Akanda Corp. Announces Registered Direct Offering Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

Akanda Corp. (NASDAQ: AKAN), a medical cannabis company, announced a securities purchase agreement with an accredited investor. The investor will acquire 2,491,381 common shares at $0.1031 each and 21,756,922 pre-funded warrants at $0.103 per share. The warrants are immediately exercisable at $0.0001 per share. The gross proceeds are estimated at $2.5 million, which Akanda will use for working capital and corporate expenses. The offering, expected to close around May 17, 2024, is made under Nasdaq rules and involves Univest Securities as the financial advisor. The securities are registered under an effective shelf registration statement filed with the SEC.

Positive

• Gross proceeds of approximately $2.5 million from the offering.
• Immediate exercisability of pre-funded warrants at a minimal exercise price of $0.0001.
• Use of proceeds for general working capital and corporate expenses, providing financial flexibility.
• Involvement of Univest Securities as an exclusive financial advisor, adding credibility to the offering.
• Offering made under an effective shelf registration statement, ensuring regulatory compliance.

Negative

• Potential shareholder dilution due to the issuance of 2,491,381 common shares and 21,756,922 pre-funded warrants.
• The low purchase price of $0.1031 per share may indicate lower market confidence.
• Offering expenses and financial advisor fees will reduce the net proceeds available to Akanda.
• Dependence on an accredited investor, which may limit broader market participation.

Financial Analyst

Akanda Corp.'s recent announcement of a registered direct offering signals a strategic move to raise capital by issuing new shares and pre-funded warrants. The gross proceeds are estimated to be around $2,500,000, which will primarily be used for general working capital and corporate expenses. This shows Akanda's need to bolster its liquidity, which can be a double-edged sword for investors.

Short-term perspective: In the short term, raising new capital can help Akanda meet its immediate financial obligations and potentially fund new initiatives. This might be seen positively as it ensures the company remains operational and can invest in its growth strategies.

Long-term perspective: However, issuing new shares and warrants can lead to share dilution, meaning that each existing shareholder's ownership percentage in the company decreases. This can often exert downward pressure on the stock price in the near term. Investors usually react cautiously to such news, as the balance between raising funds and shareholder value needs to be managed carefully.

It's also worth noting that the offering is priced at-the-market, which typically indicates that the company couldn't secure a premium price for its shares. This might suggest that the company's negotiating position wasn't particularly strong.

Overall, while the capital raise addresses liquidity concerns, the potential share dilution is a critical factor that investors must consider.

Market Research Analyst

The direct offering and the associated pricing strategies reflect Akanda's position within the medical cannabis market. The use of pre-funded warrants is particularly noteworthy. These warrants are almost equivalent to shares but come with a nominal exercise price of $0.0001. This structure allows investors to increase their stake in the company at a known cost, which could be attractive to those bullish on Akanda's future prospects.

Industry Context: The medical cannabis industry is highly competitive and capital-intensive. Companies often need to raise funds to support ongoing research, regulatory compliance and market expansion. Akanda's move to raise capital through this offering may indicate an underlying strategy to expand its footprint or invest in further R&D to maintain its competitive edge.

Investor Sentiment: For retail investors, understanding the market dynamics is crucial. The offering can be seen as a positive sign of the company's proactive approach to securing its financial health. However, the dilution effect and the current market sentiment around medical cannabis stocks need to be closely monitored. The industry is subject to regulatory changes and market fluctuations, which can impact stock performance significantly.

Conclusion: Investors should weigh the potential long-term benefits of Akanda's capital raise against the short-term implications of share dilution and market reaction. It’s important to stay informed about the broader industry trends and Akanda's strategic initiatives to make well-rounded investment decisions.

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 securities purchase agreement with an accredited investor whereby the investor has agreed to purchase 2,491,381 common shares at a purchase price of $0.1031 and 21,756,922 pre-funded warrants to purchase 21,756,922 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 $2,500,000 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/209666

FAQ

What is the stock symbol for Akanda Corp.?

The stock symbol for Akanda Corp. is AKAN.

How much is Akanda Corp. raising in the direct offering?

Akanda Corp. is raising approximately $2.5 million in the direct offering.

What is the purchase price of the common shares in Akanda's offering?

The purchase price of the common shares is $0.1031 each.

How many pre-funded warrants are being issued by Akanda Corp.?

Akanda Corp. is issuing 21,756,922 pre-funded warrants.

When is the expected closing date for Akanda's offering?

The offering is expected to close on or about May 17, 2024.

What will Akanda use the proceeds from the offering for?

Akanda will use the proceeds for general working capital and corporate expenses.

Who is the financial advisor for Akanda's direct offering?

Univest Securities is the financial advisor for Akanda's direct offering.

What is the exercise price of the pre-funded warrants issued by Akanda?

The exercise price of the pre-funded warrants is $0.0001 per share.