Executive Summary / Key Takeaways

• Akanda Corp. is undergoing a significant strategic transformation, pivoting from a struggling international medical cannabis business to a diversified entity with a substantial new focus on telecommunications infrastructure in Mexico, alongside a nascent Canadian cannabis cultivation venture.
• The recent acquisition of First Towers Fiber Corp., a Mexican telecom infrastructure owner with a 700km 5G dark fiber network and 20-year master lease agreements, represents the core of Akanda's new growth strategy, aiming to capitalize on Mexico's substantial demand for digital connectivity.
• Financially, Akanda remains an early-stage company with a history of operating losses, reporting a net loss of $4.10 million in 2024, though this was a significant improvement from the $32.28 million loss in 2023 due to reduced impairment charges.
• A recent $12.0 million convertible note offering in September 2025 provides crucial capital for marketing, development of its British Columbia cannabis site, working capital, and debt reduction, including a $6.5 million prepayment on the First Towers acquisition note.
• The investment thesis hinges on Akanda's ability to successfully integrate and scale the First Towers business, leverage its technological differentiators in the Mexican market, and bring its Canadian cannabis cultivation online, while effectively managing significant liquidity risks and intense competition in both sectors.

Akanda's Strategic Pivot: From Cannabis to Connectivity

Akanda Corp. (NASDAQ:AKAN) is in the midst of a profound strategic reorientation, shedding its legacy as a pure-play international medical cannabis company to embrace a dual-sector future anchored by telecommunications infrastructure. Established in July 2021 as a reorganization of Halo Collective Inc. (HALO)'s international cannabis assets, Akanda initially focused on medical cannabis cultivation and distribution across the UK, Portugal, and Lesotho. However, this path was fraught with operational challenges and significant losses, including the liquidation of its Lesotho subsidiary, Bophelo, in July 2022, and the divestiture of its Portuguese cultivation arm, RPK Biopharma, in April 2024. Further streamlining its cannabis footprint, Akanda ceased its UK distribution operations through Canmart Ltd. in March 2025. This history of divestitures and operational shifts underscores the company's strategic imperative to seek more stable and scalable growth avenues.

The pivotal moment in Akanda's transformation arrived on August 21, 2025, with the acquisition of First Towers Fiber Corp. This move signals a decisive shift towards diversifying Akanda's business model, aiming to reduce its reliance on the volatile and highly regulated cannabis market. This strategic pivot is critical for Akanda, as it embarks on a new chapter with a significantly altered risk-reward profile.

The First Towers Acquisition: A New Growth Engine

The acquisition of First Towers Fiber Corp. is the cornerstone of Akanda's revitalized growth strategy. First Towers, now a wholly-owned subsidiary, is a British Columbia-based company specializing in the development, construction, and ownership of wireless towers and a substantial fiber optic network in Mexico, with ambitions for broader Latin American expansion. This segment represents a significant technological and operational differentiator for Akanda.

Technological Edge and Market Opportunity in Mexico

First Towers boasts the largest 5G dark fiber optic network in Central Mexico, spanning 700 kilometers. This infrastructure is not merely a collection of assets; it is a strategic technological advantage. The company operates under 20-year master lease agreements for both its tower development and fiber network, providing a stable, long-term revenue base. This long-term contractual stability is a tangible benefit, offering predictable cash flows in contrast to the more variable nature of cannabis sales. First Towers is also positioned as a preferred partner for providing coverage to Mexico's rural regions, which often present higher barriers to entry for competitors.

The company's veteran tower development team, with two decades of experience in telecommunications infrastructure, provides a crucial operational edge. This expertise is vital in a market like Mexico, which presents significant growth opportunities. Mexico, as Latin America's second-largest telecom market, has 93 mobile cellular subscriptions per 100 inhabitants. Critically, First Towers estimates that "several thousand new wireless towers need to be built in Mexico to give at least 4G LTE coverage to 96.40% of Mexico’s population". The Mexican dark fiber network market itself is projected to grow at a compound annual growth rate (CAGR) of 10.80% from 2023 to 2030, with revenue expected to increase from approximately $156 million in 2022 to $355 million by 2030. This robust market growth provides a fertile ground for First Towers' expansion.

Beyond Mexico, the broader Latin American region presents an even larger opportunity. Fiber optic networks in Latin America are "two years behind other more developed countries", with 4G penetration still below 70% and 5G expected to represent less than 43% of mobile subscriptions by 2026. An estimated "244 million people in Latin America, which is close to one third of the population, do not have access to the internet". The digitalization of industries in the region could develop into a market exceeding $21 billion annually. First Towers' strategy to expand into other Latin American countries, leveraging its existing 5G fiber network and regional expertise, positions Akanda to tap into this significant unmet demand.

Financial Contributions and Outlook

First Towers generates revenue primarily from leasing its telecommunications equipment and tower space to other companies. Its two main revenue streams are "Anchor Leases," which are 20-year agreements with major multinational telecommunications providers, and "Additional Tenants" that utilize the available 24 pairs of fiber optic network. Historically, First Towers' sales were $694,725 in 2024, up from $667,854 in 2023, with substantially all revenue derived from leasing arrangements. Despite these revenues, First Towers has incurred operating losses since its inception, with a net loss of $6.44 million in 2024 and $3.06 million in 2023. Management anticipates "significant expenses and operating losses for the foreseeable future as we continue to pursue market penetration". The company plans to develop approximately 1100 towers in Central America under an existing agreement, signaling a clear roadmap for expansion.

The Evolving Cannabis Segment: Cultivation in British Columbia

While the telecommunications acquisition marks a new direction, Akanda has not entirely abandoned the cannabis sector. The company is developing a Canadian THC and CBD farming facility at 1900 Ferne Road, Gabriola Island, British Columbia. A hemp license was obtained from Health Canada in September 2024, triggering a $750,000 milestone payment for the property. However, the company has "not yet cultivated any product from this farming facility". Akanda anticipates making additional payments once remaining milestones, such as THC cultivation and product sales, are achieved, though it "can give no assurance of success".

The Canadian cannabis market is competitive, with established players like Aurora Cannabis , Canopy Growth , Aphria, CannTrust Holdings (CTST), and Aleafia Health (AH) in the THC segment, and Charlottes Web (CWBHF), Cresco Labs (CRLBF), and The Valens Company (VLNS) in the CBD/hemp space. Akanda's success in this segment will depend on its ability to achieve a low-cost structure and deliver high yields, especially given the significant licensed outdoor and indoor cultivation areas in Canada (63.20 million sq ft outdoor and 16.30 million sq ft indoor in 2023).

Financial Performance: A Company in Transition

Akanda's financial performance reflects a company in a significant transitional phase. For the year ended December 31, 2024, Akanda reported total revenue of $836,664, primarily from its now-discontinued Canmart operations, an increase from $423,683 in 2023. The company's gross profit for 2024 was $208,382, yielding a TTM Gross Profit Margin of 24.91%. However, operating expenses remained substantial at $4.59 million in 2024, leading to an operating loss of $4.38 million and a deeply negative TTM Operating Profit Margin of -523.80%.

The net loss for 2024 was $4.10 million, a considerable improvement from the $32.28 million net loss in 2023. This reduction was largely attributable to the absence of the $24.67 million impairment loss recognized in 2023 related to the RPK divestiture. Despite this improvement, the TTM Net Profit Margin stands at -489.57%, highlighting ongoing profitability challenges.

Cash flow from operating activities remained negative, with a net outflow of $3.98 million in 2024, and TTM Free Cash Flow was -$6.08 million. As of December 31, 2024, Akanda had working capital of $1.42 million and accumulated losses totaling $57.46 million. These figures underscore the "substantial doubt about its ability to continue as a going concern".

Liquidity, Capital, and the Path Forward

Akanda's liquidity position is a critical concern for investors. The company's continued operations are contingent on its ability to secure additional financing and generate profits. In a significant development, Akanda closed a $12.0 million convertible promissory note offering on September 12, 2025. The net proceeds are earmarked for strategic initiatives: up to $3.5 million for marketing, development of the Gabriola, B.C. site, up to $3 million for working capital and general corporate purposes, and up to $7 million for debt repayment. Approximately $6.50 million of these proceeds have already been used to prepay a portion of the Consideration Note related to the First Towers acquisition.

The First Towers acquisition also involved Akanda assuming approximately $20 million of First Towers' existing indebtedness, which "may limit its financial flexibility". While the recent capital raise provides a temporary reprieve, the company's long-term viability hinges on the successful execution of its new business model and achieving profitability from its diversified operations.

Competitive Landscape: Niche Player in a Giant's Arena

Akanda operates in two distinct, yet intensely competitive, industries. In the cannabis sector, Akanda is a niche player, particularly after divesting its European operations. Larger, more established competitors like Canopy Growth Corporation (CGC), Aurora Cannabis (ACB), Cronos Group (CRON), and Tilray Brands (TLRY) possess greater scale, brand recognition, and financial resources. While Akanda's historical cannabis operations struggled with profitability, its TTM Gross Profit Margin of 24.91% is a positive sign, though its deeply negative operating and net margins indicate significant overhead challenges compared to some rivals. For instance, while many cannabis companies, including CGC, ACB, and TLRY, also exhibit negative P/E ratios, indicating unprofitability, their larger operational footprints often allow for greater resilience and investment in innovation.

Akanda's competitive advantage in cannabis, if it materializes, would stem from its specific regulatory licenses in Canada and potentially specialized cultivation methods for high-quality yields. However, its smaller scale and regulatory dependencies make it vulnerable to larger competitors who can achieve economies of scale and adapt faster to market changes.

In the telecommunications infrastructure market, First Towers faces competition from established players such as Centennial Towers, QMC, Torrecom, MX Towers, MTP, and American Tower (AMT) in tower development, and Neutral Networks, Summit1G, National Fiber Networks, Fermaca Networks, and ICOM Construcciones in fiber optics. First Towers differentiates itself through its "Existing Infrastructure with anchor telecommunication companies," specifically its "700 kms of 5G dark fiber network in central Mexico with a telecommunications giant serving as an anchor with a 20 year leasing contract". Its "Tower Ownership" model is designed to generate "more revenue than traditional build to suit (BTS) contracts", and its focus on "Key Locations" in high-growth areas of Mexico provides a strategic advantage. This technological and contractual differentiation is crucial for Akanda to carve out a sustainable market position against well-resourced competitors.

Key Risks to the Investment Thesis

Investing in Akanda Corp. carries significant risks, primarily highlighted by the "substantial doubt about its ability to continue as a going concern". The company's historical operating losses and negative cash flows necessitate continuous external funding, with no guarantee that additional financing will be available on acceptable terms. The cannabis segment faces inherent agricultural risks, such as "crop disease, mold or mildew, insect infestations, volatile weather, drought", and is subject to a "dynamic" and evolving regulatory regime in Canada. Furthermore, the illegality of marijuana under U.S. federal law poses a significant risk should Akanda consider future expansion into the U.S. market.

The First Towers acquisition, while strategic, introduces its own set of risks. First Towers has a "limited operating history" and is subject to the "costs, uncertainties, delays, and difficulties frequently encountered by companies in this early stage of development". The telecommunications infrastructure development is a "long, expensive and uncertain process", requiring substantial capital expenditures. The company is also exposed to "adverse global economic, market and industry conditions and other geopolitical issues," including inflation and rising interest rates, which could impact its operations and anticipated revenue. Competition in the telecom sector is "intense and increasing", and rapid technological changes could adversely affect market acceptance of First Towers' networks and services.

Conclusion

Akanda Corp. stands at a critical juncture, having strategically pivoted from a challenging cannabis-centric model towards a diversified future with a strong emphasis on telecommunications infrastructure in Mexico. The acquisition of First Towers Fiber Corp. represents the core investment thesis, offering a compelling opportunity to capitalize on Mexico's significant demand for digital connectivity through its established 5G dark fiber network and long-term lease agreements. This move, coupled with the ongoing development of its Canadian cannabis cultivation facility, aims to create a more resilient and diversified revenue base.

While the company's financial history is marked by losses and a "going concern" warning, the recent $12.0 million convertible note offering provides essential capital to fuel its strategic initiatives and manage immediate liquidity needs. The success of Akanda's transformation will depend heavily on its ability to effectively integrate and scale the First Towers business, leverage its technological and contractual advantages in the competitive Mexican telecom market, and bring its Canadian cannabis operations to profitability. Investors should closely monitor the execution of these strategic initiatives, particularly the operational ramp-up of First Towers and the Gabriola Island cannabis facility, as these will be key determinants of Akanda's long-term value creation and its ability to overcome the inherent risks of its evolving business landscape.