20-F: Akanda Corp. Reports 2025 Financials Amidst Strategic Shifts

Akanda Corp. filed its annual report on Form 20-F for the fiscal year ended December 31, 2025, detailing significant operational changes, including the acquisition of First Towers and a substantial net loss.

Summary

• Akanda Corp. has filed its annual report on Form 20-F for the fiscal year ended December 31, 2025.
• The company reported a net loss of $46,859,311 for the year, a significant increase from the $4,096,029 net loss in 2024.
• Revenue for 2025 was $258,075, primarily generated from the newly acquired First Towers operations in Mexico, compared to no revenue in 2024.
• Operating expenses increased to $4,827,384 in 2025 from $4,030,183 in 2024, largely due to the First Towers acquisition and associated costs.
• A significant impairment loss of $44,812,112 was recognized in 2025, contributing heavily to the overall net loss.
• The company completed the acquisition of First Towers & Fiber Corp. (First Towers) in August 2025, which operates a fiber optic network and tower infrastructure in Mexico.
• Akanda Corp. also discontinued its UK operations through Canmart Ltd. and is in the process of developing its cannabis cultivation facility in British Columbia, Canada.
• The company's cash used in operating activities was $6,729,048 in 2025, and cash used in investing activities was $7,451,887.
• Financing activities provided $11,678,315 in cash in 2025, primarily from private placements and notes financing.
• The company has implemented multiple reverse stock splits, including a 1-for-3.125 split in August 2025, a 1-for-5 split in January 2026, and a 1-for-4.5 split in April 2026.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the substantial net loss, significant impairment charges, and going concern uncertainties, despite the strategic acquisition of First Towers.

Positives

• Generated $258,075 in revenue from the acquisition of First Towers, marking the first reported revenue for the company.
• Secured $11.68 million in financing through private placements and convertible notes in 2025 to support operations.
• The acquisition of First Towers diversifies the company's business into telecommunications infrastructure.
• Health Canada approved a hemp license for Akanda's subsidiary in September 2024, triggering a milestone payment and advancing its Canadian cannabis operations.

Negatives

• Reported a substantial net loss of $46,859,311 for the fiscal year ended December 31, 2025.
• Incurred a significant impairment loss of $44,812,112 in 2025, primarily related to goodwill from the First Towers acquisition.
• Operating expenses increased significantly due to the First Towers acquisition and related costs.
• The company has a material weakness in internal control over financial reporting due to inadequate staffing and segregation of duties.
• The company received a notification of non-compliance from Nasdaq for failure to file its annual report by the due date, though it expects to regain compliance upon filing.
• The company's financial situation raises substantial doubt about its ability to continue as a going concern.
• The company has no research and development policies and has not generated net income to date.
• The company's former CFO filed a complaint for unpaid salary and invoices, which the company disputes.

Risks

• The market price of common shares is expected to continue to fluctuate significantly.
• Failure to attract, motivate, and retain key employees from First Towers could diminish anticipated benefits.
• The First Towers Transaction has caused and may continue to cause business disruptions.
• Akanda's cannabis business may become secondary to First Towers' existing business.
• Akanda's debt post-transaction may limit its financial flexibility.
• Dilution of existing shareholders' equity due to future issuance of common shares.
• Akanda is an early-stage cannabis company with limited operating history and operations may never become profitable.
• The company requires additional funding to develop its British Columbia facility and there is no assurance it will be available.
• Demand for cannabis products could be adversely affected by scientific research, regulatory proceedings, or media attention.
• The company is subject to product liability claims and product recalls.
• The company may not be able to maintain effective quality control systems.
• The cannabis and cannabinoid industries face strong opposition.
• The company is subject to risks inherent in an agricultural business, including crop disease and volatile weather.
• The company's business will be reliant upon third-party suppliers, service providers, and distributors.
• The company may be unable to sustain its planned pricing models.
• The company may be unable to effectively manage future growth.
• The company is subject to significant competition by new and existing competitors in the cannabis industry.
• The company could be subject to a security breach that could result in significant damage or theft.
• The company is subject to economic, political, regulatory, and other risks associated with international operations.
• Political, social, and geopolitical conditions can adversely affect existing and planned business.
• Tax regulations and challenges by tax authorities could have a material adverse effect.
• The company faces the risk of disruption from labor disputes and changes to labor laws.
• The cannabis regulatory regime in Canada is relatively new and laws could rapidly change.
• There are risks associated with the regulatory regime and permitting requirements of operations.
• The company will incur ongoing costs and obligations related to regulatory compliance.
• U.S. federal law has changed, but marijuana remains a controlled substance, creating legal complexities.
• The company's financial situation creates doubt as to whether it will continue as a going concern.
• The company is subject to significant accounts payable and other current liabilities.
• Changes in accounting standards and subjective assumptions could significantly affect financial results.
• The company's indirect wholly-owned subsidiary, Bophelo, is currently in insolvency proceedings.
• There are tax risks the company may be subject to in carrying out business in multiple jurisdictions.
• The company faces the risk of being a passive foreign investment company (PFIC) for U.S. federal income tax purposes.
• Failure to develop internal controls over financial reporting as the company grows could have an adverse effect.
• The company will need to raise additional funding, which may not be available on acceptable terms.
• Future sales and issuances of capital stock could result in additional dilution.
• The company has effected numerous reverse stock splits and may effect additional ones, which could decrease liquidity.
• The company incurs increased costs as a result of operating as a public company.
• The company may not be able to maintain a listing of its Common Shares on Nasdaq.
• The company is a foreign private issuer and takes advantage of less frequent and detailed reporting obligations.
• The company may lose its status as a foreign private issuer, resulting in increased regulatory compliance costs.
• If the share price fluctuates, investors could lose a significant part of their investment.
• Investors may be unable to enforce judgments against certain directors and officers as they reside outside the U.S.
• The company does not intend to pay dividends in the near future.
• If securities or industry analysts do not publish research or publish inaccurate research, the share price could decline.
• First Towers has a limited operating history and operates in an innovative sector with long-term commitments.
• First Towers insurance may not adequately cover its operating risk.
• First Towers growth and financial health are subject to substantial uncertainty due to extreme market volatility.
• The current and future state of the domestic and global economy, including increased costs and inflation, may adversely affect operations.
• A significant failure or deterioration in the First Towers dark fiber optic network could have a material adverse effect.
• First Towers may experience breaches of security at its facilities or on its networks.
• First Towers networks and services may be affected from time to time by design and manufacturing defects.
• First Towers will need to raise substantial additional funds in the future.
• First Towers may be subject to risks associated with climate change.
• First Towers and its third-party suppliers must comply with environmental, health and safety laws.
• First Towers networks and services may be subject to regulation or local municipal approvals.
• Infrastructure development and maintenance is a long, expensive, and uncertain process.
• Rapid technological changes may adversely affect the market acceptance of First Towers networks and services.
• First Towers may face competition from other telecommunications companies with substantially greater resources.
• If First Towers services do not experience significant growth, it may not be able to achieve its anticipated level of growth.
• If First Towers long-term contracts are not maintained, it may not earn enough revenue to become profitable.
• First Towers may pursue strategic transactions in the future, which could be difficult to implement.
• First Towers is subject to Canadian Privacy and Data Security Laws.
• First Towers may be subject to liability arising from any fraudulent or illegal activity by its employees, contractors and consultants.
• First Towers dependence on suppliers and service partners may result in shortages of key components.
• If First Towers or its third-party service providers experience a security breach, its reputation may be harmed.
• First Towers telecommunication infrastructure may be at risk of unexpected technical failure due to unavailability of third-party services.

Future Outlook

The company's future outlook is heavily dependent on its ability to successfully integrate the First Towers acquisition, develop its cannabis cultivation facility in British Columbia, and secure additional financing. The company's ability to generate revenue and manage its expenses will be critical for its going concern status.

Management Comments

• The company's operations are subject to evolving regulation by governmental authorities, and new risks may emerge that management may not be able to predict.
• Management expects that the legislative and regulatory environment in the cannabis industry will continue to be dynamic and will require innovative solutions to try to comply with this changing legal landscape.
• Management believes that cybersecurity represents an important component of the company's overall approach to risk management and oversight, especially as the company moves towards commercialization.

Industry Context

StockSavvy.ai notes that Akanda Corp.'s filing reflects the challenging environment for early-stage companies in the cannabis sector, compounded by the complexities of international operations and the telecommunications infrastructure market. The significant net loss and impairment charges highlight the high-risk, capital-intensive nature of these industries. The company's diversification into telecommunications via the First Towers acquisition is a strategic move to mitigate cannabis-specific risks, but introduces new market dynamics and competitive pressures.

Comparison to Industry Standards

• The company's net loss of $46.86 million for 2025 is significantly higher than the average net loss for similarly sized telecommunications infrastructure companies, which typically aim for profitability within a few years of operation.
• The goodwill impairment of $39.57 million is a substantial write-down, indicating that the acquired First Towers business did not meet the expected future cash flow projections, a common risk in high-growth but volatile sectors like telecom infrastructure.
• The company's revenue of $258,075 from First Towers is minimal compared to established telecommunications infrastructure players like American Tower, which generates billions in annual revenue, indicating Akanda's nascent stage in this market.
• The company's reliance on multiple financing rounds, including convertible notes, is typical for early-stage companies but contrasts with more mature companies that can fund operations through operating cash flow.

Corporate Governance

Legal Proceedings

• Shailesh Bhushan, former CFO, filed a complaint with the Employment Standards Branch of British Columbia claiming unpaid salary and invoices totaling CAD $271,990.
• Mr. Bhushan also filed a Notice of Civil Claim in the Supreme Court of British Columbia alleging constructive dismissal and seeking damages.
• Dentons UK and Middle East LLP filed a debt claim against Canmart for legal services, which Canmart denies and has counterclaimed.
• Trevor Scott, former CFO, issued a claim for amounts owing under his employment agreement totaling 420,659.95, which the company denies.
• Tejinder Virk, former CEO, issued a claim for detriment and dismissal for alleged protected disclosures totaling 1,630,302.22 net, which the company denies.
• Vidya Iyer, former SVP of Finance, issued a claim for amounts owing under her employment agreement totaling 151,774, which the company denies.
• Dallas Dunkley filed a claim against the Company for wrongful dismissal totaling $200,000.
• The Company received subpoenas from the SEC, Division of Enforcement, in an investigation entitled, 'In the Matter of Halo Collective'.

Related Party Transactions

• Chris Cooper, a director, was involved in the First Towers transaction and received consideration as a shareholder of First Towers.
• The Company entered into a Bridge Loan Agreement with First Towers, a company controlled by director Christopher Cooper.
• Balances payable to key management personnel include amounts owing to current and former directors and officers.
• Loans and advances were made to and from Halo, a company controlled by Interim CEO Katharyn Field.
• Loans were outstanding to 1248787 B.C. Ltd., a company controlled by director Jatinder Dhaliwal.

Stakeholder Impact

• Shareholders may experience dilution due to future share issuances and potential declines in share price.
• Investors face risks related to the company's going concern status and potential delisting from Nasdaq.
• Employees of First Towers are now part of Akanda Corp.'s workforce.
• Creditors and suppliers may face risks due to the company's financial condition and potential inability to meet obligations.

Next Steps

• Develop THC and CBD facilities at the British Columbia property.
• Continue to comply with Nasdaq listing requirements.
• Manage ongoing litigation and regulatory investigations.
• Seek additional financing as needed to support operations and development.

Key Dates

Recommendation

The company's significant net loss, substantial impairment charges, ongoing legal proceedings, and going concern uncertainties, coupled with the risk of Nasdaq delisting, present a highly unfavorable investment profile. While the acquisition of First Towers offers diversification, the immediate financial performance and operational challenges outweigh the potential benefits at this stage.

Keywords

Akanda Corp., Form 20-F, Annual Report, First Towers, Telecommunications Infrastructure, Fiber Optic Network, Mexico, Cannabis, Hemp, Financial Results, Net Loss, Impairment Loss, Goodwill Impairment, Financing, Convertible Notes, Reverse Stock Split, Nasdaq, Going Concern