which is the maximum number of shares issuable upon the conversion of US$4,909,995.28 of principal, plus interest, under the 6-year convertible promissory notes, issued pursuant to the terms of the Debt Settlement Agreements and the FT Transaction.
The holders of the Class B Special Shares shall be entitled to one vote for each Class B Special Share held at all meetings of shareholders of the Corporation and shall vote as a single class with the Common Shares and the Class A Special Shares, other than meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series.
Subject to the prior rights of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Class B Special Shares, Common Shares shall be entitled to receive and the Corporation shall pay thereon, as and when declared by the directors of the Corporation out of moneys of the Corporation properly applicable to the payment of dividends, such non-cumulative dividends as the directors may from time to time declare.
In the event of any Liquidation Distribution, subject to the prior rights of the holders of the shares of any other class ranking senior to the Common Shares and equal in rank to the Class A Special Shares and Common Shares, the holders of the Class B Special Shares shall be entitled to receive all remaining property and assets of the Corporation.
Preferred Shares
The Preferred Shares may at any time and from time to time be issued in one or more series. The Board of Directors will, by resolution, from time to time, before the issue thereof, fix the designation, rights, privileges, restrictions and conditions attaching to the Preferred Shares of each series.
3
Company’s Objects and Purposes
The Company (Ontario Corporation No. 2854618) can engage in any legal activity permitted under the Business Corporations Act (Ontario). As set forth in Item 5 of our Articles, there are no restrictions on the business we may carry on or on the powers we may exercise.
Directors Conflict of Interests
As set forth in section 5.12 of the By-laws, and pursuant to the relevant provisions of the Business Corporations Act (Ontario), a director of the Company who is a party to, or who is a director or an officer of or has a material interest in any person who is a party to, a material contract or transaction or proposed material contract or transaction with the Company shall disclose to the Company the nature and extent of that interest at the time and in the manner provided by the Business Corporations Act (Ontario). No such director shall attend any part of a meeting of the board during which the contract or transaction is discussed or vote on any resolution to approve the contract or transaction except in accordance with the Business Corporations Act (Ontario). If no quorum exists for the purpose of voting on a resolution to approve a contract or transaction only because a director is not permitted to be present at the meeting, the remaining directors will be deemed to constitute a quorum for the purposes of voting on the resolution.
Borrowing Power
As set forth in section 3.1 of the By-laws, without limiting the powers of the Board of Directors as set forth in the Business Corporations Act (Ontario), unless the Articles, By-laws or any unanimous shareholder agreement otherwise provides, the Board may, from time to time, on behalf of the Company, without authorization of the shareholders:
| ● | borrow money upon the credit of the Company; |
| ● | issue, reissue, sell or pledge debt obligations of the Company; |
| ● | give a guarantee on behalf of the Company to secure performance of any person; and |
| ● | mortgage, hypothecate, pledge, or otherwise create a security interest in all or any property of the Company, owned or subsequently acquired, to secure any obligation of the Company. |
Unless the Articles, By-laws or any unanimous shareholder agreement otherwise provides, the Board may by resolution delegate any or all of the powers referred to in section 3.1 of the By-laws to a director, a committee of the Board or an officer of the Company.
There are no provisions in the Articles or By-laws with respect to: (a) the directors’ power, in the absence of an independent quorum, to vote compensation to themselves; (b) retirement or non-retirement of directors under an age limit requirement; or (c) the number of shares required for a director’s qualification.
4
Limitations on Liability and Indemnification of Officers and Directors
In accordance with, and subject to, the Business Corporations Act (Ontario) and pursuant to the by-laws of the Company, subject to certain conditions, the Company shall indemnify a director or officer, a former director or officer, or another individual who acts or acted at the Company’s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Company or other entity.
The Company shall not indemnify an individual unless the individual:
| ● | acted honestly and in good faith with a view to the best interests of the Company or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at the Company’s request; and | |
| ● | in the case of a criminal or administration action or proceeding enforced by a monetary penalty, had reasonable grounds to believe the conduct was lawful. |
The Company shall also indemnify an individual referred to above in such other circumstances as the Business Corporations Act (Ontario) permits or requires. Nothing in the by-laws of the Company limits the right of any individual entitled to indemnify to claim indemnity apart from the provisions therein.
Action Necessary to Change the Rights of Holders of Shares
Pursuant to Section 9.16.5 of the By-laws, subject to the Business Corporations Act (Ontario), the Articles and any unanimous shareholder agreement, every question at any meeting of shareholders will be determined by a majority of the votes cast on the question. In case of an equality of votes, either on a show of hands or on a ballot, the chair of the meeting will not be entitled to a second or casting vote.
Shareholder Meeting
The Business Corporations Act (Ontario) provides that: (i) a general meeting of shareholders shall be held at such place in or outside Ontario as the directors determine or, in the absence of such a determination, at the place where the registered office of our Company is located; (ii) directors must call an annual meeting of shareholders not later than 18 months after the date of incorporation and no later than 15 months after the last preceding annual meeting; (iii) for the purpose of determining shareholders entitled to receive notice of a meeting of or vote at meetings of shareholders, the directors may fix in advance a date as the record date for that determination, provided that such date shall not precede by more than 60 days or by less than 30 days, the date on which the meeting is to be held; (iv) the holders of not less than 5% of the issued shares entitled to vote at a meeting may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition; and (v) if for any reasons it impracticable to call a meeting of shareholders in the matter in which it may be called or to conduct the meeting in the matter prescribed by the by-laws, the Articles or the Business Corporations Act (Ontario), or for any other reason the court thinks fit, the court, upon the application of a director or shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in a manner that the court directs. The Company’s by-laws provide that a quorum is met when at least two persons are present in person and holding or representing by proxy not less than 10% of the votes attached to all shares entitled to be voted at the meeting.
The holders of our Common Shares are entitled to attend and vote at all meetings of the shareholders of the Company, except a meeting of holders of a particular class of shares other than the Common Shares who are entitled to vote separately as a class at such meeting.
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Limitations on the Rights to Own Securities
Subject to the Business Corporations Act (Ontario), the Articles, and any unanimous shareholder agreement, shares in the capital of the Company may be issued at such time and to such persons and for such consideration as the Board of Directors may determine. No share may be issued until the consideration for the share is fully paid as provided for in the Business Corporations Act (Ontario).
Delaying, Deferring or Preventing a Change in Control of the Company
No provisions of the Company’s Articles or Bylaws that would have an effect of delaying, deferring or preventing a change in control of the company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries).
Threshold Above Which Shareholder Ownership Must Be Disclosed
There are no By-law provisions requiring disclosure of share ownership.
Difference in Corporate Law
Other than with respect to the Company holding shares in itself or a subsidiary of the Company holding shares of the Company, there are no limitations under our Articles or in the Business Corporations Act (Ontario) on the rights to own our securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on our securities, except that the Investment Canada Act (Canada) may require that a “non-Canadian” not acquire “control” of the Company without prior review and approval by the Minister of Innovation, Science and Economic Development, if the applicable net benefit review threshold were to be exceeded and the Company were to meet the definition of “Canadian business” under the Investment Canada Act (Canada). If the Company were to meet the definition of a Canadian business under the Investment Canada Act (Canada), the acquisition of one-third or more of the voting shares of the Company would give rise a rebuttable presumption of the acquisition of control, and the acquisition of more than fifty percent of the voting shares of the Company would be deemed to be an acquisition of control. In addition, the Investment Canada Act (Canada) provides the Canadian government with broad discretionary powers in relation to national security to review and potentially prohibit, condition or require the divestiture of, any investment in the Company by a non-Canadian, including non-control level investments. “Non-Canadian” generally means an individual who is neither a Canadian citizen nor a permanent resident of Canada within the meaning of the Immigration and Refugee Protection Act (Canada) who has been ordinarily resident in Canada for not more than one year after the time at which he or she first became eligible to apply for Canadian citizenship, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians. Amendments to the Investment Canada Act (Canada) have been passed by the Canadian government but have not yet come into force. Among other things, the amendments will broaden and strengthen the national security review provisions and require, under certain circumstances to be prescribed in regulations that have not yet been published, pre-closing notification of certain foreign investment transactions.
In addition, limitations on the ability to acquire and hold shares of the Company may be imposed by the Competition Act (Canada) (the “Competition Act”). This legislation grants the Commissioner of Competition jurisdiction, for up to one year, to challenge the acquisition of a significant interest in us before the Competition Tribunal if the Commissioner believes that it would, or would be likely to, result in a substantial lessening or prevention of competition in any market in Canada. The Competition Act requires that any person proposing to acquire any of the assets in Canada of an operating business file a notification with the Competition Bureau where specified “size of the parties” and “size of the transaction” thresholds are exceeded. In the case of share acquisitions, an additional “shareholding threshold” applies. Any person who intends to acquire shares must file a notification with the Competition Bureau if certain financial thresholds are exceeded, and that person would hold more than 20% of our voting shares as a result of the acquisition. If a person already owns 20% or more of our voting shares, a notification must be filed when the acquisition would bring that person’s holdings over 50%. Where a notification is required, the legislation prohibits completion of the acquisition until the expiration of a statutory waiting period or unless the Commissioner provides written notice that he or she does not intend to challenge the acquisition. Amendments to the Competition Act have been proposed but not yet passed. Among other things, the amendments would alter the notification thresholds so as to capture more transactions and extend the Commissioner’s window to challenge a transaction to three years from the closing date, instead of the current one, in certain circumstances.
Additional Conditions Governing Changes in the Capital
None.
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Exhibit 12.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934)
I, Katie Field, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Akanda Corp.. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| June 9, 2026 | By: | /s/ Katie Field |
| Name: | Katie Field | |
| Title: |
Interim Chief Executive Officer (principal executive officer) |
Exhibit 12.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934)
I, Gurcharn Deol, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Akanda Corp.. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the company and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| June 9, 2026 | By: | /s/ Gurcharn Deol |
| Name: | Gurcharn Deol | |
| Title: |
Chief Financial Officer (principal financial and accounting officer) |
Exhibit 13.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Annual Report on Form 20-F of Akanda Corp. (the “Company”) for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of such officer’s knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| June 9, 2026 | By: | /s/ Katie Field |
| Name: | Katie Field | |
| Title: |
Interim Chief Executive Officer (principal executive officer) |
Exhibit 13.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Annual Report on Form 20-F of Akanda Corp. (the “Company”) for the year ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of such officer’s knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| June 9, 2026 | By: | /s/ Gurcharn Deol |
| Name: | Gurcharn Deol | |
| Title: |
Chief Financial Officer (principal financial and accounting officer) |
Exhibit 15.1
To the Board of Directors of Akanda Corp.
We hereby consent to the incorporation by reference in each of the Akanda Corp.’s Registration Statements on Form S-8 (No. 264450, No. 267976, No. 273245 and No. 279381) of our report dated June 8, 2026, relating to the consolidated financial statements of Akanda Corp., which appears in this Form 20-F.
June 9, 2026
We have served as the Company’s auditor since 2023
Los Angeles, California
PCAOB ID Number 6580