{"url_path":"/sec/akan/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW","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":4132,"has_tables":true,"body_markdown":"**ITEM 5. OPERATING AND FINANCIAL REVIEW\nAND PROSPECTS**\n\n \n\n**Overview**\n\n \n\nOur fiscal year begins on\nJanuary 1 and ends on December 31. Unless otherwise noted, references to year pertain to our fiscal year. For example, 2025 refers to\nfiscal 2025 which is the period from January 1, 2025 and to December 31, 2025.\n\n \n\nOur Audited Financial Statements\nfor the years ended December 31, 2025 and 2024, respectively, for Akanda Corp. as a group (the “**Akanda Group**”),\nhave been prepared in accordance with International Financial Reporting Standards (IFRS) and are presented in US dollars except where\notherwise indicated. Our historical results are not necessarily indicative of the results that should be expected in any future period.\n\n \n\nWe have derived the consolidated\nstatements of operations data for Akanda Group for the years ended December 31, 2025 and 2024, respectively, and the consolidated financial\nposition information as at December 31, 2025 and 2024, respectively, from the Akanda Group’s Audited Financial Statements included\nunder Item 18 of this Annual Report on Form 20-F.\n\n \n\nAkanda 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 focused\ninternational business assets. On November 3, 2021, Akanda acquired Cannahealth, which owned all the issued and outstanding equity interests\nof Canmart and Bophelo Holdings, which, in turn, owned all the issued and outstanding equity interests of Bophelo. As a result of the\nAcquisition, both Bophelo and Canmart became our indirect wholly-owned subsidiaries. On April 29, 2022, the Company, through its wholly\nowned subsidiary, Cannahealth acquired Holigen, which owned all the issued and outstanding equity interests of RPK. As a result of the\nacquisition, RPK became our indirect wholly-owned subsidiary. We have consolidated all our then-subsidiary companies, Cannahealth in\nMalta, 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,\nin the Akanda Group Audited Financial Statements and financial information presented on December 31, 2025.\n\n \n\nAs a result of Bophelo’s\nliquidation, during the year ended December 31, 2022, Bophelo ceased operations and we derecognized its assets and have since determined\nthat it is no longer a significant subsidiary. We will continue to report about Bophelo, until such time as our inquiry into the liquidation\nconfirms that the process is complete. In March 2024, we sold RPK.\n\n \n\nOn August 19, 2025, Akanda\nacquired First Towers in exchange for newly authorized Class A Special Shares and Class B Special Shares and cash payable over time as\nevidenced by a promissory note, and the restructuring and assumption of certain indebtedness of First Towers.\n\n \n\nOn August 26, 2025, January\n12, 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\nReverse Stock Split on its common shares, respectively. No fractional shares were issued in connection with the Reverse Stock Split. Any\nfractional shares resulting from the Reverse Stock Split were rounded to the nearest whole number. All share and per share data in this\nmanagement’s discussion and analysis and the Audited Consolidated Financial Statements for the years ended December 31, 2025 and\n2024 have been retroactively restated to reflect the effect of the Reverse Stock Split.\n\n \n\nAs a result of Canmart’s\nliquidation, during the year ended December 31, 2025, Canmart ceased operations and we derecognized all its assets and liabilities\nand have since determined that it is no longer a significant subsidiary.\n\n \n\n**A.**\n**Operating Results**\n\n \n\n**Results of Operations**\n\n** **\n\nThe discussion below summarizes\nAkanda Group’s consolidated historical operation results.\n\n \n\nDuring the year ended December\n31, 2025, Akanda Group evaluated the current state of Canmart and determined to discontinue and cease its UK operation. As a result,\nAkanda Group accounted for the operating results of Canmart, which was a net loss of $26,013, as a discontinued operation during the\nyear ended December 31, 2025 and has reclassified the operating results of Canmart as a discontinued operation for the year ended December\n31, 2024.\n\n \n\n49\n\n \n\n \n\n*Year Ended December 31, 2025 Compared to the\nYear Ended December 31, 2024.*\n\n \n\nThe following table sets\nforth key components of Akanda Group’s results of operations for the year ended December 31, 2025 compared to the year ended December\n31, 2024.\n\n \n\n  \nYears ended \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nSales \n$258,075  \n$— \n\nCost of sales \n 414,098  \n — \n\nGross Profit (Loss) \n (156,023) \n — \n\n  \n    \n   \n\nOperating expenses \n    \n   \n\nDepreciation and amortization \n 433,693  \n 137,271 \n\nConsulting and professional fees \n 1,463,786  \n 2,377,926 \n\nPersonnel expenses \n 624,710  \n 495,699 \n\nGeneral and administrative expenses \n 2,305,195  \n 1,019,287 \n\nTotal operating expenses \n 4,827,384  \n 4,030,183 \n\n  \n    \n   \n\nOperating loss \n (4,983,407) \n (4,030,183)\n\n  \n    \n   \n\nOther (expense) income: \n    \n   \n\nFinance income \n —  \n 2,953 \n\nFinance expense \n (925,092) \n (81,083)\n\nForeign exchange gain (loss), net \n 273,606  \n (132,842)\n\nTransaction costs\n \n \n(350,000\n)\n \n \n—\n \n \n\nChange in fair value of financial liabilities measured at FVTPL\n \n \n1,750,820\n \n \n \n—\n \n \n\nGain (loss) on debt settlement \n 1,914,956  \n (219,719)\n\nOther income \n —  \n 74,455 \n\nGain on sale of subsidiary \n —  \n 198,780 \n\nWrite-off of AP, net \n —  \n 475,816 \n\nWrite-off of holdback payable \n —  \n 400,000 \n\nWrite-off of loan receivable \n (235,686) \n — \n\nImpairment loss \n (44,812,112) \n — \n\n  \n (42,383,508) \n 718,360 \n\n  \n    \n   \n\nNet loss from continuing operations \n (47,366,915) \n (3,311,823)\n\n  \n    \n   \n\nGain (loss) from discontinued operations \n 507,604  \n (784,206)\n\n  \n    \n   \n\nNet loss \n$(46,859,311) \n$(4,096,029)\n\nTranslation adjustment \n (175,651) \n (101,188)\n\nComprehensive loss \n$(47,034,962) \n$(4,197,217)\n\n  \n    \n   \n\nNet loss attributable to: \n    \n   \n\nShareholders of the Company \n$(45,653,948) \n$(4,096,029)\n\nNon-controlling interest \n (1,205,363) \n — \n\n  \n$(46,859,311) \n$(4,096,029)\n\nNet comprehensive loss attributable to: \n    \n   \n\nShareholders of the Company \n$(46,242,254) \n$(4,197,217)\n\nNon-controlling interest \n (792,708) \n — \n\n  \n$(47,034,962) \n$(4,197,217)\n\n  \n    \n   \n\nLoss per share from continuing operations – basic and diluted \n$(669.58) \n$(223.48)\n\nLoss per share – basic and diluted \n$(662.22) \n$(276.40)\n\nWeighted average common shares outstanding \n 68,941  \n 14,819 \n\n \n\n50\n\n \n\n \n\n*Revenue*\n\n \n\nThe revenue of $258,075\nfor the year ended December 31, 2025 as compared to $nil for 2024 came from the Company’s First Towers’s operations in Mexico.\nThe revenue increase in 2025 was mainly the result of the acquisition of First Towers during the year. First Towers generate revenue\nfrom leasing its fiber optic networks and telecommunication towers.\n\n   \n\n*Cost of Sales*\n\n \n\nCost of sales increased\nfrom $nil in 2024 to $414,098 in 2025. The increase is directly related to the increase in sales activities and costs on maintenance\nand services on telecom towers during the current year since the acquisition of First Towers, as compared to no sales in the prior year\nwhen we did not own First Towers.\n\n* *\n\n*Amortization and Depreciation*\n\n \n\nAmortization and depreciation\nexpenses increased from $137,271 for 2024 to $433,693 for the year ended December 31, 2025. The increase in the amortization and\ndepreciation expenses recorded during the year ended December 31, 2025 was mainly attributable to the depreciation of First Tower assets\nheld in Mexico and leased assets in the current year as compared in the prior year.\n\n* *\n\n*Consulting and Professional Fees*\n\n \n\nThe consulting and professional\nfees incurred decreased from $2,377,926 in 2024 to $1,463,786 for the year ended December 31, 2025. This decrease in consulting\nand professional fees resulted from lower fees incurred during the current year as compared to the prior year. Consulting and professional\nfees incurred were mainly related to the engagement of various professional advisors and consultants in relation to Akanda’s completion\nof the First Towers acquisition and related financings.\n\n* *\n\n*Personnel Expenses*\n\n \n\nThe Akanda Group incurred\npersonnel expenses of $624,710 for the year ended December 31, 2025 compared to $495,699 for 2024. The increase in personnel expenses\nwas due to the change in management and increase in key personnel as a result of the acquisition of First Towers during the current year.\n\n* *\n\n*General and Administration Expenses*\n\n \n\nThe Akanda Group incurred\ngeneral and administration expenses of $2,305,195 and $1,019,287 for the years ended December 31, 2025 and 2024, respectively. These\ncosts consisted mainly of IR related expenses and a broad range of site related operational expenses such as utilities, fuel costs, import\nduties, security expenses, repairs and maintenance and consumables and office related operational expenses for its day to day business\nactivities. The increased in costs was also the result of the acquisition of First Towers during the current year.\n\n \n\n*Interest Expense*\n\n \n\nThe Company incurred interest expenses of $925,092 for the year ended\nDecember 31, 2025 compared to interest expense of $81,083 for 2024. The increase in expenses during the year ended December 31, 2025\nwas mainly due to a large amount of interest accrued from secured promissory notes and loans assumed by the Company as a result of the\nacquisition of First Towers during the current year as compared to the prior year.\n\n* *\n\n*Interest income*\n\n \n\nInterest income for the\nyear ended December 31, 2025 was $nil compared to $2,953 for 2024. The decrease was mainly due to the elimination of the interest receivable\nfor a bridge loan the Company made to First Towers in 2024 as a result of its acquisition during the current year and derecognition of\nCanmart’s interest receivable for a bridge loan to Cellen Life Sciences Limited and Cellen Biotech Limited pursuant to the Company ceasing\nits UK operation.\n\n* *\n\n51\n\n \n\n \n\n*Foreign Currency Translation*\n\n \n\nThe foreign exchange gain\n(loss) is recognized on the translation of the consolidated financial statements from their functional currencies to United States Dollar.\nThe Euro is the functional currency for our former Cannahealth, Holigen and RPK businesses, Great British Pounds is the functional currency\nfor our former Canmart business, Mexican Peso is the functional currency of our CT Mexico and CT&FO Mexico subsidiaries, and Canadian\ndollars is the functional currency of Akanda, 1371011 B.C. Ltd. and First Towers while the United States Dollar is its reporting currency.\nThe exchange gains and losses have not been incurred on any transactions or balances held by these companies in a different currency.\n\n* *\n\n*Net Loss and Total Comprehensive Loss*\n\n \n\nFor the years ended December 31, 2025 and 2024, the group incurred\na 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\nprimarily of depreciation and amortization of $433,693 and $137,271, respectively, consulting and professional fee expenses of $1,463,786\nand $2,377,926, respectively, personnel expenses of $624,710 and $495,699, respectively, general and administrative expenses of $2,305,195\nand $1,019,287, respectively, and gain (loss) from discontinued operation gain of $507,604 and loss of $784,206, respectively. The significant\nincrease in losses for the year ended December 31, 2025 was mainly due to impairment loss of $44,812,112 recognized during the current\nyear as compared to no impairment incurred in the prior year.\n\n** **\n\n**Off-Balance Sheet Arrangements**\n\n \n\nAkanda did not have, during\nthe reporting period, and we do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current\nor future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,\ncapital expenditure or capital resources that is material to investors.\n\n \n\n**B.**\n**Liquidity and Capital Resources**\n\n \n\n**Cash Flows**\n\n \n\nThe Akanda Group’s\nprincipal liquidity requirements are for corporate operating expenses, working capital and capital expenditures. Historically, we have\nfunded our liquidity requirements primarily through shareholder loans, loans from third parties and from the issuance of shares. We did\nnot have, during the reporting period, and we do not currently have any contractual obligations for ongoing capital expenditures.\n\n \n\nThe following table summarizes\nour cash flows from operating, investing and financing activities for the years ended December 31, 2025 and 2024:\n\n \n\n \n \n**Year Ended December 31, 2025**\n \n\n \n \n**2025**\n \n \n**Change**\n \n \n**2024**\n \n\nCash used in operating activities\n \n$\n(6,729,048\n)\n \n$\n(2,748,683\n)\n \n$\n(3,980,365\n)\n\nCash used in investing activities\n \n$\n(7,451,887\n)\n \n$\n(6,435,722\n)\n \n$\n(1,016,165\n)\n\nCash provided by financing activities\n \n$\n11,678,315\n \n \n$\n2,688,881\n \n \n$\n8,989,434\n \n\n \n\n**Cash Flows from Operating Activities**\n\n \n\nFor the year ended December 31, 2025, Akanda Group’s cash flow\nfrom operating activities decreased by $2,748,683 due to higher corporate expenses incurred as a result of corporate activities such as\nthe acquisition of First Towers, gain on debt settlement, change in fair value of financial assets at FVTPL, and impairment loss recognized\nduring the current year as well as changes in working capital relating to decrease in accounts receivable, increase in prepayments, decrease\nin trade and other payables and increase in due to related parties.\n\n \n\n52\n\n \n\n \n\n**Cash Flows from Investing Activities**\n\n \n\nCash used in investing activities\nwas $7,451,887 for the year ended December 31, 2025, which were mainly attributable to cash paid as part of consideration for the acquisition\nof First Towers, additional purchases or costs for fiber optic projects, telecommunication towers and computer equipment and additional\ncost for farmland. The cash used in investing activities during the year ended December 31, 2024 were attributable to acquisition costs\nof farmland and additional purchases of computer equipment, furniture and fixtures and leasehold improvements, cash surrendered upon disposal\nof RPK, cash lent out for a bridge loan entered in the current year and loan receivable, partially offset by cash proceeds from the sale\nof RPK.\n\n* *\n\n**Cash Flows from Financing Activities**\n\n* *\n\nCash provided by financing activities was $11,678,315 for the year\nended December 31, 2025, which was mainly attributable to the proceeds from private placement offering and notes financing, as discussed\nbelow, and partially offset by repayment of loans, lease payments and advances to related parties. Cash provided by financing activities\nduring the year ended December 31, 2024 was mainly attributable to the proceeds from public offerings and short term loans and partially\noffset by repayment of loans and lease payments.\n\n \n\n*Share Capital and Financings*\n\n \n\nDuring the year ended December\n31, 2025, Akanda Group completed the following financings:\n\n \n\n \n(i)\nOn March 26, 2025, pursuant\nto a series of subscription agreement entered with investors on March 21 and 24, 2025, Akanda Group completed its private offering\nwith the issuance of 3,250 common shares at a subscription price of $98.44 per share for gross proceeds of $320,000.\n\n \n\n \n(ii)\nOn September 12, 2025,\nthe Company closed the Securities Purchase Agreement entered on September 11, 2025 with certain institutional investors to issue\nand sell to each of the September Investors a convertible promissory note for gross proceeds of $12,000,000.\n\n \n\n \n \nThe Company issued 408,427\ncommon shares pursuant to the conversion of an aggregate principal amount of $10,737,400, under the terms of the convertible promissory\nnote.\n\n* *\n\nDuring the year ended December\n31, 2024, Akanda Group completed the following financings:\n\n \n\n \n(i)\nOn February 2, 2024, pursuant\nto the securities purchase agreement entered with Corbo Capital Inc. on February 1, 2024, the Company announced closing of registered\ndirect offering with the issuance of 49 common shares at a purchase price of $2,283.75 per share and prefunded warrants to purchase\n260 common shares at a price of $2,283.19 per share for gross proceeds of $708,000. The prefunded warrants were immediately exercisable\nfor $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain\nbeneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance\nwith their terms.\n\n \n\n \n(ii)\nOn March 4, 2024, pursuant\nto the securities purchase agreement entered with Corbo Capital Inc. on March 1, 2024, the Company announced closing of registered\ndirect offering with the issuance of 65 common shares at a purchase price of $1,155.60 per share and prefunded warrants to purchase\n64 common shares at a price of $1,155.04 per share for gross proceeds of $150,000. The prefunded warrants were immediately exercisable\nfor $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain\nbeneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance\nwith their terms.\n\n \n\n \n(iii)\nOn March 5, 2024, pursuant\nto the securities purchase agreement entered with Corbo Capital Inc. on March 4, 2024, the Company announced closing of registered\ndirect offering with the issuance of 65 common shares at a purchase price of $949.05 per share and prefunded warrants to purchase\n66 common shares at a price of $948.49 per share for gross proceeds of $125,000. The prefunded warrants were immediately exercisable\nfor $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain\nbeneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance\nwith their terms.\n\n \n\n53\n\n \n\n \n\n \n(iv)\nOn March 27, 2024, pursuant\nto an underwriting agreement entered with Univest Securities, LLC (“**Univest**”) as the underwriter on March 25,\n2024, the Company announced closing of underwritten public offering with the issuance of 548 common shares at a purchase price of\n$684.56 per share and prefunded warrants to purchase 8,866 common shares at a price of $684.00 per share for gross proceeds of $5,000,000.\nThe prefunded warrants are immediately exercisable for $0.56 per share and may be exercised at any time until all of the prefunded\nwarrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the prefunded warrant. All of\nthe pre-funded warrants have been exercised in accordance with their terms.\n\n \n\n \n(v)\nOn May 17, 2024, pursuant\nto the securities purchase agreement entered with DRNK Beverage Corp. on the same day, the Company announced the 1st closing\nof registered direct offering with the issuance of 442 common shares at a purchase price of $579.94 per share and prefunded warrants\nto purchase 3,867 common shares at a price of $579.38 per share for gross proceeds of $2,500,000. The prefunded warrants are immediately\nexercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject\nto certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised\nin accordance with their terms.\n\n \n\n \n(vi)\nOn May 20, 2024, pursuant\nto the securities purchase agreement entered with DRNK Beverage Corp. on May 17, 2024, the Company announced the 2nd closing\nof registered direct offering with the issuance of 442 common shares at a purchase price of $579.94 per share, and prefunded warrants\nto purchase 2,143 common shares at a price of $579.38 per share for gross proceeds of $1,500,000. The prefunded warrants are immediately\nexercisable for $0.56 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject\nto certain beneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised\nin accordance with their terms.\n\n \n\n \n(vii)\nOn October 3, 2024, pursuant\nto an underwriting agreement entered with Univest as the underwriter on October 2, 2024, the Company announced closing of underwritten\npublic offering with the issuance of 1,841 common shares at a purchase price of $140.625 per share, and prefunded warrants to purchase\n8,825 common shares at a price of $140.611 per share for gross proceeds of $1,500,000. The prefunded warrants are immediately exercisable\nfor $0.014 per share and may be exercised at any time until all of the prefunded warrants are exercised in full, subject to certain\nbeneficial ownership limitations as set forth in the prefunded warrant. All of the pre-funded warrants have been exercised in accordance\nwith their terms.\n\n* *\n\n*Short Term Loan*\n\n* *\n\nDuring the year ended December\n31, 2024, Akanda Group received additional loans of $110,236 for its capital as well as working capital needs, of which $44,954 was advances\nfrom related parties. No new short term loans were received during the year ended December 31, 2025 or in 2026 through the date of this\nAnnual Report on Form 20-F.\n\n \n\n**Disclosure of Contractual Arrangements**\n\n \n\nOn December 31, 2025,\nAkanda Group was committed to minimum lease payments as follows:\n\n \n\n  \nLess than  \n1 – 5  \nOver \n\nContractual Obligation \nOne Year  \nYears  \n5 Years \n\nOffice lease \n$144,000  \n$—  \n$— \n\nTower leases \n 69,739  \n 239,495  \n 33,944 \n\n  \n$213,739  \n$239,495  \n$33,944 \n\n \n\nThe amounts above are undiscounted\nand include the total amounts due, including the interest component, that has been reclassified to accounts payable.\n\n \n\nOn December 31, 2024,\nAkanda Group was committed to minimum lease payments as follows:\n\n \n\n \n \n**Less than**\n \n \n**1 – 5**\n \n \n**Over**\n \n\n**Contractual\nObligation**\n \n**One\nYear**\n \n \n**Years**\n \n \n**5\nYears**\n \n\nOffice lease\n \n$\n40,000\n \n \n$\n     —\n \n \n$\n    —\n \n\n \n\nThe amounts above are undiscounted\nand include the total amounts due, including the interest component, that has been reclassified to accounts payable.\n\n \n\n54\n\n \n\n \n\nSubsequent to the year ended December\n31, 2025, the Company:\n\n \n\ni.\n*Implemented a Reverse\nStock Split:*\n\n* *\n\n \na.\nOn January 12, 2026, the\nCompany implemented a 1-for-5 Reverse Stock Split on its ordinary shares. No fractional shares were issued in connection with the\nReverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole number.\nAll share and per share data in these consolidated financial statements have been retroactively restated to reflect the effect of\nthe reverse stock split.\n\n \n\n \nb.\nOn April 13, 2026, the\nCompany implemented a 1-for-4.5 Reverse Stock Split on its ordinary shares. No fractional shares were issued in connection with the\nReverse Stock Split. Any fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole number.\nAll share and per share data in these consolidated financial statements have been retroactively restated to reflect the effect of\nthe reverse stock split.\n\n \n\nii.\n*Issued the following\nshares:*\n\n* *\n\n \na.\nOn January 14, 2026, pursuant\nto the conversion of September Note, the Company issued 26,217 common shares at conversion price of $15.26 for an aggregate principal\namount of $399,957.\n\n \n\n \nb.\nOn January 16, 2026, pursuant\nto the conversion of September Note, the Company issued 26,217 common shares at conversion price of $15.26 for an aggregate principal\namount of $399,957.\n\n \n\n \nc.\nOn January 22, 2026, pursuant\nto the final conversion of September Note, the Company issued 41,208 common shares at conversion price of $15.26 for an aggregate\nprincipal amount of $628,642.\n\n \n\niii.\n*Closed a $7,000,000\nConvertible Note Offering:*\n\n \n\nOn January 21, 2026, the\nCompany entered into a Securities Purchase Agreement dated January 20, 2026 (the “January Purchase Agreement”) with certain\ninstitutional investors (the “January Investors”) to issue and sell to each of the January Investors a convertible promissory\nnote (each, individually, a “January Note” and collectively, the “January Notes”), for aggregate gross proceeds\nto the Company of $7.0 million (the “Purchase Price”), before deducting fees to the Placement Agent (as defined below) and\nother expenses payable by the Company in connection with the offering (the “January Offering”). The closing of the January\nOffering occurred on January 21, 2026.\n\n \n\nThe Company used the net\nproceeds from the sale of the January Notes for (i) marketing purposes of approximately $2.3 million, (ii) working capital and general\ncorporate purposes of approximately $2.6 million and (iii) the repayment of certain indebtedness of up to $2.1 million.\n\n \n\nThe maturity date of each\nJanuary Note is the 12-month anniversary of the issuance date of such January Note, and is the date upon which the principal amount,\nas well as any other fees, shall be due and payable. The January Notes bear interest at a rate of 10% per annum.\n\n \n\nEach January Investor has\nthe right, at any time, to convert all or any portion of the then outstanding and unpaid principal amount and interest if any (including\nany costs, fees, and charges) into the Company’s Common Shares, at a conversion price (the “Conversion Price”) equal\nto the lower of (i) $5.715 per share (the “Initial Conversion Price”), (ii) 85% of the VWAP (as defined in the January Notes)\nof the Common Shares during the five consecutive Trading Day (as defined in the January Notes) period ending and including the Trading\nDay immediately preceding the delivery of the Conversion Notice (as defined in the January Notes); or (iii) 85% of the Closing Sale Price\n(as defined in the January Notes) on the Trading Day prior to the Conversion Notice being submitted; provided, however, that in no event\nshall 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,\nnone of the January Note has been converted and it continues to accrue interest on the total principal amount.\n\n \n\n55\n\n \n\n \n\nIn addition, the Company\npaid the placement agent $70,000 in cash fees in relation to the January Offering at the closing.\n\n ** **\n\n**C.**\n**Research and Development, Patents\nand Licenses**\n\n \n\nNot applicable.\n\n \n\n**D.**\n**Trend Information**\n\n \n\nBecause we ceased our European\noperations and should still be considered in the startup phase, we are unable to identify any recent trends in revenue or expenses. Thus,\nwe are unable to identify any known trends, uncertainties, demands, commitments or events involving our business that are reasonably\nlikely to have a material effect on our revenues, income from operations, profitability, liquidity or capital resources, or that would\ncause the reported financial information in this Annual Report on Form 20-F to not be indicative of future operating results or financial\ncondition.\n\n \n\n**E.**\n**Material Accounting Policies\nand Estimates**\n\n \n\nPlease refer to Note 3 of\nAkanda Group’s audited consolidated financial statements included in Item 18 of this Annual Report on Form 20-F."}