{"url_path":"/sec/akan/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-09","source_url":"https://www.sec.gov/Archives/edgar/data/1888014/0001213900-26-066800-index.html","accession_number":"0001213900-26-066800","cik":"0001888014","ticker":"AKAN","issuer_name":"AKANDA CORP.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1888014/0001213900-26-066800-index.html","primary_entity_key":"0001888014","primary_entity_name":"AKANDA CORP."},"word_count":7640,"has_tables":true,"body_markdown":"**ITEM 4. INFORMATION ON THE COMPANY**\n\n** **\n\n**A.**\n**History and Development of the\nCompany**\n\n \n\nAkanda Corp. was incorporated\nin the Province of Ontario, Canada on July 16, 2021 in connection with the plan of Halo to reorganize its medical cannabis market\nfocused international business assets. In September 2021, we entered into a share purchase agreement with Halo, a publicly-traded,\nvertically integrated multinational cannabis company (NEO: HALO) (OTCQX: HCANF) (Germany: A9KN). Pursuant to this agreement, we acquired\nall the issued and outstanding equity interests of Cannahealth Limited, a Republic of Malta company (“**Cannahealth**”),\nfrom Halo (the “**Cannahealth Acquisition**”).\n\n \n\nAt the closing of the Cannahealth\nAcquisition on November 3, 2021, Cannahealth owned all the issued and outstanding equity interests of Canmart and Bophelo Holdings,\nwhich owned all the issued and outstanding equity interests of Bophelo. As a result of the Acquisition, both Bophelo and Canmart became\nour indirect wholly-owned subsidiaries. As consideration for this Acquisition, we issued 233 Common Shares to Halo at a price of $56,250.00\nper share, resulting in Halo owning approximately 68.3% of all our outstanding Common Shares at the closing of the Cannahealth Acquisition.\n\n \n\nOn November 12, 2021,\nHalo transferred 37 Common Shares to an unaffiliated party, 1306077 B.C. LTD. (the “**Halo Transferee**”),\nwhich resulted in Halo owning 49.6% of our issued and outstanding Common Shares (the “**Halo Transfer**”) at the\ntime. On 14 March 2022, and pursuant to a convertible debenture agreement between Akanda and Halo, Akanda issued 29 Common Shares\nto 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\ndebenture agreement.\n\n \n\nOn April 20, 2022, Akanda,\nCannahealth, The Flowr Corporation (“**Flowr**”) and Holigen Holdings Limited (“**Holigen**”),\na wholly-owned subsidiary of Flowr entered into a share purchase agreement (the “**Holigen Agreement**”) whereby\nCannahealth would acquire 100% of the ordinary shares of Holigen, which is the holding company of RPK Biopharma, Unipessoal, LDA (“**RPK**”),\na cultivator and manufacturer of medical cannabis products based in Portugal (the “**Holigen Acquisition**”). The\nHoligen Acquisition closed on April 29, 2022.\n\n \n\nThe Purchase Price for the\nHoligen 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\nShares**”). The Akanda Shares were issued pursuant to Regulation S of the Securities Act. Concurrent to the closing of the\nHoligen Acquisition, Akanda purchased 14,285,714 Common Shares of Flowr for an aggregate purchase price of CAD$999,999.98.\n\n \n\nRPK’s operations consisted\nof a 20,000 square foot indoor EU GMP certified grow facility located near Sintra, Lisbon, Portugal, dedicated to the cultivation of\nhigh-THC premium cannabis as well as a 180+ acre outdoor facility located in Aljustrel. In 2020, Holigen grew more than 20 high-THC strains\nat the Aljustrel facility making it the largest outdoor medical cannabis grow in the EU.\n\n  \n\nOn July 15, 2022, our indirect\nwholly-owned subsidiary Bophelo, a Lesotho company, was placed into liquidation by the High Court of Lesotho (the “**Lesotho Court**”)\npursuant to an unauthorized application and request (the “**Liquidation Application**”) that was filed by Louisa Mojela,\nour former Executive Chairman, who was terminated as Executive Chairman of Akanda in July 2022, and the Mophuti Matsoso Development Trust,\nwhich we believe was established by Ms. Mojela. Mr. Chavonnes Cooper of Cape Town, South Africa, was appointed by the Lesotho Court as\nliquidator of Bophelo for purposes of maintaining the value of the assets owned or managed by Bophelo. We intended to seek to recover significant\nloans made to Bophelo to fund the execution of Bophelo’s business plan, including payment of rents and staffing costs in the event\nthat 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\nthis time actively contesting the matter and cannot give no assurance that it will do so in the future.\n\n  \n\nBophelo was focused on the\ncultivation of cannabis, the production of medical cannabis products including dried flower, oils, and other concentrates and the supply\nof such medical cannabis products to wholesalers in international markets. As a result of Bophelo’s liquidation, during the year\nended December 31, 2022, Bophelo ceased operations and we derecognized its assets and have since determined that it is no longer\na significant subsidiary. We will continue to report about Bophelo, until such time as our inquiry into the liquidation confirms that\nthe process is complete.\n\n \n\n35\n\n \n\n \n\nOn August 9, 2022, we entered\ninto a cooperation agreement with Cansativa GmbH to allow the Cansativa platform to supply the German market with dried flowers from\nAkanda’s EU-GMP certified indoor grow facility in Sintra, Portugal. All pharmacies in Germany will be able to purchase these products\nthrough the Cansativa platform. In 2024, this cooperation agreement was terminated as a result of our exiting our European business.\n\n    \n\nOn September 22, 2023, the\nCompany entered an amended and restated option to purchase agreement with 1107385 B.C. LTD., pursuant to which the Company acquired an\noption to purchase a Canadian THC and CBD farming facility located at 1900 Ferne Road, Gabriola Island, British Columbia and related\noperations and licenses, pursuant to which, the key deal terms are as follows:\n\n \n\n \n●\nAkanda will issue a non-refundable\npayment equal to US$1,800,000 and if paid in Common Shares of Akanda will be based on formula to calculate the per share price as\nset forth in the agreement. The initial payment will be broken up into the First Option Payment, the Second Option Payment and the\nThird Option Payment, upon signing, 15 days after signing, 30 days after signing respectively.\n\n \n\n \n●\nThis buys Akanda the right\nto develop the property for two years. The Company plans during this time period to develop Tetrahydrocannabinol (THC) and CBD facilities\nat this site. Additional payments will be made based upon milestones achieved from the development. Additional milestones include\nTHC cultivation, sales of product, CBD cultivation, and Hemp cultivation. In the event all of the milestone payments are made or\notherwise pays the full purchase price in the timeframes specified in the option agreement, the Company will have purchased the farming\nfacility.\n\n \n\nPursuant to the amendment\non September 24, 2025, the term contained in the option agreement has been extended to September 25, 2027. The Company plans during this\nadditional two year period to develop Tetrahydrocannabinol (THC) and cannabidiol (CBD) facilities at this site. In exchange for such\nextension, the Company shall pay to 1107385 a total of $250,000, of which:\n\n \n\n \n●\n$150,000 was paid in September\n2025; and\n\n \n\n \n●\n$100,000 shall be paid\non the 12-month anniversary of the Amendment.\n\n \n\nTo date, Akanda has made\nthe first three option payments, an additional $750,000 milestone payment as a result of our obtaining a hemp license from Health Canada\nin September 2024 and extension payment of $150,000. We also anticipate making additional payments once the remaining milestones are\nachieved, of which we can give no assurance of success. To date, we have not yet cultivated any product from this farming facility.\n\n \n\nOn February 28, 2024, the\nCompany entered into a share purchase agreement with Somai, Cannahealth and Holigen to sell all the shares of RPK to Somai for a consideration\nof $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\nsecured lender bank, Caixa Agricola. In total, Somai agreed to assume approximately 4,000,000 Euros of debt. On March 24, 2024, the Company\ncompleted the transaction with Somai for the sale of RPK. On June 12, 2021, we entered into a finder’s fee agreement with\nCannera Holdings LTD, a British Columbia corporation, pursuant to which we agreed to pay to it a finder’s fee of 5% of the gross\nsales price of RPK payable at closing for identifying and introducing or otherwise assisting us with completing the sale of RPK. On\nFebruary 28, 2024, we paid an invoice of $425,000 to Cannera.\n\n* *\n\nOn March 5, 2025, the Company\nannounced that after evaluating the current state of the Company’s business of importing and distributing cannabis-based products\nin the United Kingdom through its Canmart Ltd. (“**Canmart**”) subsidiary, the Company determined to discontinue\nand cease its U.K operations and shut down Canmart. The Company came to this conclusion after receiving notification from Canmart’s\ndirectors that they intend to resign and the difficulty in finding qualified replacements, determining that the expense and timing of\nrenewing its license to operate in the U.K. when compared to projected near-term future revenues is not cost effective, and evaluating\nthe continued potential exposure to Canmart’s existing lawsuits, among other things. The Company then filed for creditor’s\nvoluntary liquidation and had the winding up commenced on May 30, 2025. As a result of Canmart’s liquidation, during the year ended\nDecember 31, 2025, Canmart ceased operations and we derecognized all its assets and liabilities and have since determined that it\nis no longer a significant subsidiary.\n\n \n\n36\n\n \n\n \n\nOur principal executive\noffices and mailing address are located at c/o Gowling WLG (Canada) LLP, 100 King St. W, Suite 1600, Toronto, ON M5X 1G5, Canada, and\nour telephone number is +1 (416) 862-7525.\n\n \n\nThe SEC maintains an internet\nsite that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the\nSEC on *www.sec.gov*. You can also find information on our website *akandacorp.com*. The information contained on\nour website is not a part of this annual report.\n\n \n\n*Reverse Stock Splits*\n\n \n\nOn August 26, 2025, we implemented\na 1-for-3.125 reverse stock split of our Common Shares. Every 3.125 shares of our issued and outstanding Common Shares were\nautomatically converted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse stock\nsplit. Instead, any fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock split\naffected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding\nCommon Shares, except for adjustments that resulted from the treatment of fractional shares.\n\n \n\nOn January 12, 2026, we\nimplemented a 1-for-5 reverse stock split of our Common Shares. Every 5 shares of our issued and outstanding Common Shares\nwere automatically converted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse\nstock split. Instead, any fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock\nsplit affected all shareholders uniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding\nCommon Shares, except for adjustments that resulted from the treatment of fractional shares.\n\n \n\nOn April 13, 2026, we implemented\na 1-for-4.5 reverse stock split of our Common Shares. Every 4.5 shares of our issued and outstanding Common Shares were automatically\nconverted into one issued and outstanding common share. No fractional shares were issued as a result of the reverse stock split. Instead,\nany fractional shares that resulted from the split were rounded down to the next whole number. The reverse stock split affected all shareholders\nuniformly and did not alter any shareholder’s percentage interest in the Company’s outstanding Common Shares, except for\nadjustments that resulted from the treatment of fractional shares.\n\n* *\n\n37\n\n \n\n* *\n\n*January 2026 Convertible Note Transaction*\n\n \n\nOn January 21, 2026, the\nCompany entered into a Securities Purchase Agreement dated January 20, 2026 (the “**January Purchase Agreement**”) with\ncertain institutional investors (the “**January Investors**”) to issue and sell to each of the January Investors a convertible\npromissory note (each, individually, a “**January Note**” and collectively, the “**January Notes**”), for\naggregate gross proceeds to the Company of $7.0 million, before deducting fees to the Placement Agent (as defined below) and other expenses\npayable by the Company in connection with the offering (the “**January Offering**”). The closing of the January Offering\noccurred on January 21, 2026.\n\n \n\nThe Placement Agent acted\nas placement agent for the January Offering and was paid $70,000 in cash fees in relation to the January Offering.\n\n \n\nThe maturity date of each January Note is the 12-month anniversary\nof 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\npayable. The January Notes bear interest at a rate of 10% per annum. For a detailed description of the transaction, please refer to Note\n29 of the Audited Consolidated Financial Statements as of and for the years ended December 31, 2025 and 2024 included elsewhere in this\nForm 20-F.\n\n \n\n*IR Agency Consulting Agreements*\n\n \n\nOn January 27, 2026, the\nCompany entered into a six-month consulting agreement with IR Agency to provide marketing services effective February 1, 2026. IR Agency\nis a marketing/advertising agency that conducts informational awareness campaigns for publicly traded companies through its multi-channel\ndistribution model, which targets potential interested parties. Although the term of each IR Agency consulting agreement is six months,\nthey are paid for the services calculated based on an informational awareness campaign’s expected cost for a projected timeframe\nand only continue until the exhaustion of the funds rather than the estimated term.\n\n \n\nThe Company previously had\na six-month consulting agreement with IR Agency, dated September 22, 2025, to conduct a similar informational awareness campaign. The\nCompany 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\nfrom the proceeds from the sale of convertible notes in September 2025, and $925,000 pursuant to a 2024 consulting agreement, for these\nmarketing services.\n\n \n\nAs part of the informational\nawareness campaign, IR Agency disseminated information about the Company through a SMS network of over 2.3 million subscribers utilizing\nthe subscribers’ mobile networks, its email distribution list reaching roughly 46,713 recipients per email, digital newsletter\nadvertisements on 9 investor-focused publications, push notifications on targeted mobile phone applications reaching 12,370 user per\nnotification (e.g., Stock News app), and traditional and social media platforms (e.g., WhatsApp and Telegram). Such services provided\nby IR Agency were promotional in nature only, were curated to enhance the Company’s public visibility, and did not provide investment\nadvice or deliver performance guarantees.\n\n \n\n**Acquisition of First Towers and Related Transactions**\n\n** **\n\nOn March 5, 2025, we entered\ninto a Share Exchange Agreement (the “**SEA**”) with First Towers and the common shareholders of First Towers (the\n“**Shareholders**”). Subject to the terms and conditions set forth in the SEA, as amended as of August 19, 2025,\nthe parties agreed to enter into a business combination transaction (the “**First Towers Transaction**”), pursuant\nto which, among other things, all of the common shares of First Towers were exchanged for either (a) our (i) newly authorized Class A\nSpecial Shares of the Company (the “**Class A Special Shares**”), that convert into an aggregate number of common\nshares of the Company equal to 19.9% of the common shares of the Company issued and outstanding at the closing of the Transaction and\n(ii) newly authorized Class B Special Shares of the Company (the “**Class B Special Shares**” and, with the Class\nA Special Shares, the “**Special Shares**”), that convert into the remaining Purchaser Shares otherwise issuable\nto the Shareholders under the amended SEA, or (b) cash payable over time and evidenced by a promissory note (the “**Consideration\nNote**”), and First Towers continued as a wholly owned subsidiary of the Company.\n\n \n\nThe Company’s Board\nof Directors and its executive officers as of immediately prior to the closing of the Transaction remained, while management of First\nTowers, as a wholly-owned subsidiary of the Company, included Christopher Cooper, President, Francisco Juarez, VP and Chief Operating\nOfficer, and Edgar Contreras, Country Manager.\n\n \n\n38\n\n \n\n \n\nIn connection with the Transaction,\nat the closing, the Company entered into a Debt Settlement Agreement (the “**PGC DSA**”) and a Convertible Promissory\nNote (the “**PGC Note**”) with PGC Finco Inc. (“**PGC**”), and a Debt Settlement Agreement\n(the “**Dunstan DSA**”) and a Convertible Promissory Note (the “**Dunstan Note**”) with Dunstan\nHoldings Ltd. (“**Dunstan**”).\n\n \n\nPursuant\nto the PGC DSA, in satisfaction of all indebtedness of First Towers to PGC through the Closing, the Company assumed indebtedness of First\nTowers 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\nof $500,000 and issued to PGC, 24,762 (post-reverse stock split) Class B Special Shares.\n\n \n\nPursuant to the Dunstan DSA, in satisfaction of all indebtedness of\nFirst Towers to Dunstan through the Closing, the Company assumed indebtedness of First Towers in the aggregate principal amount of US$756,917\nwhich is evidenced by the Dunstan Note, and the Company issued to PGC 7,787 (post-reverse stock split) Class B Special Shares.\n\n \n\nEach\nof the PGC Note and the Dunstan Note (collectively, the “**Notes**”) has a maturity date of August 19, 2031, has\nan 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\nare subject to customary events of default.\n\n \n\nEach\nNote 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\nfirst obtaining approval from the shareholders of the Company at the Second Shareholder Meeting. The conversion price shall be a price\nper 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\nof the conversion notice.\n\n \n\nAlso\nin connection with the Transaction, at the closing, the Company entered into the Consideration Note with a Shareholder. The Consideration\nNote 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\nannum payable quarterly. In addition, the Company paid to the holder of the Consideration Note a commitment fee of $424,018.98.\n\n \n\nThe\nConsideration Note is secured by all of the assets of the Company pursuant to a General Security Agreement dated as of August 19, 2025,\nbut such security interest has been subordinated to the Notes and the security interest held by PGC and Dunstan. Since its issuance, the\nCompany prepaid approximately $8.5 million of the Consideration Note.\n\n \n\n**B.**\n**Business Overview**\n\n** **\n\n**Our Cannabis Business**\n\n \n\n**Background**\n\n \n\nOur cannabis segment relates\nto cannabis cultivation, manufacturing and distribution company. We have a limited operating history and minimal revenues to date. We\nexpect to expand our cultivation operations and develop sales channels of our cannabis products.\n\n** **\n\n39\n\n \n\n** **\n\n**1900 Ferne Road, Gabriola Island, British\nColumbia**\n\n \n\nOn\nSeptember 19, 2023, Akanda entered an option to purchase agreement for Canadian farming property in British Columbia, including related\noperations and licenses, from 1107385. On September 22, 2023, Akanda entered an amended and restated purchase agreement with 1107385\nfor 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,\nbroken 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\nin the agreement. On September 22, 2023, we paid the first payment by issuing 156 Common Shares. On April 4, 2024, we paid the second\npayment of $600,000 and the third payment of $600,000. Additional payments to the seller will be made based upon milestones achieved\nfrom the development, including THC cultivation, sales of product, CBD cultivation, and hemp cultivation. On September 5, 2024, Health\nCanada approved a hemp license for Akanda’s subsidiary, 1468243 B.C. LTD, which triggered another milestone. As a result, Akanda\nwas required to pay an additional $750,000 to the seller within ten business days of the milestone event and made the payment on September\n16, 2024. On September 24, 2025, Akanda entered into an amended option agreement pursuant to which the option term was extended to September\n25, 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\nnot yet cultivated any product from this land.\n\n* *\n\n**Competition**\n\n \n\n**CBD**\n\n \n\nThe\nindustry in which we operate is subject to intense and increasing competition. The Canadian hemp industry has stabilized around 29,309\nacres in 2023, and Canada has established a global leadership position in producing hemp grain for food. The Hemp industry maintains\nthat hemp could become Canada’s next “canola”. Innovation and technological development in this industry has been almost\nexclusively privately funded and enabled to date. CBD competitors include Charlotte’s Web, Cresco Labs, and the Valens Company. \n\n \n\n**THC**\n\n \n\nSome\nof the larger competitors in this segment include Aurora Cannabis, Canopy Growth, Aphria, CannTrust Holdings, and Aleafia Health. We\nbelieve this market is worthwhile to enter as long as we can keep costs down and deliver high yields. According to Health Canada, as\nof 2023, there was 63.2 million square feet of outdoor area licensed for cannabis production and 16.3 million square feet of greenhouse\nand indoor areas for cannabis production. These numbers are down from the peak of 76.7 million square feet of outdoor area in 2021 and\nthe peak of 23.9 million square feet of indoor area in 2020.\n\n \n\n**Research and Development**\n\n \n\nWe\ndo not have any research and development policies nor have we had any for the last three fiscal years.\n\n  ** **\n\n**Regulation**\n\n** **\n\n**Regulatory Framework in Canada**\n\n** **\n\nOn October 17, 2018, the *Cannabis\nAct* (S.C. 2018, c. 16) (the “**Cannabis Act**”) and the regulations enacted under the Cannabis Act, which\nset out the rules and standards that apply to the production, distribution, sale, importation and exportation of cannabis by federal\nlicense holders (the “**Cannabis Regulations**”), came into force, legalizing the sale of cannabis for adult recreational\nuse. Cannabis in Canada is subject to a complex regulatory framework arising from federal, provincial, and territorial legislation. The\nCannabis Act and the Cannabis Regulations provide the framework for legal access to medical and non-medical cannabis, and control and\nregulate its production, distribution, sale, import and export. The provinces and territories of Canada have enacted legislation to control\nand regulate how non-medical cannabis is distributed and sold within their respective jurisdictions.\n\n \n\nOn October 17, 2019, October\n17, 2020 and December 2, 2022, subsequent amending regulations titled the came into force that, among other things, expanded the scope\nof the Cannabis Act and Cannabis Regulations to enable the sale of certain categories of cannabis, including cannabis extracts, topicals\nand edibles, and set THC content limits for certain categories of cannabis products.\n\n \n\n40\n\n \n\n \n\nPrior to the Cannabis Act\nand the Cannabis Regulations coming into force, only the sale of medical cannabis was permitted and it was regulated by the *Access\nto Cannabis for Medical Purposes Regulations (the “**ACMPR**”)* made under the *Controlled Drugs and Substances\nAct* (Canada) (the “**CDSA**”). The Cannabis Act and the Cannabis Regulations replaced the CDSA and the\nACMPR as the governing laws and regulations in respect of the cultivation, processing, sale and distribution of cannabis (including cannabis\noil extract) in Canada.\n\n \n\nCanada’s regulatory\nframework for cannabis is constantly evolving and both the Canadian Ministry of Health for Canada (“**Health Canada**”),\nwhich has regulatory oversight over and administration of the Cannabis Act, and provincial and territorial regulators frequently release\nand update guidance to assist the industry in interpreting and applying the applicable laws to their operations.\n\n* *\n\n*Licensing*\n\n \n\nThe Cannabis Regulations\nestablish six classes and various sub-classes of licenses that authorize specific activities, namely: (1) cultivation (standard cultivation,\nmicro-cultivation, nursery); (2) processing (standard processing, micro-processing); (3) sales (sale for medical purposes); (4) analytical\ntesting; (5) research; and (6) and cannabis drug license. Licensing requirements and authorized activities vary by class and sub-class,\nand authorized activities can also be narrowed by conditions described in individual licenses when they are issued.\n\n \n\nHealth Canada is responsible\nfor reviewing and approving all federal licensing applications. While Health Canada does provide service standards for new applications,\nrenewals, and amendments, they are not guaranteed and may not always be met. The volume of applications in queue or under review by Health\nCanada, the complexity of an application or amendment, and the quality of the submission, among other factors, can impact the duration\nof the review process, creating uncertainty in timelines. After a license is issued, it is the holder’s responsibility to comply\nwith all applicable requirements in the Cannabis Act and Cannabis Regulations, including periodic inspections by Health Canada to ensure\ncontinued compliance.\n\n* *\n\n*Security Clearances*\n\n \n\nCertain people associated\nwith cannabis licensees, including individuals occupying a “key position” such as directors, officers, large shareholders,\nand individuals identified by the Minister of Health (the “**Minister**”), must hold a valid security clearance issued\nby the Minister. The Minister considers many factors and may refuse to grant security clearances to individuals with, among other things,\norganized crime associations or past convictions for, or in association with, drug trafficking, corruption, or violent offences. Individuals\nwho have a history of nonviolent, lower-risk criminal activity (for example, simple possession of cannabis, or small-scale cultivation\nof cannabis plants) are not precluded by legislation from participating in the legal cannabis industry, and the granting of security\nclearance to such individuals is at the discretion of the Minister.\n\n* *\n\n*Cannabis Tracking System*\n\n \n\nThe Cannabis Tracking and\nLicensing System (“**CTLS**”) was established by Health Canada to, among other things, track cannabis throughout\nthe supply chain to help prevent diversion of cannabis into, and out of, the illicit market. Under the CTLS, holders of a cultivation,\nprocessing and/or sale for medical purposes licenses are required to submit monthly reports to Health Canada setting out inventory levels\nof finished and unfinished cannabis for each cannabis class.\n\n* *\n\n*Cannabis Products*\n\n \n\nThe Cannabis Act differentiates\nbetween cannabis depending on its form (referred to as “classes” of cannabis in the Cannabis Act) and only permits the sale\nof specified classes of cannabis. Upon enactment of the Cannabis Act on October 17, 2018, these classes included dried cannabis, fresh\ncannabis, cannabis plants, cannabis seeds, and cannabis oil. On October 17, 2019, edible cannabis, cannabis extracts and cannabis topicals\nwere added to the authorized classes of cannabis, also known as “**Cannabis 2.0**”). Cannabis oil was subsumed\ninto cannabis extracts and ceased to exist as a standalone class as of October 17, 2020.\n\n* *\n\n41\n\n \n\n \n\n*Health Products and Cosmetics Containing Cannabis*\n\n \n\nHealth Canada has taken\na scientific, evidence-based approach to the oversight of health products containing cannabis that are approved with health claims, including\nprescription and non-prescription drugs (human and veterinary), medical devices, natural health products (“**NHPs**”),\nand veterinary health products. Drugs, NHPs, and veterinary health products may only contain parts of the cannabis plant that are not\nsubject to the *Cannabis Act*, and Industrial Hemp derivatives that do not contain isolated or concentrated phytocannabinoids\nor synthetic duplicates thereof (e.g. THC, CBD, etc.). Per Health Canada’s Cosmetic Ingredient Hotlist, the use of cannabis species\n(hemp) derivatives (other than certain hemp seed derivatives containing no more than 10 parts per million THC) in cosmetics, are permitted,\nsubject to the provisions of the Cosmetic Ingredient Hotlist and the Industrial Hemp Regulations. Cosmetics must not contain isolated\nor concentrated phytocannabinoids or synthetic duplicates thereof.\n\n \n\n*Packaging and Labelling*\n\n \n\nThe Cannabis Regulations\nset out a comprehensive approach to the packaging and labelling of cannabis products. This approach helps to promote informed consumer\nchoice and encourage the safe handling and storage of cannabis. All cannabis products must be packaged in plain packaging that is child-resistant\nand tamper-evident and displays a variety of information such as the standardized cannabis symbol, THC and CBD potency, and prescribed\nhealth warning messages.\n\n \n\n*Promotion*\n\n \n\nThe Cannabis Act and Cannabis\nRegulations outline several prohibitions that can potentially apply to anyone who may be involved in the promotion of cannabis, cannabis\naccessories and services related to cannabis, or related activities. These prohibitions are intended to protect public health and safety,\nincluding by protecting the health of young persons by restricting their access to cannabis, and young persons and others from inducements\nto use cannabis.\n\n* *\n\n*Cannabis for Medical Purposes*\n\n \n\nWith the Cannabis Act and\nthe Cannabis Regulations coming into force on October 17, 2018, the medical cannabis regime migrated from the CDSA and the ACMPR to the\nCannabis Act and the Cannabis Regulations. The medical cannabis regulatory framework under the Cannabis Act and the Cannabis Regulations\nremains substantively the same as under the CDSA and the ACMPR, with adjustments to create consistency with rules for non-medical use,\nimprove patient access, and reduce the risk of abuse within the medical access system.\n\n \n\nUnder Part 14 of the Cannabis\nRegulations, patients maintain three options for obtaining cannabis for medical purposes: (i) they can continue to access cannabis by\nregistering with licensees holding a license to sell for medical purposes; (ii) they can register with Health Canada to produce a limited\namount of cannabis for their own medical purposes; or (iii) they can designate someone else to produce cannabis for them. With respect\nto (ii) and (iii), starting materials, such as plants or seeds, must be obtained from licensees. Starting materials for personal production,\nsuch as plants or seeds, must be obtained from a license holder.\n\n* *\n\n*Provincial and Territorial Regulatory Regimes*\n\n \n\nProvinces and territories\nof Canada are authorized to license and oversee the distribution and sale of non-medical cannabis to adult consumers in their respective\njurisdictions. As a result, regulations pertaining to the sale and distribution of non-medical cannabis vary from province to province\nand territory to territory.\n\n \n\nThe Cannabis Act prohibits\nindividuals aged 18 years or older from possessing more than 30 grams of dried cannabis (or its equivalent) in public and from the personal\ncultivation of more than four plants at any one time. Provinces and territories have the flexibility to increase the minimum age of consumption,\nlower possession limits, and set added requirements on personal cultivation within their respective jurisdictions. Provinces and territories\ncan also restrict where cannabis can be consumed in public.\n\n \n\n42\n\n \n\n \n\nThe following chart outlines\nbasic details regarding the current regulatory regime by province and territory. The possession limit of 30 grams remains unchanged in\nall provinces.\n\n \n\n**Province/Territory**\n \n**Legal\nAge**\n \n**Where\nit is Legal to Purchase**\n\nAlberta\n \n18\n \nPrivate licensed\nstores or government-operated online store\n\nBritish Columbia\n \n19\n \nGovernment-operated stores\nor online, or private licensed stores\n\nManitoba\n \n19\n \nPrivate licensed stores\nor online\n\nNew Brunswick\n \n19\n \nGovernment-operated stores\nor online, or private licensed stores\n\nNewfoundland and Labrador\n \n19\n \nPrivate licensed stores\nor government-operated online store\n\nNorthwest Territories\n \n19\n \nGovernment-operated stores\nor online, or private licensed stores\n\nNova Scotia\n \n19\n \nGovernment-operated stores\nor online\n\nNunavut\n \n19\n \nGovernment-operated online\nstore\n\nOntario\n \n19\n \nPrivate licensed stores\nor government-operated online store\n\nPrince Edward Island\n \n19\n \nGovernment-operated stores\nor online\n\nQuebec\n \n21\n \nGovernment-operated stores\nor online\n\nSaskatchewan\n \n19\n \nPrivate licensed stores\nor online\n\nYukon\n \n19\n \nGovernment-operated online\nstore or private licensed stores\n\n* *\n\n*Industrial Hemp*\n\n \n\nThe regulatory framework\nfor industrial hemp is set out in the Industrial Hemp Regulations. Industrial hemp is defined under the Industrial Hemp Regulations as\na cannabis plant – or any part of the plant – in which the concentration of THC is 0.3% (weight by weight) or less in the\nflowering heads and leaves.\n\n \n\nUnder this framework, a\nlicense from Health Canada is required in order to conduct various activities with industrial hemp. These activities include the cultivation,\nsale, import, export, cleaning, preparing, and processing of certain parts of the industrial hemp plant. Not every activity that involves\nindustrial hemp falls within the scope of the Industrial Hemp Regulations and may instead fall under the Cannabis Regulations. For example,\nthe extraction of phytocannabinoids from the flowering heads, leaves and branches of the plant requires a processing license under the\nCannabis Regulations. Additionally, only seeds of approved industrial hemp varieties which have a THC level lower than 0.3% in their\nleaves and flowering heads, can be planted.\n\n \n\nIn addition to obtaining\na license, industrial hemp license holders must comply with the Cannabis Act and Cannabis Regulations, and with other applicable federal,\nprovincial and territorial legislation and municipal by-laws.\n\n** **\n\n**Inflation and Seasonality**\n\n \n\nThe planned facility in\nBritish Columbia is an indoor facility. Seasonality is not expected to have an effect on the harvest month to month or season to season;\nhowever, as the property is located in British Columbia, seasonality can be reasonably expected to impact logistics on occasion due to\nweather. Inflation has increased operating and production costs globally. Increased labor costs, as well electrical and material costs\nsuch as fertilizer have had an impact on net revenue.\n\n \n\n**Our First Towers Business**\n\n** **\n\n**Background**\n\n \n\nFirst Towers is a company\nincorporated in the province of British Columbia, Canada on February 24, 2017 under the name Canadian Towers and Fiber Optics Inc. On\nSeptember 3, 2024, it changed its name to First Towers & Fiber Corp. First Towers’ principal office is located at 1170-1040\nWest Georgia Street, Vancouver, British Columbia V6E 4H1, Canada.\n\n \n\n**Description of Business**\n\n \n\nFirst Towers is focused\non tower development and operating a 700+km fiber optic network in the wireless market of Mexico, with an intention to expand to other\nLatin American countries. First Towers:\n\n \n\n \n●\nowns the largest 5G dark\nfiber optic network in Central Mexico.\n\n* *\n\n43\n\n \n\n \n\n \n●\nis in possession of 20-year\nmaster lease agreements for both tower development and fiber network.\n\n \n\n \n●\nis a preferred partner\nin providing coverage to the rural regions of Mexico.\n\n \n\n \n●\nhas a veteran tower development\nteam with 20+ years of experience in telecommunications infrastructure development.\n\n \n\n \n●\nhas 24 towers deployed\nto date and an additional 6 under construction, with the opportunity to continue to develop in key Mexican markets.\n\n \n\nFirst Towers generates revenue\nfrom owning telecommunications equipment and towers and leasing the equipment and space to telecommunications companies.\n\n \n\n**Growth Strategies**\n\n \n\nFirst Towers’ development\nstrategy is focused across five states in Central Mexico which feature strong economic and demographic drivers, and where First Towers\nhas regional expertise and relationships, and an established 5G fiber network that can be leveraged for backhaul.\n\n \n\nFirst Towers seeks to increase\ninfrastructure sharing contracts in lieu of build to suit contracts to enable construction of more tower sites in rural and urban areas.\n\n \n\n**Competitive Strengths**\n\n* *\n\nThere are many telecommunication\ninfrastructure companies in the marketplace. Competitors in developing telecommunication towers include: Centennial Towers, QMC, Torrecom,\nMX Towers, MTP, and American Tower. On the fiber optic network side, competitors include: Neutral Networks, Summit1G, National Fiber\nNetworks, Fermaca Networks, and ICOM Construcciones. First Towers strategically differentiates in:\n\n* *\n\n \n●\n**Existing Infrastructure\nwith anchor telecommunication companies **- First Towers has 700+ kms of 5G dark fiber network in central Mexico with a telecommunications\ngiant serving as an anchor with a 20 year leasing contract.\n\n \n\n \n●\n**Tower Ownership **-\nFirst Towers owns the telecommunications equipment and towers and shares in revenues with telecommunication companies leasing space\non the towers, generating more revenue than traditional build to suit (“**BTS**”) contracts.\n\n \n\n \n●\n**Key Locations **-\nFirst Towers’ opportunities are located in critical areas of economic growth where there is an expected need for over 1,000\nnew towers over a three-year timeframe.\n\n \n\n \n●\n**National Need **-\nFirst Towers is strategically located in Latin America, whose countries have a national need for increased telecommunication infrastructure,\nwith Latin America’s fiber optic networks being two years behind other more developed countries. The Mexico telecom regulator\nIFT has committed to awarding 5G frequencies to develop this needed infrastructure.\n\n* *\n\n**Industry Overview and Opportunity**\n\n* *\n\n*Mexico Opportunity*\n\n* *\n\nThe telecommunication industry\nin Latin America is worth an estimated US$81 billion, with Mexico being the second largest market and, on a GDP per capita basis, Mexico\nranks 11th across the region. Mexico has 93 mobile cellular subscriptions per 100 habitants compared to just 18 fixed phone subscriptions\nper 100 habitants. Mexico is an OECD nation with an investment-grade sovereign credit rating, controlled public debt, stable inflation\nand currency offering an attractive market for investment. \n\n \n\n44\n\n \n\n \n\nFirst Towers estimates that\nseveral thousand new wireless towers need to be built in Mexico to give at least 4G LTE coverage to 96.4% of Mexico’s population.\n\n \n\nFirst Towers owns and operates\n700+kms 5G dark fiber network in central Mexico, where some of the strongest industrial and fastest growing state economies in Mexico\nare located, with multinational telecommunications giant Telefonica as anchor under a 20-year leasing contract.\n\n \n\n*Latin America Opportunity*\n\n** **\n\nThrough relationships in\nLatin America, First Towers expects to expand into other Latin American countries, as coverage in the Latin American region is also still\nlimited to certain neighborhoods of major cities.\n\n**  **\n\n \n**●**\n4G penetration is still below 70% in Latin America.\n\n** **\n\n \n**●**\nBy 2026, 5G is expected to represent less than 43%\nof mobile subscriptions in Latin America and the average traffic per smartphone is forecast to be approximately 35GB per month.\n\n \n\nAn estimated 244 million\npeople in Latin America, which is close to one third of the population, do not have access to the internet. Deployment of 5G networks\nrepresents a significant opportunity as it is projected that the digitalization of industries could develop into a market of more than\nUS$21 billion annually.\n\n** **\n\n**Regulatory Background**\n\n \n\nThe regulatory landscape\nfor 5G and 4G in Mexico and Latin America is marked by progress and challenges. Mexico has actively worked on 5G deployment, with spectrum\nauctions and planning led by the Federal Telecommunications Institute, although high costs and regulatory uncertainty hinder its adoption.\nAcross Latin America, 4G remains dominant, but insufficient spectrum allocation and economic instability slow further expansion. Telecommunication\ncompanies like América Móvil, Telefónica, and AT&T are investing heavily in infrastructure, focusing on expanding\n5G networks and upgrading 4G services. These companies are also exploring innovative solutions, such as fixed wireless access and digital\nservices, to enhance connectivity and bridge the digital divide. Streamlined regulations and increased investment remain crucial for\ntechnological growth in the region.\n\n \n\n**Market Growth**\n\n* *\n\nThe dark fiber network market\nin 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\nnetwork market is expected to increase from approximately $156 million in 2022 to $355 million by 2030. Mobile internet users in Latin\nAmerica exceeded 380 million by the end of 2021, equating to 60% of the population. As of 2023, 4G LTE connections in Latin America reached\napproximately 565 million, with a quarterly growth rate of 1.9%. While 4G adoption is peaking, it is expected to remain a key technology\nin the region until 2028, as 5G adoption gradually increases.\n\n \n\n**Market Activity Timeline**\n\n* *\n\n2017\n\n \n\nAltán Redes signs PPP with Mexican Government\nfor deployment and operation of wholesale wireless network. Installation begins.\n\n \n\n$2.3B initial capital committed to Altán\nRedes, including $800mm equity from lead investors Morgan Stanley, CDPQ and IFC.\n\n \n\n2018\n\n \n\nFirst Towers completed 700km+ fiber network and\nsigns agreement to lease fiber to leading communications provider Telefonica.\n\n \n\n45\n\n \n\n \n\nFirst Towers signs Master Agreement with Altán\nRedes to construct and own towers.\n\n \n\nAltán Redes begins service operations\nafter surpassing initial coverage commitments of 30% of population.\n\n \n\n2019\n\n \n\nFirst Towers completes development of its 700km+\nfiber network in Central Mexico.\n\n \n\nFirst Towers completes first 6 towers for Altán\nRedes.\n\n \n\n2020\n\n \n\nFirst Towers completes construction of 2 new\ntowers in Q3 2020.\n\n \n\nFirst Towers completes construction of 4 new\ntowers in Q4 2020.\n\n \n\n2021\n\n \n\nFirst Towers completes construction of 9 new\ntowers in first half of 2021.\n\n \n\nAltán Redes investors increase capital\ncommitment for ongoing network deployment.\n\n \n\nCoverage of 63% of population (70mm people) achieved.\n\n \n\n2022\n\n \n\nFirst Towers owned 24 towers at the end of 2022,\nof which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.\n\n \n\nFirst Towers owned 552.98 Kms of fiber at the\nend of 2022. The fiber was leased by Telefonica (527 Kms) and Marcatel (25.98 Kms).\n\n \n\n2023\n\n \n\nFirst Towers owned 24 towers at the end of 2023,\nof which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.\n\n \n\nFirst Towers owned 558.68 Kms of fiber at the\nend of 2023. The fiber was leased by Telefonica (527 Kms) and Marcatel (31.68 Kms).\n\n \n\n2024\n\n \n\nFirst Towers owned 24 towers at the end of 2023,\nof which 17 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.\n\n \n\nFirst Towers owned 568.68 Kms of fiber at the\nend of 2024. The fiber was leased by Telefonica (537 Kms) and Marcatel (31.68 Kms).\n\n \n\n2025\n\n \n\nFirst Towers owned 27 towers at the end of 2025,\nof which 20 were BTS towers (Build to Suit) and 7 were shared infrastructure towers.\n\n \n\nFirst Towers owns 568.68 Kms of fiber at the\nend of 2025. The fiber is leased by Telefonica (537 Kms) and Marcatel (31.68 Kms).\n\n \n\n46\n\n \n\n \n\n**Intellectual Property**\n\n \n\nFirst Towers’ intellectual\nproperty consists primarily of trade secrets. First Towers’ trade secrets consist of research and development and know-how, all\nof which it seeks to protect, in part, by confidentiality agreements. To protect First Towers’ intellectual property, First Towers\nrelies on a combination of laws and regulations, as well as contractual restrictions. First Towers does not own or have any rights to\nany patents or trademarks. First Towers also relies on the protection of laws regarding unregistered copyrights for certain content First\nTowers creates and trade secret laws to protect First Towers’ proprietary technology.\n\n \n\n**Government Regulation**\n\n \n\nFirst Towers is subject\nto local, state, federal and international laws, statutes, rules, policies, and regulations (collectively “Regulations”)\nthat relate directly or indirectly to First Towers’ operations. These include privacy and data protection regulations. First Towers’\nbusiness operations involve the permitting, contracting, construction, and development of fiber optic networks and towers that transmit\nboth public information, as well as personal or sensitive information. As a result, First Towers’ business is subject to complex\nand evolving Latin American and international laws and regulations regarding construction, environmental permitting, labor, frequency\nusage, other telecommunication-related matters. Other Regulations that First Towers is subject to, include the following: licensing,\npermitting, and zoning requirements for the operations of First Towers’ offices and other facilities; health, safety, and sanitation\nrequirements; working conditions, labor, minimum wage and hour, citizenship, immigration, visas, harassment and discrimination, and other\nlabor and employments laws and regulations; marketing activities; and environmental protection regulations. First Towers is also subject\nto common business and tax rules and regulations pertaining to the operation of its business.\n\n \n\n**Human Capital Resources**\n\n**  **\n\n**Our Commitments and Values**\n\n \n\nOur Company’s motto\nof “Grow. Move. Heal.” relays Akanda’s vision to create a climate embodying positive change in the cannabis industry.\nOur Company is committed to building a quality cultivation facility, connecting consumers in Canada with diverse products including cultivated\ncannabis products. We create an atmosphere of positive change by relying on diverse opinions and perspectives, leveraging cross-cultural competencies,\nand achieving the full potential of the business.\n\n \n\nWe intend to continue to\nfocus on developing a culture of compliance, which includes training for the Company’s employees on applicable corporate policies,\nincluding our Code of Conduct, Insider Trading and Trading Window Policy, and Corporate Governance Guidelines.\n\n \n\nAs a result of the discontinuance of our Canmart operations and our\ntransition to cultivating cannabis products at our British Columbia facilities, Akanda ceased having any full time employees and had a\ntotal of 2 part-time executives, since it had not yet begun cultivation operations at its British Columbia location. In August 2025, we\nincreased our full-time employee headcount with the assumption of six employees from First Towers. As of June 8, 2026, we had two part-time\nexecutives and six full-time employees. None of our employees are represented by labor unions or subject to collective bargaining agreements.\n\n \n\nOur human capital resource\nmanagement approach is based on the following:\n\n \n\n \n●\n*Talent Acquisition and\nDevelopment.    *We rely on talented employees and will need to more knowledgeable and passionate talent as\nour operations expand throughout our subsidiaries in both Mexico and Canada.\n\n \n\n \n●\n*Diversity and Inclusion.    *We\nare committed to creating a diverse and inclusive workplace, where all employees feel valued, respected, and supported. We are focused\non strategies for increasing diversity, promoting inclusivity, and reducing biases across the organization. Diversity and inclusion\nis a priority for our Company, and Akanda wants talented people from a variety of backgrounds both in our team and in our subsidiaries’\nteams.\n\n \n\n47\n\n \n\n \n\n \n●\n*Health and Safety.    *We\nare committed to providing a safe and healthy workplace for all employees.\n\n \n\n \n●\n*Compensation and Benefits*.    We\nstrive to provide competitive compensation and benefits that align with industry standards and reflect the value that our employees\nbring to the organization.\n\n \n\n \n●\n*Employee Engagement*.    We\nwant our employees to be satisfied and engaged in their career with Akanda, as we believe that engaged employees are more productive,\ninnovative, and committed to the Company’s success as a whole.\n\n   \n\n**C.**\n**Legal Entity Structure**\n\n \n\nThe following chart reflects\nour legal entity structure (including the jurisdiction of formation or incorporation of the various entities).\n\n \n\n \n\n** **\n\n** **\n\n[1]Structured\nentity. See Note 3 of the Audit Consolidated Financial Statements included under Item 18 of this Annual Report on Form 20-F for further\ninformation.\n\n \n\nAs of June 8, 2026, we no longer operate in Europe and, accordingly,\nour Malta and UK subsidiaries no longer have any operations or material assets.\n\n \n\n**D.**\n**Property, Plants and Equipment**\n\n \n\nOn September 19, 2023,\nAkanda entered an option to purchase agreement for Canadian farming property in British Columbia, at 1900 Ferne Road, Gabriola Island,\nBritish Columbia, including farming land and related operations and licenses, from 1107385. The agreement was amended and restated\non September 22, 2023 and provides the Company a two-year option to purchase. We plan to develop THC and CBD facilities at\nthis site. Additional payments to the seller will be made based upon milestones achieved from the development, including THC cultivation,\nsales of product, CBD cultivation, and hemp cultivation. On September 24, 2025, the agreement was amended and provides a two-year extension\nto develop THC and CBD facilities. Additional payments to the seller will be made in exchange for the extension period. To date, three\noption payments have been made, an additional milestone was achieved and paid in September 2024 with the issuance of a hemp license,\nand first extension payment paid in September 2025.\n\n \n\nFirst Towers’ corporate\nheadquarters is located at 1170-1040 West Georgia Street, Vancouver, British Columbia V6E 4H1 Canada. First Towers also owns towers and\nrights-of-way in several Mexican states."}