The Offering

Company Overview

Akanda Corp. (hereinafter referred to as “Akanda” or “The Company”) is a cannabis cultivation, manufacturing, and distribution company whose mission is to provide premium quality medical cannabis products worldwide. The company cultivates and processes natural cannabis at facilities in the Kingdom of Lesotho, Africa, and intends to supply medicinal-grade cannabis biomass, cannabis flower, and cannabis concentrates to wholesalers in international markets.

Legal Structure of the company

Source: IPO Prospectus

Key Highlights

Primary product offering: The company's primary product offering includes Cannabis biomass, Cannabis flower, and Cannabis concentrates. The company seeks to sell its products to international distributors and medical cannabis customers in the UK.

Use of Proceeds: The company estimates that the net proceeds from this offering will be approximately $14.2 million, assuming an initial public offering price of $4.00 per common share-post deduction of underwriting discounts, commissions, and estimated offering expenses. The company intends to use these proceeds for acquisitions, capital expenditures (including without limitation, the construction of their planned greenhouse, post-harvest drying and extraction facilities at Bophelo), working capital, and general corporate purposes.

Dividend Policy: Since incorporation, the company has never paid any dividends and does not intend to pay dividends on its Common Shares in the near future.

Financial Highlights

Akanda is an early-stage company with minimal operating history. The company has no trading related operations to date, except for those transactions incurred in relation to its function as a holding company for group entities. During the nine months ended September 30, 2021, the company incurred legal expenses of $39,474 because of corporate activity and transaction-related legal fees in respect to the acquisition of Cannahealth Limited.

Key Management Highlights

Source: IPO Prospectus

Associated Risk (High)

Investment in the IPO of Akanda is exposed to a variety of risks such as:

• Early-stage Company: Akanda is an early-stage company with limited operating history.
• Poor Financial Position: The company’s financial position raises concerns as each of its operating subsidiaries, Bophelo and Canmart, have generated no or only minimal revenue since inception.
• Bearishness in the Cannabis Industry: A majority of the cannabis stocks are trading below their long-term support of 200-day SMA, signifying bearishness in the overall cannabis industry.
• Other Risks: The company’s success will depend, in part, on its ability to continue to enhance its product offerings and to respond to technological changes, regulatory changes and emerging industry standards and practices.

Conclusion

The company is an early-stage, emerging growth company with a limited operating history and minimal revenues. Moreover, the leadership team will require funding from this offering to expand and further develop their operations. Furthermore, the broader trend in the exchange-listed cannabis stocks is bearish. A majority of them have plummeted significantly over the past year and are trading well below their crucial long-term support levels.

Therefore, given the weak financial background of the company, bearishness in the overall cannabis industry, uncertainty arising from the escalated geopolitical tensions, we have concluded that the IPO of Akanda Corp. is not very attractive at the current offer price and have assigned a "Watch" rating to this IPO.

*Please note that an IPO can be postponed or put on Hold at the discretion of the company or regulatory authority.

Disclaimer

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