Akanda - 20-F annual report 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commission file number001-41324

AKANDA CORP.

(Exact name of Registrant as specified in its charter and translation of Registrant’s name into English)

Canada

(Jurisdiction of incorporation or organization)

c/o Gowling WLG (Canada) LLP

100 King St. W, Suite 1600

Toronto, ON M5X 1G5, Canada

Tel: +1 (416) 862-7525

(Address of principal executive offices)

Katie Field, Interim Chief Executive Officer and Director

100 King St. W, Suite 1600

Toronto, ON M5X 1G5, Canada

Phone: +1 (202) 498 7917

(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.

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 1,983,546

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes  ☒ No

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  ☒ No

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. ☒ Yes  ☐ No

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). ☒ Yes  ☐ No

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.

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:

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  ☒ No

TABLE OF CONTENTS

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:

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.”

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

Not applicable.

Not applicable.

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.

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:

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.

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:

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.

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.

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.

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.

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:

 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.

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.

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:

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.

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.

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:

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.

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.

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.

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:

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.

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.

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.

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:

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.

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.

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:

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.

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:

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.

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.

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.

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.

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.

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.

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.

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.

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.

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:

Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.

ITEM 4. INFORMATION ON 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.

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:

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:

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.

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.

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.

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.

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.

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.

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.

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.

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.

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:

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:

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. 

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.

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.

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).

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:

The following chart reflects our legal entity structure (including the jurisdiction of formation or incorporation of the various entities).

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.

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.

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.

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.

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.

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.

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.

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:

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.

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:

During the year ended December 31, 2024, Akanda Group completed the following financings:

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:

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:

The amounts above are undiscounted and include the total amounts due, including the interest component, that has been reclassified to accounts payable.

Subsequent to the year ended December 31, 2025, the Company:

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.

In addition, the Company paid the placement agent $70,000 in cash fees in relation to the January Offering at the closing.

Not applicable.

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.

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

The following table sets forth our directors and senior management, their age and the positions they held as of June 8, 2026.

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.

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 Dhaliwalhas 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.

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.

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.

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:

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.

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.

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:

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.

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:

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:

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: