Akanda Corp. Announces Subsequent Registered Direct Offering

Rhea-AI Summary

Akanda Corp. (NASDAQ: AKAN), an international medical cannabis company, has announced a second securities purchase agreement with an accredited investor. The investor will purchase 2,491,381 common shares at a price of $0.1031 each and 12,057,600 pre-funded warrants at $0.103 per share in a registered direct offering. The pre-funded warrants have an exercise price of $0.0001 and are immediately exercisable. Gross proceeds to Akanda are estimated at $1.5 million before fees and expenses, with the offering expected to close around May 17, 2024. The net proceeds will be used for general working capital and corporate expenses. The offering is made under an effective registration statement filed with the SEC.

Positive

• Akanda Corp. secures approximately $1.5 million in gross proceeds from the offering.
• The pre-funded warrants are immediately exercisable, providing potential for rapid capital influx.
• The offering is priced at Minimum Price under Nasdaq rules, ensuring compliance.
• Funds will be used for general working capital and corporate expenses, potentially stabilizing the company's operations.

Negative

• Issuing 2,491,381 common shares and 12,057,600 pre-funded warrants may cause shareholder dilution.
• Net proceeds will be reduced by financial advisor fees and other offering expenses.
• The offering indicates a need for additional capital, which may concern investors.
• Shares are priced at a low of $0.1031, reflecting potential undervaluation of the stock.

Insights

Financial Analyst

Akanda Corp.'s latest registered direct offering indicates a strategic move to raise $1.5 million in capital. For retail investors, it's important to understand that such offerings can have a short-term dilutive effect on existing shareholders, as the issuance of new shares increases the total share count. This could potentially lower the stock price if demand for the shares does not rise equivalently. However, the raised capital provides additional liquidity for the company, which is essential for its operations and growth plans.

The pricing at $0.1031 per share and the nearly equivalent price for the pre-funded warrants, might reflect the current market sentiment towards Akanda. The inclusion of pre-funded warrants exercisable at a nominal price of $0.0001 reduces immediate dilution but ensures future dilution, as the warrants are highly likely to be exercised given their advantageous terms.

Investors should also note the involvement of Univest Securities LLC as the financial advisor, suggesting a level of due diligence and professional oversight. However, the ultimate impact will depend on how effectively Akanda uses these proceeds for its stated purposes.

The shelf registration provides flexibility for the company to issue additional shares in the future, which could be a double-edged sword: beneficial for future capital needs, but potentially dilutive if not managed carefully.

Given these factors, the impact of this offering is mixed. While it secures immediate funds, the potential dilution and low price per share could concern investors.

Market Research Analyst

From a market perspective, Akanda's direct offering is a signal of the company’s need for additional capital. The pricing strategy, at just over $0.10 per share, indicates a focus on ensuring the offering's success by making it attractive to investors, perhaps reflecting cautious optimism about the company's near-term prospects.

For retail investors, the pre-funded warrants structure is noteworthy. These warrants are a common feature in financing rounds aimed at minimizing immediate dilution while providing the company with necessary funding. However, given that these warrants are exercisable at a minimal cost, it suggests that Akanda is prioritizing immediate capital inflow over long-term share price stability.

This move could be interpreted as a strategic pivot to strengthen its financial position in the competitive medical cannabis market. With the proceeds earmarked for general working capital and corporate expenses, investors should look for signs of how effectively these funds are deployed. Efficient use of these funds could lead to operational improvements and potential profitability, which are critical for investor confidence.

However, the long-term success of this strategy will depend on Akanda’s ability to leverage these funds into meaningful business growth without excessive shareholder dilution.

London, United Kingdom--(Newsfile Corp. - May 17, 2024) - Akanda Corp. (NASDAQ: AKAN) ("Akanda" or the "Company"), an international medical cannabis company, today announced that it has entered into a second securities purchase agreement with an accredited investor whereby the investor has agreed to purchase 2,491,381common shares at a purchase price of $0.1031 and 12,057,600 pre-funded warrants to purchase 12,057,600 common shares at $0.103 per share in a registered direct offering priced at Minimum Price under Nasdaq rules. The pre-funded warrants are immediately exercisable at an exercise price of $0.0001 and may be exercised at any time until all of the pre-funded warrants are exercised in full, subject to certain beneficial ownership limitations as set forth in the pre-funded warrant.

Univest Securities LLC is acting as the exclusive financial advisor in connection with the offering.

The gross proceeds to Akanda are estimated to be approximately $1,500,000 before deducting the financial advisor fees and other offering expenses. The offering is expected to close on or about May 17, 2024, subject to the satisfaction of customary closing conditions. Akanda intends to use the net proceeds from this offering for general working capital and general corporate expenses.

The offering is being made pursuant an effective shelf registration statement on Form F-3, as amended (File No. 333-276577) previously filed with the Securities and Exchange Commission ("SEC") and declared effective on January 29, 2024. The securities may be offered only by means of the prospectus supplement and the accompanying prospectus that form a part of the registration statement. A final prospectus relating to the Offering will be filed with the SEC and will be available free of charge on the SEC's website at http://sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended.

About Akanda Corp.

Akanda is an international medical cannabis and wellness platform company seeking to help people lead better lives through improved access to high quality and affordable products. Akanda's portfolio includes CanMart, a UK-based fully licensed pharmaceutical importer and distributor which supplies pharmacies and clinics within the UK. The Company's seed-to-patient supply chain also includes partnerships Cellen Life Sciences' Leva Clinic, one of the first fully digital pain clinics in the UK. Akanda also acquired the right to develop a Canadian farming property in British Columbia, including farming land and related operations and licenses. The Company plans to develop THC and cannabinoid (CBD) facilities at this site.

Connect with Akanda: Email | Website | LinkedIn | Twitter | Instagram

Investor Contact

ir@akandacorp.com

Advisor Contact

Univest

Cautionary Note Regarding Forward-Looking Information and Statements

This press release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only Akanda's beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of Akanda's control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or may contain statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "will continue", "will occur" or "will be achieved". These statements include, among others, statements regarding the completion of the offering, the anticipated proceeds from the offering and the use of such proceeds. Forward-looking information may relate to anticipated events or results including, but not limited to business strategy, product development and sales and growth plans. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and Akanda does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/209751

FAQ

What is the new securities purchase agreement announced by Akanda Corp. (AKAN)?

Akanda Corp. announced a second securities purchase agreement where an investor will purchase 2,491,381 common shares and 12,057,600 pre-funded warrants.

What is the price of Akanda Corp.'s common shares in the new offering?

The common shares are priced at $0.1031 each in the new offering.

How much will Akanda Corp. raise from the new offering?

Akanda expects to raise approximately $1.5 million in gross proceeds from the offering.

When will Akanda Corp.'s new securities offering close?

The offering is expected to close around May 17, 2024.

What will Akanda Corp. use the proceeds from the new offering for?

The net proceeds will be used for general working capital and corporate expenses.

What is the exercise price of the pre-funded warrants in Akanda Corp.'s new offering?

The pre-funded warrants have an exercise price of $0.0001 each.

What are the shares and warrants being offered by Akanda Corp. priced at?

The shares are priced at $0.1031 each, and the pre-funded warrants are priced at $0.103 each.

Who is acting as the financial advisor for Akanda Corp.'s new offering?

Univest Securities is acting as the exclusive financial advisor for the offering.

Is the new offering by Akanda Corp. compliant with SEC regulations?

Yes, the offering is made under an effective shelf registration statement filed with the SEC.

Where can investors find the final prospectus for Akanda Corp.'s new offering?

The final prospectus will be filed with the SEC and available at their website, http://sec.gov.